Conrad Black charged with racketeering and obstruction of justice
by TARA PERKINS

LINK

TORONTO (CP) - The U.S. Attorney's Office in Chicago upped the ante in its case against Conrad Black, dealing out new federal charges Thursday including allegations the former media mogul was involved in racketeering.

The 61-year-old Black was hit with four new charges in total. They collectively add 55 years to the potential 40-year jail sentence Black was already facing if convicted on eight counts of fraud.

The new counts are racketeering, obstruction of justice, money laundering and wire fraud. They stem from Black's time at the helm of Chicago-based newspaper publisher Hollinger International Inc., owner of the Chicago Sun-Times and former proprietor of the London Telegraph, Jerusalem Post and other publications in the United States, Canada and abroad.

Black pleaded not guilty to the eight fraud counts at the beginning of this month. He is scheduled to appear in a Chicago court Friday morning to face the additional charges, which were laid by Patrick Fitzgerald, the U.S. Attorney for the Northern District of Illinois.

Racketeering charges, under the U.S. Racketeer Influenced and Corrupt Organizations act, known as RICO, are rare, said former U.S. federal prosecutor Marc Mukasey, who was trained by Fitzgerald.

They were created as a tool to fight traditional organized crime such as the Mafia and foreign drug cartels.

Under the racketeering count against Black, Fitzgerald is seeking forfeiture of more than $92 million US.

He alleges that Black was the leader of Hollinger, a company which between 1998 and 2002 was operated through a pattern of frauds.

"What he's saying is that Black used his company as a racketeering enterprise," Mukasey said.

According to the U.S. Attorney's office, the purpose of the Hollinger enterprise included:

-"Enriching Black, his associates, and their entities at the expense of (Hollinger) International and its public, majority shareholders. . .(and) Canadian tax authorities."

-"Promoting and maintaining Black's control over the Hollinger Enterprise's affairs."

-"Concealing fraudulent activities of, and the fraud proceeds received by Black, his associates and their entities."

The obstruction count against Black, who lives in Toronto, alleges that Black illegally took more than a dozen boxes out of the Toronto office of Hollinger Inc., at 10 Toronto Street, the company's then headquarters near the Bay Street financial district.

A Canadian court had ordered that no documents be removed from the building without court permission. In addition, Black was notified on May 19 that the U.S. Securities and Exchange Commission was looking for some documents, according to the allegations.

At about 5 p.m. on May 20 - three hours after his assistant was thwarted in an attempt to take some boxes and put them in her car - Black showed up at the office building and helped remove the boxes, the U.S. Attorney's Office said.

The charges of money laundering and fraud allege that Black illegally transferred $2.15 million US in fraudulent proceeds from his Canadian account to Hollinger's Chicago bank account to buy a New York apartment on Park Avenue from the company.

Thursday's indictment, which supersedes the earlier charges, also added one new count of wire fraud to the eight counts that co-defendent and former Hollinger executive John Boultbee was facing.

The B.C. resident pleaded not guilty to the original eight counts earlier this month and was released on a $1.5 million bond, the week after Black was freed on $20 million US bail.

Boultbee and former Hollinger lawyer Mark Kipnis are both also scheduled to appear in the Chicago federal court Friday morning.

Toronto-resident Peter Atkinson, another co-defendant, has been excused from appearing because of a previously scheduled trip to Italy.

All of the defendants are accused of participating in a scheme to divert more than $80 million US from Hollinger into its executives pockets.

Black and Boultbee are also accused of letting Black misuse company perks, by using the corporate jet for a personal trip to Bora Bora and having Hollinger pay tens of thousands of dollars for his wife's birthday party.

Meanwhile, David Radler, the 63-year-old former publisher of the Chicago Sun-Times and chief operating officer of Hollinger International, pled guilty in September to one count of fraud.

Black's former top executive, Radler is co-operating with U.S. authorities in the case.

Convictions of high-profile white-collar criminals have been mounting in the United States, as regulators try to reassure investors and wipe up the image of corporate America that was tarnished by major frauds including Enron Corp.'s collapse in 2001.

Former WorldCom CEO Bernard Ebbers was sentenced to 25 years in prison for his role in an $11 billion US accounting fraud. Tyco International Ltd.'s former chief, Dennis Kozlowski, and CFO, Mark Swartz, were convicted in June on 22 of 23 counts of grand larceny, conspiracy, securities fraud and falsifying business records.

Adelphia Communications Corp. founder John Rigas, and his son Timothy, were convicted last year of fraud and sentenced to 15 and 20 years respectively. And home diva Martha Stewart's well-known stock trades landed her in prison for five months, with an additional five months of home confinement.

Enron's founder, Kenneth Lay, is scheduled to stand trial in January on fraud and conspiracy charges. The company's former CFO, Andrew Fastow, has already agreed to serve the maximum 10-year sentence for his part in the conspiracy, and to testify against his former bosses.

© The Canadian Press, 2005

Conrad Black indicted for fraud in US
The Times of India

LINK

A federal grand jury indicted Conrad M Black, the prominent and flashy media entrepreneur, on eight counts of mail and wire fraud today along with three of his deputies, the United States Attorney for Chicago, Patrick Fitzgerald, said.

The charges are the culmination of an investigation into a series of complex transactions that prosecutors contend Lord Black and his associates used to enrich themselves of millions of dollars at the expense of the two publicly traded companies, Hollinger International and Hollinger, that he controlled in Chicago and Toronto.

Black has denied the charges, and a statement issued by his lawyers said "Conrad Black asserts his innocence without qualification with respect to each and every one of the charges set forth in the indictment. It will be shown that he has, at all times, acted within the law."

Hollinger International at one time published several newspapers around the world including the Daily Telegraph in London, the National Post in Toronto and the Jerusalem Post, as well as the Chicago Sun-Times, which it still owns.

The company was once the third largest newspaper company by circulation. Hollinger was a holding company that controlled Hollinger International.

Black served as chairman and chief executive of both entities. The indictment outlines two money-laundering schemes that Black and his aides are accused of devising.

INDEPTH: CONRAD BLACK
Conrad Black: Lager-heir to London lord
CBC News Online | December 7, 2005

He was born Conrad Moffat Black on August 25, 1944, in Montreal. His father, George Black, was a wealthy brewery executive.

He studied his way to a history degree at Carleton University, a law degree from Laval and an MA from McGill.

In his 20s, Black began buying small Canadian newspapers and, in 1971, he co-founded the Sterling Newspapers Group. In 1978, he became chair of the Argus Corporation  a position he used as a launch-pad to start the Hollinger group. By the 1990s Hollinger controlled 60 per cent of Canadian newspaper titles, as well as hundreds of dailies in the U.S., England, Australia and Israel.

Black became known for taking over newspapers and chopping away the fat (and much of the meat as well), resulting in job losses. Criticism aside, these newspapers often turned a profit within a year. So large was his appetite for newspapers that at one point, he was the third-largest newspaper publisher in the world. At its peak in 1999, Hollinger had revenues over $2 billion.

All the money and fame (or infamy) that came with this empire was not quite enough for Black  he wanted a title to go along with it.

In 1999, the British government moved to make him Lord Black. This elicited strong opposition from Prime Minister Jean Chrétien who pointed to the Nickle Resolution of 1919, which ruled that foreign governments could not grant honours to Canadians that carry a title or privilege. Black challenged the ruling unsuccessfully in court.


Crossharbour station in London
Determined to get his title, Black renounced his Canadian citizenship and was officially inducted into the British House of Lords as Lord Black of Crossharbour on October 31, 2001. Crossharbour is the name of a neighbourhood as well as a subway stop on the Docklands light railway, near the Daily Telegraph building.

Black later renounced, or rather sold, many of his Canadian media holdings, including the National Post, which he started in 1998 to compete with The Globe and Mail.

Hollinger International's holdings are now a shadow of what they used to be. It sold the Daily Telegraph and the Jerusalem Post in 2004. It still owns the Chicago Sun-Times, several affiliated newspapers in the U.S. midwest, the Sherbrooke Record, (the first paper Conrad Black bought), and about a dozen smaller papers in British Columbia.


Conrad Black is sworn in as Lord Black of Crossharbour (Oct. 31, 2001)
He's not just a tycoon. Black has written several books, including an autobiography, a book about Maurice Duplessis and one about Franklin Roosevelt. And although he owns many presses, he's also got a lot of press for his conservative views and his very public disagreement with Jean Chrétien about the peerage. He has weighed in heavily with his views that Britain should join NAFTA and that Canada should become part of the U.S.

His wife, Barbara Amiel, is an outspoken columnist, who at one time wrote for his competitor, Rupert Murdoch. The couple is on many top-level guest lists in Britain, and her strong conservative views are similar to many of his.

On Nov. 17, 2003, Black announced he would step down as CEO of U.S.-based newspaper conglomerate Hollinger International. The move followed findings of a special committee that Black and other senior Hollinger executives received $32.15 million in unauthorized payments.

The committee of Hollinger's board found that payments "styled as 'non-competition payments' were made that were not authorized or approved by either the audit committee or the full board of directors of Hollinger."

Of that, Black and chief operating officer David Radler each received $7.2 million, and $16.6 million went to parent company Hollinger Inc. Two other Hollinger execs received just over $600,000 each.

Black, however, denied any wrongdoing and described his departure as a "retirement."

Parent company Hollinger Inc. is $120 million US in debt, and Black has previously denied rumours that he would give up control of his media empire to get new funding.

But Hollinger International acted first and removed Black as its chairman in January 2004, just hours after announcing a $200-million US lawsuit against him and Radler.

The suit accused them of using "sham" accounting to divert corporate assets, and demands that Black and Radler refund all salaries and dividends they collected during the disputed time period.

Black responded by announcing he would sell his stake in Hollinger Inc. to Press Holdings International, a British conglomerate run by twins David and Frederick Barclay. Ownership of Toronto-based Hollinger Inc. would give Press Holdings control of the Hollinger International newspaper chains.

But the U.S. Securities and Exchange Commission obtained a court order against Hollinger International to force its executives to try to protect its corporate assets even if the sale went through.

But Conrad Black's deal with the Barclay brothers fell apart soon after and Hollinger International later sold its British titles, including the Daily Telegraph to the Barclays for 665 million pounds.

On Aug. 31, 2004, the U.S. Securities and Exchange Commission made public a report by a special committee of Hollinger International.

The report says that former CEO Conrad Black and other executives took hundreds of millions of dollars they weren't entitled to. It accuses controlling shareholders and their affiliates of transferring to themselves more than $400 million in the last seven years.

Black's holding company, Ravelston Corp., dismissed the report, saying there were "factual and tainting misrepresentations and inaccuracies" and that the issues would be resolved in court.

In September 2004, a group of Canadian investors launched a class-action lawsuit against Conrad Black and several of his associates seeking at least $4 billion in damages. The suit seeks to recover market losses that may have been caused by controversies involving Black's management and allegations he and associates took hundreds of millions of dollars they weren't entitled to.

On Oct. 8, 2004, the $1.25-billion US racketeering lawsuit against Black brought by Hollinger International was thrown out by a U.S. Federal Court judge, but Black's legal troubles didn't end there.

On Nov. 15, less than two weeks after Black resigned as chairman and chief executive of Hollinger Inc., the U.S. Securities and Exchange Commission laid a civil fraud lawsuit against Black, Hollinger's former deputy chairman and chief operating officer David Radler, and Hollinger Inc. The suit accuses Black and Radler of improperly diverting tens of millions of dollars from Hollinger International.

Black faced new legal troubles in 2005. In March, he learned that U.S. authorities had opened a criminal investigation into his activities. Ontario stock market regulators also filed notice that they would launch proceedings against Black, three former associates and Hollinger Inc. for alleged violations of securities laws.

Two months later, in an eyebrow-raising twist, Black, his chauffeur and a personal assistant were caught on a security video removing 12 boxes of files from the Toronto headquarters of Hollinger Inc. The removal occurred despite an Ontario court order that barred Black from taking documents from Hollinger's offices. Black's lawyer said the boxes contained "personal" item not covered by the court order, but says they will be returned.

In September 2005, former Black associate David Radler pleaded guilty to a single count of mail fraud for his part in a scheme to divert more than $32 million US from Hollinger International. He was given a reduced 29-month jail term in exchange for agreeing to testify for the U.S. government.

Black's Toronto-based holding company, Ravelston, was also charged.

A month later, the U.S. attorney's office in Chicago seized almost $9 million US from the sale of Black's New York apartment, saying the proceeds were accumulated through fraud.

The legal proceedings against Black turned criminal in November 2005. The U.S. Attorney's Office in Chicago charged Black with eight counts of mail fraud and wire fraud relating to the alleged diversion of millions from Hollinger International. Black pleaded not guilty and was released after posting a $20 million US bond.

In December 2005, prosecutors laid four more criminal charges against him, including racketeering, obstruction of justice and money laundering.

Lord Black of Crossharbour was facing a maximum of 95 years in jail if convicted on all charges.

Hollinger Investigation August 2004