Monday, December 10, 2007

Conrad Black is jailed for 6+ years for fraud

The press tycoon Conrad Black got a lighter sentence than anticipated, but he is looking at half a dozen years of enforced "boredom" behind bars. The Right Honourable
The Lord Black of Crossharbour, PC, OC, KCSG was absolved of racketeering, tax charges and five of the wire and mail fraud counts.

The former Hollinger International Inc. chairman, convicted of mail fraud and obstructing justice, today was sentenced to 6.5 years in prison, about a quarter of the maximum originally sought by the government. Bloomerg News reports

Black, 63, led Hollinger for eight years as chairman and chief executive officer. He quit as CEO in 2003 after an internal probe found he and other executives got more than $32 million in unauthorized payments. He was fired as chairman two months later and convicted in July of directing a $6.1 million fraud.

``You violated your duty to Hollinger International shareholders,'' U.S. District Judge Amy St. Eve, who presided over the trial, told Black today when pronouncing sentence in Chicago federal court. ``I frankly cannot understand how someone of your stature, at the top of the media empire, could engage in the conduct you engaged in and put everything at risk.''

Black was ordered to return the $6.1 million and pay a $125,000 fine. His conviction stemmed from a federal crackdown on corporate crime that followed the 2001 collapse of Enron Corp. Juries convicted several ousted CEOs of fraud, including Enron's Jeffrey Skilling, WorldCom Inc.'s Bernard Ebbers, Tyco International Inc.'s L. Dennis Kozlowski and Adelphia Communications Corp.'s John Rigas.

`Very Profound Regret'

``I do wish to express very profound regret and sadness'' for Hollinger investors who lost ``$1.8 billion of shareholder value,'' Black told St. Eve today. The judge sentenced him to the minimum prison term available under the law.

The judge allowed Black to remain free on bail until March 3, when he is to report to prison. She granted a defense request that he serve his term at a low security facility at Eglin Air Force Base in Florida. She rejected U.S. requests to seize Black's Palm Beach, Florida, home or the proceeds of the sale of his Manhattan apartment.

Mike Truman, a spokesman for the U.S. Bureau of Prisons, said the facility at Eglin was closed last year. He added that Black may be eligible for a similar, low-security facility in Miami, though because he isn't a U.S. citizen, he must seek government permission. Black's attorney, Edward Greenspan of Toronto, said his client will appeal his conviction.

Assistant U.S. Attorney Eric Sussman today argued against leniency for the former Hollinger chief executive.

``Black and his codefendants nakedly stole money,'' he argued. ``What brought him here today is his own greed.''

Tougher Guidelines

The judge rejected U.S. efforts to sentence Black under tougher guidelines or to consider the higher fraud amount found by the internal company investigation.

St. Eve said the range for Black's sentence was between 6.5 and 8.1 years. Prosecutors, who originally sought a maximum 24- year term, today asked for the maximum in the range provided by the judge, while the defense sought the minimum.

Black, 6-foot-1, silver-haired and barrel-chested, is a member of Britain's House of Lords, with the title of Lord Black of Crossharbour. A Toronto native, he renounced his Canadian citizenship to become a British peer. He has written well- reviewed biographies of former U.S. presidents Richard Nixon and Franklin D. Roosevelt.

At its peak and under Black's command, Hollinger, now Sun- Times Media Group Inc., was the world's third-largest publisher of English-language newspapers, including the Chicago Sun-Times, London's Daily Telegraph, Canada's National Post and the Jerusalem Post.

Guilty of Fraud

Black was charged in November 2005. On July 13, a jury found him and three former subordinates guilty of fraud stemming from $6.1 million in checks paid to three defendants in exchange for sham non-competition agreements involving Hollinger. Black was convicted of obstruction of justice for removing 13 boxes of documents sought by regulators from his Toronto office in 2005.

Black was found not guilty of racketeering, tax charges and five wire and mail fraud counts.

St. Eve said today before sentencing that she would increase Black's prison term because he used such ``sophisticated means'' in perpetrating the fraud.

Defense lawyer Jeffrey Steinback told St. Eve the prison term constitutes ``life without parole'' for the 63-year-old Black. ``This case is not like Enron or WorldCom,'' the attorney said. ``No bankrobbers ever built the banks that they robbed.''

Black was the largest shareholder in Hollinger, he added.

`Wrapped Up'

``His fate was wrapped up in'' the company, Steinback said.

The government argued the defendants were responsible for the theft of at least $32 million from Hollinger. St. Eve rejected that calculation today before sentencing.

The judge ruled that fairness dictated that she sentence Black under the same 2000 federal guidelines used to sentence his chief accuser, ex-Hollinger President F. David Radler.

``Radler was the one who was ordering the money and telling others where it should be disbursed,'' St. Eve said, adding Radler was ``calling just as many shots.''

Prosecutors had asked her to use tougher guidelines approved last year.

Gene Fox, chief executive officer of Cardinal Capital Management Inc., a former Hollinger shareholder, told the judge in a victim-impact statement today that noncompete payments weren't properly disclosed, and shareholders need accurate financial information.

``Stocks would become no better than lottery tickets,'' without accurate information, Fox said. ``They lied to us repeatedly.''

Sun-Times Reaction

Sun-Times spokeswoman Tammy Chase said in reaction to the sentence that the Chicago-based company is ``focused on the future.''

``While we continue to grapple with some of the troubling legacy issues previous management left behind, we are deeply committed to overcoming those hardships,'' she said.

Convicted with Black were former Hollinger Vice President Peter Atkinson, ex-Chief Financial Officer John Boultbee, and former General Counsel Mark Kipnis. St. All three men are scheduled to be sentenced later today.

The case is U.S. v. Black, 05-cr-00727, U.S. District Court for the Northern District of Illinois (Chicago).

1 comment:

Anonymous said...

If Conrad Black's holdings were turned into cash and distributed among the people he's said to have victimized, it could do more good than shutting him up at public expense, says Reginald Stackhouse in the globe & mail. "Why spend $87,000 a year to imprison someone when it would cost next to nothing to turn his possessions into millions that could benefit the injured parties in this case?"