When the FBI Comes Calling…®
April 8, 2007
By Romina Maurino
Four new witnesses to testify at Black trial as U.S. steers talk back to fees
TORONTO (CP) - Jurors in Conrad Black's fraud trial will hear testimony from four new witnesses this week as prosecutors attempt to return the court's attention to the former press baron's alleged wrongdoing by detailing how millions of dollars in fees ended up in his pockets.
But before those four men take the stand, the government will get one last stab at questioning former Hollinger International (TSX:HLG.C)comptroller Frederick Creasey, after defence lawyers tried last week to discredit much of his important testimony.
After Creasey, prosecutors plan to play a video deposition by Darren Sukonick, a lawyer with Toronto-based law firm Torys LLP.
He and former Torys lawyer Beth DeMerchant advised Hollinger International during the controversial sale of newspapers to CanWest Global Communications Corp. (TSX:CGS) in 2000 - a deal that saw Black and two other executives pocket more than US$50-million in "non-compete" payments.
Defence lawyers had wanted the two lawyers to appear in person and blame them for many of the mistakes they say led to the fraud charges. Torys has not admitted wrongdoing but agreed to pay $30 million to Hollinger International in 2005 to settle allegations that the firm failed to act in the company's best interests during the CanWest sale.
The following three witnesses are expected to be lawyer Gulliaume Hecketsweiler, William (Bud) Rogers and Paul Saunders - Henry Kissinger's lawyer.
Creasey testified last week that Black's use of Hollinger International's corporate jet for a trip to the island of Bora Bora and other travel cost US$7 million a year and said the media mogul regularly billed the company when he took the jet to visit his estate in West Palm Beach, Fla.
Defence lawyers suggested Creasey sharply inflated the price of the trip and had miscalculated the tax bill and questioned his recollections about regulatory filings.
Douglas McNabb, a senior lawyer at McNabb Associates, said evidence about "bad acts" such as the Bora Bora trip won't have a direct impact on establishing Black's guilt or innocence but is rather intended to hint at how he might have spent allegedly misappropriated funds.
"What the government is trying to do is to 'sex up' the case, because a white-collar case like this can be incredibly dry and boring," McNabb said.
"They're trying to throw as much mud up on the wall as possible (and) dirty him up (so) the jury doesn't like him. If they don't like him, it's going to be harder for the jury to say he didn't do it."
The Bora Bora testimony followed weeks of evidence about "non-compete" payments, which are at the heart of the prosecution's allegations that Black and former associates David Radler, John Boultbee, Peter Atkinson and Mark Kipnis stole US$80 million from Hollinger International.
Shifting the trial's focus away from financial details should not be interpreted to mean that talk about non-compete payments is over, said one observer.
Ross Albert, a senior lawyer at Morris, Manning & Martin in Atlanta and former prosecutor and SEC lawyer, said changing the pace of trail to keep a jury's interest by mixing up witnesses is a standard strategy for prosecutors.
When he worked as a federal prosecutor he would "put up a financial employee, followed by testimony from an investor where we believed that the jury would identify more with the investor."
Lawyer Robert Kent agreed, saying that "the buyers' testimony to the effect that the individual defendants and Hollinger Inc. were inserted as non-competition fee recipients by the defenders and Hollinger International establishes that there's a scheme."
"The question then becomes who was a knowing participant in the scheme... so we'll have to wait for Radler's testimony to hear about the government's evidence that ties in the other defendants," said the former U.S. prosecutor who worked with lead prosecutor Eric Sussman on the Black case before going into private practice at the Baker & McKenzie law firm in Chicago last year.
While some had expected former Hollinger International CEO Gordon Paris to produce evidence of Black's involvement in the alleged fraud, Kent said Paris wasn't on the audit committee that reviewed the firm's dealings at the time the disputed transactions occurred.
That testimony will most likely come from the audit committee members who were around at the time of the deals, he said.
The U.S. government claims the defendants pocketed fees from the sale of newspapers in exchange for promises not to compete with the buyers. Those fees, they say, belonged to Hollinger International and its shareholders.
All four have pleaded not guilty and denied any wrongdoing.