CHICAGO -- Unmoved by testimony about a jet-setting lifestyle at company expense but certain that Hollinger International had been pilfered, a federal jury found press baron Conrad Black guilty yesterday of the lesser but still serious charges of obstruction of justice and three counts of mail fraud.
With Black's former business partner David Radler serving as a star witness against him, prosecutors accused Black, 62, of masterminding a racketeering conspiracy that allegedly plundered more than $60 million from Chicago-based Hollinger, owner of the Chicago Sun-Times, the Daily Telegraph and other newspapers.
The jury found that Black illegally had taken a relatively modest $2.9 million. On the strength of a videotape that showed Black personally removing 13 boxes from his Toronto office during the U.S. government's fraud investigation, the jury also ruled that Black had impeded the investigation.
Black's conviction marks the stunning downfall of one of Canada's most prominent businessmen, who used the power of the press to become an international celebrity.
Born to wealth in Canada, Black parlayed a tidy investment in a group of community newspapers into a media empire with holdings in the United States, Britain, Israel and Canada.
Black recruited luminaries such as Henry A. Kissinger and former Illinois Gov. James R. Thompson to his board,
Black's hold over Hollinger Inc. began to unravel when a little-known Hollinger shareholder, the investment firm Tweedy Browne Co., complained publicly about millions of dollars that Black and other top Hollinger executives received as part of the company's sale of dozens of newspapers in the United States and Canada.
Black was ousted as Hollinger's chairman and chief executive in 2004. Soon after, a task force headed by former Securities and Exchange Commission Chairman Richard Breeden issued a scathing report, calling the conduct of Black and Radler at Hollinger a "corporate kleptocracy."
Black, who gave up his Canadian citizenship in order to become a British lord, showed no visible reaction to the verdict and will appear in court Thursday to learn from U.S. District Judge Amy St. Eve if he may leave the country.
He faces a maximum of 35 years in prison, a maximum penalty of $1 million, possible forfeiture of property and restitution of ill-gotten gains. Prosecutors recommended a sentencing range of 15 to 20 years.
The jury in Chicago also found Black's three co-defendants guilty of three counts each of mail fraud. They are attorney Mark Kipnis, 59, of Chicago, and former Hollinger International vice presidents John Boultbee, 64, of Vancouver, British Columbia, and Peter Y. Atkinson, 60, of Toronto. Each faces up to 15 years in prison and fines of up to $750,000. All three were released on bond.
"If you're going to take liberties and break the law with other people's money, there are going to be consequences," U.S. Attorney Patrick Fitzgerald said.
Yet after a four-month trial and 12 days of deliberation, the jury found insufficient evidence to convict Black of the most sweeping charges of the indictment, including racketeering. The government had filed 42 separate charges in the 16-count indictment, claiming Black, Radler and the others engaged in a scheme illicitly to pocket millions of dollars from the sale of dozens of Hollinger newspapers.
In the deals, Black and Radler personally reaped millions in payments from the buyers of the newspapers. In exchange, the Hollinger executives promised not to compete against the new owners. Some of those payments were not disclosed to shareholders or even to Hollinger's audit committee.
Defense lawyers argued that such "noncompete" payments are legitimate and customary in newspaper deals.
The guilty verdicts for all four defendants stemmed from charges they received $5.5 million in bogus noncompete agreements with a Hollinger subsidiary - essentially agreeing not compete with themselves. They were also convicted in connection with $600,000 in payments fraudulently attached to the sale of community newspapers.
Government lawyers sought to have Black immediately put into custody as a flight risk. But his defense lawyers vowed Black would remain in the country until his sentencing hearing Nov. 30. They also argued that St. Eve should allow a reduction in the bond he has pledged: the $20 million he has invested in his home in Palm Beach, Fla., and the proceeds from the $5 million sale of a New York apartment.
Ameet Sachdev, David Greising and Susan Chandler write for the Chicago Tribune.