By David Bailey
CHICAGO (Reuters) - U.S. prosecutors announced criminal fraud charges on Thursday against Conrad Black and his former associates, accusing the ex-publisher of looting his now-shrunken media empire, once one of the world’s largest.
The executives not only illegally dealt themselves millions of dollars from the $2.1 billion (1.2 billion pound) sale of hundreds of Canadian newspapers, but Black also misused corporate perks by taking the company jet to Bora Bora for a vacation and spending more than $60,000 on a birthday party for his wife, the mail and wire fraud indictment alleged.
"All in all what has happened here has been the grossest abuse by officers or directors and insiders," U.S. Attorney Patrick Fitzgerald told a briefing.
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Fitzgerald is also the special prosecutor investigating how the name of a covert CIA agent was leaked after her husband accused the White House of misrepresenting pre-Iraq war intelligence.
"On those occasions when they did go to the audit committee or the board of directors, they told lies and when those became apparent, they told further lies," Fitzgerald added.
In a statement through attorney Edward Greenspan, Black said it will be shown he acted within the law at all times.
"He is confident that, if given a full and fair opportunity to defend himself, he will be found innocent," Greenspan said.
Prosecutors said they would seek the forfeiture of at least $80 million from Black and the others. Arrest warrants were issued for Black and two of the former executives but officials said they would be given an opportunity to appear voluntarily in federal court in Chicago.
The Canadian-born Black, a flamboyant conservative who is a
member of the House of Lords, and the others were accused of
siphoning off money from his former newspaper empire through a
scheme that impacted both his publishing company, U.S.-based
Hollinger International Inc.
Fitzgerald said the investigation remains ongoing and declined to answer questions about the Hollinger board.
Several Hollinger International independent board members agreed to settle shareholder claims that they stood by while Black looted the company, including former U.S. Secretary of State Henry Kissinger and former Illinois Gov. James Thompson, who made his name as a U.S. Attorney.
THREE FORMER HOLLINGER EXECUTIVES NAMED
Also named in the indictment were three former Hollinger executives -- John Boultbee, Peter Atkinson and Mark Kipnis, Hollinger International’s in-house lawyer. He was charged in an earlier indictment in August and pleaded not guilty but additional counts were added in Thursday’s indictment.
"Let this investigation be a warning to those in corporate America or elsewhere who would attempt to defraud shareholders, that these crimes do not pay and we will eventually find you," said Robert Grant, special agent in charge of the Chicago office of the FBI.
The charges follow a deal struck with prosecutors by Black’s once-loyal lieutenant, David Radler, who has pleaded guilty to a single count of mail fraud and agreed to cooperate and testify against others involved. Radler’s plea deal calls for him to serve 29 months in prison and pay a $250,000 fine after the investigation concludes.
Each count in the indictment announced on Thursday carries a maximum penalty of five years in prison and a $250,000 fine.
The new indictment encompasses charges that were brought in August against Radler and Kipnis. Black’s insolvent holding company, Ravelston Corp. Ltd., was also charged in the earlier indictment with fraud.
Black’s newspaper empire, which sometimes provided editorial platforms for his conservative views, began to crumble in November 2003, when he and Radler resigned from Hollinger International after an internal investigation uncovered unauthorised payments.
Hollinger International’s new management, which sold off flagship titles like the Daily Telegraph and the Jerusalem Post, accused Black and Radler, a Canadian who lives in Vancouver, of operating a "corporate kleptocracy" that drained hundreds of millions of dollars from the company.
Hollinger International has sued Black and others for $542 million. Hollinger Inc. has sued Black, his companies and allies for at least $534 million.
In a separate civil case, the U.S. Securities and Exchange Commission accused Black, Radler and Hollinger Inc. of having "cheated and defrauded" Hollinger International shareholders.
In October, FBI agents seized nearly $9 million from the sale of Black’s Park Avenue apartment in New York, on the grounds that they were accumulated as part of a fraud scheme.
