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A federal jury convicted fallen media tycoon Conrad Black and three of his former executives at Hollinger International Inc. Friday of illegally pocketing money that should have gone to stockholders.
Black, 62, was convicted of three counts of mail fraud and one count of obstruction of justice. He faces a maximum of 35 years in prison for the offenses, plus a maximum penalty of $1 million.
He was acquitted of nine other counts, including racketeering and misuse of corporate perks, such as taking the company plane on a vacation to Bora Bora and billing shareholders $40,000 for his wife's birthday party.
While the verdict was mixed, the conviction signaled an increasing trend of aggressive US government pursuit of senior corporate executives, following the Enron, Tyco and WorldCom scandals, and to hold top executives personally accountable for their companies' actions.
Black's three co-defendants were all found guilty of three counts of mail fraud. They are former Hollinger International vice presidents John Boultbee, 64, of Vancouver and Peter Y. Atkinson, 60, of Toronto and attorney Mark Kipnis, 59, of Chicago. They face up to 15 years in prison and fines of up to $750,000.
The jury delivered its verdict on the 12th day of deliberations. The trial lasted for 14 weeks. Two hours after jurors announced their decision, prosecutors and defense attorneys were still arguing over bond issues pending a sentencing date being set.
All four men decided to let St. Eve, rather than the jury, handle the issue of how much money they may have to give back in connection with the charges they were convicted of. Prosecutors had been seeking the return of tens of millions of dollars if they had been convicted on all counts.
Hollinger International once owned community papers across the United States and Canada as well as the Chicago Sun-Times, the Toronto-based National Post, The Daily Telegraphof London and the Jerusalem Post. The Sun-Times is the only large paper remaining at the company whose name has been changed to Sun-Times News Group.
Jacob Frenkel, a former federal prosecutor and Securities and Exchange Commission enforcement lawyer, called the jury's decision a "stunning victory" for the government after a slow start in the trial. He also called a split verdict the best possible outcome for the prosecution.
"It highlights for the appellate court that the jury was very thoughtful and thorough in its deliberations, separating the wheat from the chaff, identifying those counts in which the government met its burden of proof and those in which it failed to do so," he said.
Andrew Stoltmann, a Chicago securities attorney who has been following the trial, said Black can be thankful he was not convicted on all counts. Stoltmann expects a sentence of three to seven years.
The heart of the case against the husky, silver-haired publishing millionaire focused on a large-scale selloff starting in 1998 of Hollinger community papers that were published across the United States and Canada.
Companies that bought newspapers in seven such deals paid millions of dollars to Hollinger International, with headquarters in Chicago, in return for promises it would not go into competition with the new owners.
Black was charged with illegally diverting millions of dollars in those so-called non-compete payments to himself, Boultbee, Atkinson and the longtime No. 2 man in the Hollinger International empire, F. David Radler.
Black was convicted on three counts of those allegations made by prosecutors. The obstruction of justice charge was considered the most likely of all to net a conviction because Black was captured on videotape removing 13 boxes of documents from his Toronto offices, despite a court ban on taking away potential evidence.
Some of the non-compete payments also went to a smaller Toronto corporation, Hollinger Inc., which was controlled by Black and in turn owned a controlling interest in the Chicago-based Hollinger International.
Radler pleaded guilty to fraud and agreed to testify in exchange for a lenient 29-month sentence. In eight days on the witness stand, he contradicted Black's argument that he knew little about the deals that led to the non-compete payments because he was busy with other matters.
Black's attorneys painted Radler as a liar looking for a good deal from prosecutors in his own case.
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