When the FBI Comes Calling…®
August 20, 2005
He's the ultimate prize
By Rick Westhead, Toronto Star
As Conrad Black's lawyers huddle in the weeks ahead, their first job will be to assess how difficult it will be for their client to defend himself in the wake of a decision by long-time business partner David Radler to co-operate with U.S. law enforcement officials.
Black's counsel, says a lawyer who specializes in U.S. white-collar crime cases, will also be weighing how much money they might raise by selling Black's securities, real estate and other assets for use in a possible financial settlement to "minimize his exposure."
Robert Mintz, a former U.S. federal prosecutor who now heads the securities litigation practice at the McCarter & English law firm in Newark, N.J., also said it's doubtful the U.S. Attorney's Office in Chicago would negotiate any settlement with Black.
"He's the ultimate prize," said Mintz. "There's really no motivation for the prosecutors to cut any kind of favourable deal."
U.S. prosecutors announced on Thursday that they expect Radler to plead guilty to seven counts of fraud related to $32 million (all figures U.S.) allegedly diverted from Hollinger International. Radler, who was charged alongside a former Hollinger lawyer and Black's Toronto holding company, Ravelston Corp., faces up to 35 years in prison and a fine of up to $1.75 million if he's found guilty on all counts.
Lawyers involved with the criminal probe said they expect Radler to help bolster the case against Black, who has steadfastly denied any wrongdoing and has promised he would be vindicated when all of the alleged skulduggery at Hollinger was finally revealed.
Black's top Canadian lawyer, Edward Greenspan, said yesterday the embattled publisher is currently in Toronto and has no plans to travel abroad.
Greenspan declined to say whether Black would willingly travel to the U.S. to answer criminal charges that might be filed in relation to an alleged multi-million-dollar fraud at Chicago-based Hollinger International Inc., Black's former publishing company.
Black, Radler and others have been accused by the U.S. Securities and Exchange Commission of looting money from Hollinger over several years through a complex series of related-party transactions and sham payments.
The U.S. Department of Justice on Thursday accused Radler, former Hollinger lawyer Mark Kipnis and Ravelston of misappropriating money from the company through an elaborate series of self-dealing transactions.
While it seems to legal observers that U.S. prosecutors are in the process of building a strong case against Black, it's not immediately clear how a trial involving the ousted newspaper baron would unfold.
WorldCom Inc. chief executive Bernie Ebbers was sentenced in July to 25 years in prison for fraud after one of his top-ranking executives agreed to co-operate with the Department of Justice.
Scott Sullivan, the WorldCom former finance chief who testified against Ebbers, was sentenced on Aug. 11 to five years in prison for helping to engineer the $11 billion fraud - the biggest corporate fraud in U.S. history.
But HealthSouth Corp. chief executive Richard Scrushy was acquitted in June of 36 counts of money laundering and securities, wire and mail fraud, "even though he faced a parade of high-ranking executives who rolled over on him," Mintz said.
"It's a battle that has been waged successfully on occasion."
Black's fight against his adversaries within Hollinger has been going on for more than a year.
And it has been at least three years since the company's investors began complaining that they believed Black was using company money for his personal pursuits.
Yet even with this week's developments in the protracted battle for control of the company Black built into the world's third-largest newspaper company, there are indications there still may be plenty of legal manoeuvring in the high-stakes case.
Several lawyers who specialize in cross-border extradition cases say that if he wanted to, Black might be able to stall U.S. officials seeking his possible extradition for more than a year.
"He's got money and it's not a terrorist act," said Douglas McNabb, a senior principal with McNabb Associates in Houston.
McNabb was one of several lawyers specializing in extradition cases who said yesterday that the U.S. justice department seems to have needlessly complicated its case against Black by not waiting until he was in the U.S. before announcing charges against Radler.
Even if U.S. officials weren't prepared to announce an indictment against Black to coincide with Radler's, "they still could have issued a criminal complaint against Black, which would still have given them 30 days to file the indictment," said McNabb.
He was recently an expert witness at an extradition hearing involving a trio of former Enron bankers in the U.K.
"That effectively would have landlocked Black, and prevented him from leaving the country," McNabb said.
He added that the Department of Justice "just doesn't seem to strategize very well on cases like this."
Black is currently free to travel since no indictment has been issued.
While he's a British citizen and a member of that country's House of Lords, Black's citizenship would have no bearing on possible extradition proceedings from Canada, the U.K., or most other European countries, lawyers said.
If Black were to travel to the U.K. and then fight a U.S. extradition request, it's possible it might take several years for his case to work its way through the courts, the U.K. Home Office - the department responsible for the country's internal security - and possibly the European Court of Justice.