Remarks by Jeffrey Cramer, U.S. Attorney:
You're sitting in a room with four men who stole $60 million. Four men that betrayed the trust of thousands of public shareholders. Four men who decided amongst themselves that their six- and seven-figure salaries were simply not enough.
Bank robbers wear masks and use a gun. Burglars wear dark clothing and use a crowbar. But these four — three lawyers and an accountant — dressed in ties and wore a suit. These four, you see, were officers of Hollinger International. It's a newspaper company based here in Chicago.
In 1998, the shareholders trusted these four to sell hundreds of community newspapers — small community newspapers — in Canada and the United States.
What the shareholders didn't know was that these four secretly took some of the money from all of those sales of the newspapers for themselves — money that should have gone to the shareholders.
And these four covered up their crime by falsifying documents to make it look to any outside observer that each transaction was a normal business deal. It wasn't. It was a theft. It was fraud. It was a crime …
They decided to focus on those big newspapers. Conrad Black didn't want to focus on the small community newspapers; newspapers like Jamestown, North Dakota, a population of about 10,000 people. That's not the target market that Conrad Black wanted. He wanted to influence world events; not just write about them, but influence world events.
But what that resulted in is that, as they were selling these hundreds and hundreds of newspapers that were located in Canada and the United States, these four were literally working themselves out of a job because their salaries were based on 400 or so newspapers, plus the larger newspapers, as I mentioned.
What they decided to do was they thought they deserved some of that money — the money that belonged to shareholders. Remember, this is a public company. In the mid-'90s, they went public. The shareholders owned this company.
These four decided that they would take the proceeds from each of those sales and put it in their pocket. And they concocted a scheme. And the scheme was to use a vehicle called a non-competition agreement to facilitate this. A non-competition agreement.
What a non-competition agreement is, you have a buyer and seller of an asset. It could be anything, a company. And if you're going to buy a company, the last thing you want is the person who sold it to you to come back and compete with you.
So, if you buy a business, you don't want them to open up right next door to you the day after you buy it. So, you enter into what's called a non-competition agreement. …
Ladies and gentlemen, these are some of the most sophisticated businessmen you will ever see. They are the most sophisticated businessmen you will ever lay eyes upon. They knew this wasn't their money. It was the shareholders' money.
Keep remembering this was the shareholders' money when they sold this business to the public. It's the woman who put Hollinger International stock into her retirement account. That's who owns this company. It's the guy who bought Hollinger International stock and put it into the college fund. That's who owns this company. It's not their [the defendants'] company —
And you will see, ladies and gentlemen, that they just take a little piece. They just take the tiniest pieces.
But these are hundreds of millions of dollars in deals. One of these deals was several billion dollars.
I will tell you what. If you take a little piece from deals that are worth hundreds of millions of dollars and billions of dollars, you can get to $60 million pretty darn quick. And that's what they did.
What's wrong with it? Why can't you take $60 million from a public company that you work for?
Ladies and gentlemen, besides the obvious that it's stealing, these defendants also had a duty. They had an obligation to the shareholders. You'll hear it called a fiduciary duty.
What a fiduciary duty is, is directors and officers have a duty to Hollinger International and its shareholders.
Generally, they must consider the company's and shareholders' best interests. They must not harm the company or its shareholders.
So, they have this duty to the shareholders. And it's a thread. It's a thread that's going to go through this trial — a fiduciary duty.
And you will see them, ladies and gentlemen, breach that duty time after time after time. The shareholders have a right to expect that the officers — these defendants — don't lie to them. They have a right to expect that they are honest with them. At the very least, they can expect not to be lied to — at the very least.
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