Chicago – Fallen newspaper magnate Conrad Black faces long but not insurmountable odds in trying to beat federal fraud charges, legal experts say, as he enters the courtroom Wednesday to formally begin his defense.
Until his ouster as head of the Hollinger International media empire, Black controlled a stable of papers from Chicago to London to Jerusalem.
The former Canadian citizen, now a member of the British House of Lords, has pledged to appear at his rescheduled arraignment in U.S. District Court after skipping one Nov. 22 to line up a criminal defense team.
Black is certain to declare his “innocence without qualification,” as he already has conveyed through an attorney, to all eight charges accusing him of involvement in fraudulent schemes, which the government claims netted company insiders some $84 million. But beyond that, his likely defense strategy is a matter of speculation.
Outside attorneys predict a trial won’t start for six to 18 months, depending on what Black’s defense team does. They note that high-profile corporate executives accused of white-collar crimes usually lose – and in this instance, Black will have to overcome testimony against him from former top lieutenant David Radler, who has pleaded guilty.
But especially with a jury trial, nothing is a given.
“There’s no question that despite a small number of losses in high-profile cases, the government has won the majority of these trials,” said Jacob Frenkel, a former federal prosecutor and Securities and Exchange Commission enforcement lawyer.
But citing the case of the fired chief executive of HealthSouth Corp., he added: “If Richard Scrushy can win an acquittal with five former CEOs lined up against him, and audiotapes, Conrad Black certainly can believe that he can avoid a conviction.”
The linchpin of the prosecution’s case is expected to be Rad ler, Black’s top deputy and longtime business partner. The former publisher of the Chicago Sun-Times – the last remaining major daily newspaper owned by Hollinger International Inc. after the sales of The Daily Telegraph of London and The Jerusalem Post – pleaded guilty Sept. 20 to taking part in a scheme to siphon away $32 million from the Chicago-based company for himself and others.
Government lawyers also can draw on a 500-page report issued last year by a special committee of Hollinger’s board, which laid out how Black allegedly conspired with associates to systematically loot the company of more than $400 million – nearly all of its profits from 1997 to 2003 – in bogus management and other fees that they siphoned from Hollinger’s coffers.
“I think the prosecution case is probably going to be pretty strong with a cooperating witness who was a former associate,” said Bernard Harcourt, a professor of law the University of Chicago Law School. “It’s going to make the presentation of the evidence pretty clean and simple.”
The personal-perks aspect also could help sway the jury after helping to convict former Tyco International Ltd. CEO L. Dennis Kozlowski, who used company money on a $2 million toga birthday party for his wife in Sardinia and an $18 million Manhattan apartment. Black’s indictment accuses him of siphoning off thousands of corporate dollars to pay for a vacation in Bora Bora, a surprise birthday party for his wife and apartments on Park Avenue in New York City.
But some legal experts say it’s still hard to gauge the exact strength of the prosecution’s case, which steered clear of more serious charges filed in similar cases, such as securities fraud and money laundering.
“Typically, these types of cases where prosecutors are going right to the top targeting CEOs of far-flung corporations are more complicated to prove than it would first appear,” said Robert Mintz, a former federal prosecutor who represents companies and individuals accused of white-collar crimes.
The defense, he said, can argue that the $84 million in disputed payments made to Black and his associates by Hollinger International related to the sales of Hollinger newspapers were ordinary business practices. The fact the transactions “were handled entirely in the open with the knowledge of other high-ranking officials or other board members certainly helps them,” he said.
