Media Execs Charged With Fraud

Conrad Black, former CEO and chairman of Hollinger International Inc., enters the New Castle County Courthouse in Wilmington, Del., in this Feb. 20, 2004 file photo. AP (file)

Former media tycoon Conrad Black and three other executives were charged in a federal fraud indictment Thursday involving the $2.1 billion sale of several hundred Canadian newspapers and the abuse of corporate perquisites at newspaper publishing company Hollinger International Inc.

Black, 61, Hollinger International's ousted chairman, was accused in the 11-count indictment of cheating the company's U.S. and Canadian shareholders as well as Canadian taxing authorities.

Black and the others were accused of fraudulently diverting more than $32 million from the company through a complex series of transactions. Former Chicago Sun-Times publisher David Radler pleaded guilty to similar charges involving the $32 million in September.

But the indictment also outlines fresh allegations, including what federal prosecutors described as the fraudulent diversion of an additional $51.8 million in 2000 from Hollinger International's sale of assets to CanWestGlobal Communications Corp.

Prosecutors said that Black and others criminally charged had arranged to funnel payments to themselves that were disguised as "non-competition" fees.

The indictment also charged that Black and one of his co-defendants fraudulently misused corporate perquisites, including a company jet for a vacation by Black and his wife in the South Pacific, two Park Avenue apartments and company money for a lavish birthday party for Mrs. Black.

According to prosecutors, when Black was asked to reimburse the company for the 10-day vacation to Bora Bora in French Polynesia, he replied: "No such outcome is possible."

Black, who renounced his Canadian citizenship and is now a member of the British House of Lords, also charged the company $42,000 for his wife's birthday party five years ago at the La Grenouille restaurant in New York, prosecutors allege. They say Black agreed to pick up the rest of the tab, about $20,000.

Also charged in the indictment were John A. "Jack" Boultbee, 62, a Toronto-area accountant; Peter Y. Atkinson, 58, a Canadian attorney and former executive vice president of Hollinger International; and attorney Mark S. Kipnis, 58, of Northbrook, a Chicago suburb.

Also named as a defendant was Ravelston Corp., a Canadian company that Black used to gain control of Hollinger International.

Chicago-based Hollinger International publishes the Chicago Sun-Times, community newspapers in the Chicago area and a few small publications in Canada. It sold the Jerusalem Post and The Daily Telegraph of London in 2004.

Arrest warrants were issued for Black, Boultbee and Atkinson, U.S. Attorney Patrick J. Fitzgerald's office said. Prosecutors said they would allow the defendants to appear voluntarily in U.S. District Court in Chicago.

But if they fail to do so, the government will seek to have them extradited, prosecutors said.

All of the defendants were charged with various counts of mail fraud and wire fraud.

The indictment seeks criminal forfeiture of at least $80 million from the four men as well as more than $8.5 million seized in October after the sale of Black's Park Avenue apartments and a home in Florida.

Black still has homes in Toronto and London, according to prosecutors.

Kipnis was indicted in August and reindicted Thursday. He is free on bond pending a fresh arraignment date.

Fitzgerald said in a statement issued by his office that "officers and directors of publicly traded companies who steer shareholders' money into their pockets should not lie to the board of directors to get permission to do so."

He said insiders "whose job it was to safeguard the shareholders made it their job to steal and conceal."
  • Stephen Smith

    Stephen Smith is a senior editor for CBSNews.com

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