Black found guilty of obstruction, mail fraud

3 former Hollinger International associates convicted of mail fraud

Last Updated: Friday, July 13, 2007 | 12:36 PM ET

CBC News

Former media baron Conrad Black has been found guilty of obstruction of justice and three counts of mail fraud, following a 15-week trial in a Chicago courtroom and more than two weeks of jury deliberation.

Conrad Black, former head of the Hollinger International Inc. newspaper empire, leaves the federal court building in Chicago, Friday.
(M. Spencer Green/Associated Press)

Following the verdicts Friday, Black was ordered to return to court July 19, for a decision on whether he will be released on bond, or taken into custody as he awaits sentencing in November.

And within hours of the verdict, Black and his legal team said they would appeal his convictions.

The CBC's Alison Smith reported from inside the courtroom that Black's wife, Barbara Amiel Black, scribbled a note, which was passed to her husband in the defendant's box.
 
At first expressionless, Black's daughter Alana folded her arms and sighed as the verdicts on the 13 charges he faced were read out. The family gathered around Black in discussion after the verdicts were read.

Holding the hand of his wife, and flanked on the other side by his daughter, Black remained stone-faced as he walked by reporters and into an awaiting van, without commenting on the convictions.

His Canadian lawyer, Eddie Greenspan, read a prepared statement in the courthouse hallway. "We intend to appeal and there are viable legal issues," Greenspan said.

"We believe … the sentencing on this type of offence is far less than the government suggests," he said.

Later, as a throng of reporters followed him out of the federal building, Greenspan remarked that "we were hoping for an entire acquittal and we came just short of that."

Black as well as his three Hollinger International co-defendants — Mark Kipnis, Jack Boultbee, and Peter Atkinson — will have to return to the 12th-floor Chicago courtroom for the sentencing hearing on Nov. 30 at 9 a.m. CT.

It was at Greenspan's request that St. Eve granted a continuance until July 19 to deal with the matter of his custody as he awaits sentencing.

Acquitted on nine charges

In the meantime, however, Black has surrendered his U.K. passport and must give the judge an address of where he can be located.

Asked by St. Eve whether he intended to appear at next week's hearing, Black answered, "Absolutely."

St. Eve explained that if Black does not show up, his $21-million bail would be forfeited. She added that he must remain in Chicago until then.

"I understand," Black replied, then asked her whether the restriction included "the metropolitan" area or just downtown Chicago.

At an afternoon news conference, U.S. prosecuting attorney Patrick J. Fitzgerald told reporters, "I don't like using words like 'victory' to treat it like a basketball game," but said the prosecution team was "very content" with the charges that stuck.

"I will simply say this: He was charged, he's now a convicted felon — convicted for very serious fraud charges and convicted of obstructing justice, and I'll leave it at that," Fitzgerald said.

The nine-woman, three-man jury found the Montreal-born Black not guilty on nine other charges, including mail fraud, wire fraud, racketeering and tax fraud.

In the wake of their decision, none of the 12 jurors agreed to speak to the media.

The conviction could mean a lengthy sentence for Black, who is 62 years old. Obstruction of justice carries a maximum penalty of 20 years imprisonment, while each mail fraud conviction carries a maximum prison term of five years.

Black could also face a penalty of up to $1 million US.

Kipnis, Boultbee, and Atkinson, were all convicted of three counts each of mail fraud, meaning they could each face up to 15 years in prison and a fine of up to $750,000 US.

Non-compete payments key in trial

Hollinger International started selling off its extensive newspaper assets in the late 1990s in a series of transactions.

The U.S. government — with star prosecution witness and former Black chief lieutenant David Radler — alleged Black devised a scheme to improperly divert $60 million US from those sales to himself, and to Radler, Boultbee, Atkinson or companies they had an interest in.

Kipnis, the prosecution alleged, facilitated the diversions.

The prosecution said the money should have gone to Hollinger International and its shareholders but instead was dressed up as non-compete payments — money the buyer of a business pays a seller in return for promising not to start up a competing business.

The government alleged the non-compete deals in this case were frauds — cover stories invented to allow Black and the co-defendants to transfer tax-free money into their pockets. The fraud allegations around the sale of these newspapers were the heart of the prosecution's case.

The defence argued that non-compete agreements are routine in the newspaper business. In all these transactions, it said, the payments arising out of them were legal, appropriate, disclosed to Hollinger International auditors and authorized by the board. If there was any wrongdoing, defence lawyers said, it was by Radler, who had already pleaded guilty to fraud and who the defence accused of lying to fulfil the conditions of his plea bargain with the prosecution.

Boultbee, Hollinger's former chief financial officer, and former general counsel Kipnis each faced 11 counts of wire fraud, mail fraud and filing false corporate tax returns. Atkinson, a former company vice-president, faced seven charges.

All four defendants had pleaded not guilty. None of them testified during their trial.

Complicated case affected verdicts: lawyer

After 15 weeks of testimony, more than 40 witnesses and about 700 documents, the jurors were handed the case on June 27.

Radler, Black's former confidant, pleaded guilty to fraud and received a 29-month sentence as part of an agreement to act as the key witness for the prosecution.

Trial watchers said the complicated nature of the case made it tougher for the prosecution to get guilty verdicts on all the charges.

"I think [the prosecution] lost a number of jurors," said securities lawyer Andrew Stoltman.

"I think the jurors weren't finding guilty beyond a reasonable doubt on most of the charges. And it's only natural when they feel this way — when they can't follow the testimony [and] can't follow the evidence — they tend to find not guilty on a whole bunch of the counts," he told CBC News.