The U.S. Court of Appeals has ruled against former newspaper magnate Conrad Black in his appeal of his fraud and obstruction of justice convictions.
"I think it's good news for the shareholders of Hollinger International and the investing public," Eric Sussman, who led the four-person team that prosecuted Black, told CTV Newsnet on Wednesday.
The ruling shows "these laws are being taken seriously and that people who defraud the shareholders and take money from the company will be prosecuted. I think that's the best news," he said.
U.S. Attorney Patrick Fitzgerald also released a statement saying he was pleased by the court's decision.
"The Court found across the board that the defendants received a fair trial and now must serve their sentences," said Fitzgerald, attorney for the Northern District of Illinois. "This decision vindicates the rights of shareholders to expect that corporate officers will safeguard their assets, and put the shareholders' interests before their own."
Chicago's Seventh Circuit Court of Appeals heard the defence's arguments about three weeks ago.
Black's appeal lawyer, Andrew L. Frey, released a short statement on Wednesday saying, "We are very disappointed with the decision and are carefully considering further options."
Black, 63, was convicted in July 2007 of three counts of fraud and one count of obstruction of justice -- and acquitted on nine others -- but has insisted he is innocent.
He is now serving a 6�-year sentence in a Florida prison but had vowed he would clear his name on appeal.
The convictions relate to the sale of newspapers by the Black-controlled Hollinger International company. The company is currently named Sun-Times Media.
Frey, Black's high-profile appeal lawyer, told the court on June 5, "I think this is the weakest case that I've seen in 45 years of law practice."
However, BNN's Amanda Lang told CTV Newsnet that the court obviously disagreed.
The prosecution had argued Black and his three co-defendants, who also lost their conviction appeals, had illegally pocketed millions of dollars through the fraudulent use of "non-compete" fees.
Such fees are often paid in newspaper transactions to ensure the seller doesn't open up a competing publication.
Hollinger International had a subsidiary called American Publishing Company. The defendants -- Black was on the board of both companies -- paid themselves US$5.5 million to not compete with APC's sole remaining paper in Mammoth Lake, Calif. for three years after they left Hollinger, the ruling said.
"That Black and the others would start a newspaper in Mammoth Lake to compete with APC's tiny newspaper there was ridiculous," Judge Richard Posner wrote in the court's 16-page ruling.
"There was still more evidence of the fraud, but there is no need to go into it. The jury convicted the defendants of a second, similar fraud, on equally compelling evidence; there is no need to extend the opinion with a discussion of that either."
BNN's Amanda Lang told CTV Newsnet that the defence had argued the non-competes were really management fees disguised as non-competes to avoid Canadian taxes.
She said the judges saw that as the equivalent of arguing no harm, no foul.
On the obstruction charge, which related to Black removing documents from his former office at 10 Toronto St. in Toronto, the judges said they found no reason to believe the removal of the document was an innocent act, she said.
No surprise
Most observers wouldn't be surprised by today's ruling because the judges were tough on the appellants during the hearing, Lang said.
Sussman said Black's legal options are limited at this point. Black could ask the entire Seventh Circuit court to rehear the case or ask the Supreme Court of the United States to hear his arguments.
"Given the fact that the appeal court said there are not really meaty legal issues here, it's unlikely the (Supreme Court) would be interested in delving into the facts," he said.
Black had previously said he would not seek a presidential pardon. U.S. President George Bush leaves office in January. Most presidents have pardoned individuals, particularly if they've been politically loyal.
Black holds conservative political views and Bush is a conservative Republican.
If he doesn't obtain a pardon, Black would have to serve 85 per cent of his sentence before being considered for release.
The other defendants received lesser terms:
- Jack Boultbee, of Victoria, B.C., was considered Black's key financial advisor. He was sentenced to 27 months in prison, followed by three years of supervised release. He also must pay $152,000 in restitution.
- Peter Atkinson, of Oakville, Ont., had been the chief legal counsel for Hollinger. He was sentenced to 24 months in prison and given a $3,000 fine.
- U.S. lawyer Mark Kipnis was sentenced to six months house confinement.
David Radler, a Canadian citizen and longtime Black associate who pleaded guilty and testified for the prosecution, received a 29-month sentence in a plea bargain agreement.
There had been speculation he would apply to serve his sentence in Canada, but Lang told CTV.ca that Radler is still in the U.S.
Black, while born in Canada, is now a British citizen. He gave up his Canadian citizenship in 2001 to accept an appointment to the British House of Lords.
He cannot apply to serve his sentence here, and most experts think it is now unlikely he could ever regain his Canadian citizenship without a direct ministerial order.
