Saturday, July 14, 2007

CHICAGO — Former media mogul Conrad Black was convicted yesterday of swindling millions from the far-flung Hollinger International newspaper empire he once ran, thus becoming the latest in a wave of disgraced corporate executives to face possible prison time for financial fraud.

Black, 62, who once renounced his Canadian citizenship to become a member of the British House of Lords, was found guilty by a federal jury of three counts of mail fraud and one count of obstruction of justice for spiriting documents out of his Toronto office in defiance of a court order.

Black was acquitted of nine other counts ranging from tax fraud to the most serious charge — racketeering. He was also acquitted of fleecing Hollinger shareholders through such perks as taking the corporate jet on a two-week vacation to the island of Bora Bora.

The three-month trial drew international media attention, heightened by the silver-haired British lord’s posh lifestyle and sometimes haughty comments. When shareholders grumbled about the cost of the Bora Bora trip, he wrote a memo saying: “I’m not prepared to re-enact the French revolutionary renunciation of the rights of the nobility.”

Three other former Hollinger executives, John Boultbee, 62, of Victoria, British Columbia; Peter Y. Atkinson, 60, of Oakville, Ontario; and Mark Kipnis, 59, of Northbrook, Ill., were also convicted of fraud charges.

Prosecutors asked U.S. District Judge Amy St. Eve to have Black jailed immediately, saying he could face about 15 years to nearly 20 years in federal prison for the conviction. But defense attorneys said the actual sentence was likely to be much less.

In contrast to the $84 million in fraud prosecutors blamed on Black when he was indicted two years ago, the jurors found him guilty of a fraction of that — defense attorneys put the amount at $3.5 million.

Judge St. Eve set a Nov. 30 sentencing date, confiscated Black’s passport and ordered him to remain in the Chicago area while she considers the government’s request to revoke his $21 million bond, partly secured by a seaside estate in Palm Beach, Fla.

Black avoided reporters’ questions as he left the courthouse yesterday afternoon. Edward Greenspan, Black’s Canadian defense attorney, told reporters he would appeal.

“There are viable legal issues. We vehemently disagree with the government’s position on sentencing,” he said, reading a prepared statement.

Andrew Stoltmann, a Chicago securities lawyer who has been following the trial and was in court for the verdict, said Black can be thankful he wasn’t convicted on all counts.

“Certainly there are a whole bunch of appealable issues, but it’s unlikely that he’ll be successful,” he said.

Jacob Frenkel, a former federal prosecutor and Securities and Exchange Commission enforcement lawyer, called it a “stunning victory” for the government and said a split verdict was 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.

Hollinger International, based in Chicago, was at one time one of the world’s largest publisher of community newspapers as well as the Chicago Sun-Times, the Daily Telegraph of London and Israel’s Jerusalem Post.

At the core of the charges against Black was a strategy he arrived at starting in 1998 to sell off the bulk of the small community papers, which were published in smaller cities across the United States and Canada.

Black and other Hollinger executives received millions of dollars from the companies that bought the community papers in return for promises that the sellers would not return to compete with the new owners.

Prosecutors said the executives pocketed the money, which they said belonged to shareholders, without telling Hollinger’s board of directors.

Jurors convicted Black in connection with two sets of non-compete payments.

The fourth count Black was convicted of involved the removal of documents from his Toronto offices after a court ordered them frozen unless otherwise permitted by a court monitor.

Jurors saw surveillance camera pictures of Black hauling documents out of his offices and loading them into his car. His attorneys argued that there were other copies of the documents in the hands of regulators, and he had eventually given them back.

The government’s star witness at the trial was F. David Radler, Black’s partner in building the Hollinger empire over three decades. He pleaded guilty to mail fraud and agreed to testify in exchange for a lenient 21-month sentence and $250,000 fine.

Black had said that he was busy with newspaper interests in Britain and eastern Canada and left most of the sales of community newspapers and non-compete arrangements to Radler. But Radler said Black was well aware of how and why the money was being paid.

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