Conrad Black not wise enough to win in a US court now faces
6 and half years in jail
Conrad Black was found guilty
on July 13, 2007, and the expatriate Canadian was convicted on three counts of fraud
and one count of obstruction of justice. On Dec 9 07 Black was sentenced to 6 ½
years in a US federal prison. Judge Amy St. Eve said he would begin serving
that sentence in March 2008, and meanwhile he is free on bail to order his
affairs.
In 2005 Black was charged with
stealing billions of dollars from Hollinger
The U.S. is far sooner to deal
out charges in so-called white collar crime than other countries including our
own, and when the American government brought charges against Black they
included racketeering, mail and tax fraud, money laundering, and obstruction of
justice. As the proceedings neared the government alleged he and his cohorts
bilked Hollinger Inc. stockholders out of some $80 million.
Proceedings were based on
illegal activities around the sales of company holdings, and while he (Black)
was ultimately cleared on most charges, to this day he is confronted by
numerous lawsuits, most of which are generated against him in Canada. The New
York Times said in Jul 07: "The verdict represents a remarkable turn in
fortune for Mr. Black, the son of a wealthy Canadian businessman and society
fixture who once commanded a far-flung media empire that included the Daily
Telegraph in London, the Jerusalem Post, and the Chicago Sun-Times,” and many
other papers in the Canada, United States, and Australia.
Sentencing on his four
convictions was originally set for Nov 21 07 but his lawyers asked for an
extension and received a delay until Dec 10 07. He faces a possible prison
sentence of 35 years.
As the trial was growing near
Black was vocal and dismissive of the charges, calling himself, "an
underdog in the crosshairs of the U.S. government, the most powerful
institution in the world." Black wrote, "I have never had the
slightest doubt of the outcome of a fair trial, knowing that the judgment of the
legality of my actions will lie in the hands of 12 American citizens, in one of
that country's greatest cities."
At the conclusion of the legal
proceedings while the jury deliberated, Black wrote in the Globe and Mail, on
Jul 16 07, " I feel like a soldier conscripted for a foreign war. You
fight till you win, and then you come home.”
Patrick Fitzgerald was the
Chicago-based federal prosecutor who said the charges ensued from “the grossest
abuse by officers or directors and insiders. ... By lining their pockets they
went about a course of conduct where they ... never told the audit committee of
the board of directors, or through them the shareholders, what was going on and
how they were self-dealing and taking money from the shareholders for themselves."
The meltdown actually began
earlier, when in Nov 03, Hollinger's board fired him as CEO. This came when an
investigation revealed he and some cohorts had paid themselves millions of
dollars without company approval. A short time later, the company filed suit
against him in Chicago, seeking $200 million in damages. Hollinger Inc., the
Toronto-based parent company of the publishing company, also filed lawsuits.
Conrad Black gave up his
Canadian citizenship in 2001 to join the British House of Lords, as Lord Black
of Crossharbour. The main problem for Conrad Black, however, may have been an
inability to estimate the “severity of the U.S. court system,” said Diane
Francis, publisher of the Financial Post.
She said while Martha Stewart,
and many others are wise enough to recognize their difficulties, “Conrad Black
and three of his officers didn’t get it. All four have gone down ruinously,
thanks to a very sophisticated set of convictions handed down by a Chicago
jury.” Francis described the convictions as being well-conceived by a
thoughtful group of jurors, “The first type of deals involved non-compete
‘payments’, which were paid to Black and the others, even though the buyers did
not request non-compete agreements, much less realize that some of their purchase
prices had been set aside as non-compete payments.”
These payments, she said, were
inflated or, “created because such payments were tax free.” She also said, “The
other type of transaction that the jury felt constituted fraud was where Lord
Black and his co-accused were involved in both sides of the transaction. In
other words, this was a form of cynical theft, or self-dealing. As a prosecutor
summed it up, ‘He was paying himself not to compete against himself.’”
Finally, according to Francis
and most other observers of the trial, “the most serious jury finding was that
Black obstructed justice,” which was based on the video that was repeatedly
shown in this country, where Black and his chauffeur took boxes out the back
door his Toronto office despite U.S. and Canadian court orders not to do so,
and at one moment during these illegal activities he realized himself the film
was rolling.
In Nov 07 the Chicago judge
denied Black's bid for a new fraud trial, but acquitted his co-defendant Mark
Kipnis of one mail fraud conviction. Kipnis and two other co-defendants had
also been found guilty of fraud-related charges. Judge Amy St. Eve rejected the
appeal because, she, “was satisfied with all of the convictions except for one
count of mail fraud against Kipnis.”
She said in a 39-page ruling,
“The government introduced more than enough evidence to support each
defendant's convictions on the mail fraud counts and defendant Black's
obstruction of justice conviction" with one exception.
Black, John Boultbee, and Peter
Atkinson will be sentenced Dec. 10. Kipnis will be sentenced a week later for
his remaining convictions in the trial. David Radler was the main witness
against Black and he pleaded guilty in 2005 to one count of fraud, but agreed
to a fine of US$250,000 and a 30-month sentence in exchange for testifying
against Black.