Black faces fraud charge

November 18, 2005|By BLOOMBERG NEWS

CHICAGO -- Conrad Black, the former press magnate who built Hollinger International Inc. into the world's third-largest publisher of English-language newspapers, was charged yesterday with helping steal $51.8 million from the company.

The 61-year-old former chairman and chief executive officer of Hollinger International and three former company executives were accused of wire fraud and mail fraud in an 11-count indictment unsealed in U.S. District Court in Chicago. Prosecutors issued an arrest warrant for Black, who has been a British lord since 2001. He could get up to 40 years in prison and be fined $2 million.

Black's prosecution is the highest-profile criminal case against a former chief executive officer since the arrests last year of WorldCom Inc.'s Bernard Ebbers and Enron Corp.'s Kenneth Lay. At his peak, Black controlled Britain's Daily Telegraph, the Jerusalem Post and 60 percent of Canada's dailies, drawing comparisons to News Corp. chief Rupert Murdoch.

"Insiders at Hollinger - all the way to the top of the corporate ladder - whose job it was to safeguard the shareholders, made it their job to steal and conceal," U.S. Attorney Patrick Fitzgerald, whose office brought the charges, said in a statement.

Also indicted were Hollinger Inc.'s former chief financial officer, John Boultbee, 62; former Hollinger Inc. general counsel Peter Atkinson, 58; former Hollinger International corporate counsel Mark Kipnis, 58; and Ravelston Corp., Black's former Toronto-based holding company. Boultbee was also CFO at Ravelston.

Prosecutors said they will seek the forfeiture of $80 million from the four defendants.

Arrests warrants were issued for Boultbee and Atkinson, who are Canadian citizens. Kipnis, an American, is free on bail after being indicted in August on a fraud charge.

Black and Boultbee are charged with eight counts each of mail and wire fraud. Atkinson is charged with six counts of mail and wire fraud. Kipnis is charged with nine counts of mail and wire fraud. Each fraud count carries a prison term of five years and a $250,000 fine. Ravelston is charged with the same seven counts of mail and wire fraud first brought against it in August.

Fitzgerald offered Black a chance to turn himself in and said he would seek Black's extradition if he doesn't surrender. A secretary to one of Black's lawyers, Edward Greenspan, said she didn't know where Black was and that Greenspan would be in court the rest of the afternoon. Fitzgerald declined to comment on Black's whereabouts.

An e-mail sent to Black seeking comment wasn't immediately returned.

The indictments describe two schemes. The first involved the diversion of $51.8 million, disguised as noncompetition and management fees, from Hollinger International's $2.1 billion sale of assets to CanWest Global Communications Corp. in 2000.

The second involves the suspected abuse by Black of corporate perks provided by Hollinger International, including $40,000 to pay for his wife's surprise birthday party in December 2000. Black also had Hollinger pay for his use of its corporate jet for a personal vacation to Bora Bora in French Polynesia, prosecutors said.

"It never ceases to amaze me when people such as some of those named in this indictment, who are of affluent means, choose to steal with both hands, with a greed almost unfathomable to your average American citizen," Robert Grant, special agent in charge of the Chicago office of the FBI, said at a news conference yesterday.

Black has fought, mostly unsucessfully, a two-year effort by Hollinger International to neutralize his voting control and influence over the Chicago-based Sun-Times publisher and its Canadian parent, Hollinger Inc.

Hollinger International's board ousted Black as CEO in November 2003, sued him and stripped him of the chairman's title two months later. The company then auctioned the Telegraph over his objections in June 2004. Hollinger International sued to recover more than $425 million that it says Black and associates stole.

Black countersued on April 25, 2004, and said that if he was found liable, former Illinois Gov. James R. Thompson and other members of the company's audit committee should pay part of the damages because they breached their fiduciary duties.

Radler, 63, was indicted Aug. 18 on federal charges that he participated in a $32 million fraud. He pleaded guilty to one of the charges in September and is cooperating with the Justice Department. In return, prosecutors plan to recommend that he serve 29 months in jail and pay a $250,000 fine.

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