Former newspaper mogul Conrad Black, already accused of fraud, was indicted by federal prosecutors Thursday on additional charges including racketeering and obstruction of justice. He now faces a maximum prison sentence of 95 years if convicted.
The new charges came two weeks after Black pleaded not guilty to charges related to the alleged looting of more than $80 million from Hollinger International Inc., the newspaper empire he once controlled.
The charges were brought in an indictment returned by a federal grand jury in Chicago and announced by U.S. Attorney Patrick Fitzgerald's office.
Black's former chief financial adviser, John Boultbee, also faces one new count of wire fraud in addition to the eight fraud counts he was charged with last month. Charges brought against co-defendants Peter Atkinson, Mark Kipnis and the Ravelston Corp. Ltd., the Canadian company that Black used to gain control of Hollinger International, remained unchanged.
Attorneys for Black and Boultbee did not immediately return calls seeking comment. Both are required to appear in U.S. District Court on Friday for a status hearing in the case, along with Kipnis, the former Hollinger attorney. All have pleaded not guilty.
The former Hollinger executives are accused of cheating on taxes and looting millions from the company through a series of fraudulent payments linked to the sale of several hundred U.S. and Canadian publishing properties. Prosecutors allege that Black, a member of Britain's House of Lords whose holdings once included the Daily Telegraph of London and other major papers, misused company perks such as taking the corporate jet for vacation in Bora Bora and throwing a lavish birthday party for his wife.
The expanded indictment against Black adds four charges -- one count each of racketeering, obstruction of justice, money laundering and wire fraud -- in addition to the eight counts of mail fraud and wire fraud he was charged with Nov. 17. They carry maximum penalties of 55 years in prison and $5 million in fines, adding to the maximum 40 years and $2 million for the earlier charges.
The obstruction count alleges that Black illegally removed more than a dozen boxes of documents from his company's offices in Toronto last spring, despite a December 2004 ruling by a Canadian court that said no documents could be removed without permission.
According to the U.S. attorney's office, Black first tried to take out the papers from the offices of parent Hollinger Inc. and Ravelston on May 20, a day after being warned by the U.S. Securities and Exchange Commission that it was about to formally request documents as part of its investigation into the case. But the effort was thwarted when a company official told a court-appointed inspector, who notified building security.
Three hours later, just after 5 p.m., Black returned to the building and together with his chauffeur and an assistant removed 13 boxes of documents through a rear entrance, the statement by prosecutors said.
The new racketeering count alleges that Black oversaw the series of fraudulent newspaper sales and other actions that enriched him and other top Hollinger executives. The new wire fraud and money laundering counts allege that Black illegally transferred $2.15 million in fraudulently obtained proceeds of newspaper transactions from Canada to a company bank account in Chicago in order to buy an apartment on Park Avenue in New York City.
Earlier Thursday, published reports said the SEC has informed former Illinois Gov. James Thompson and two other Hollinger International directors that it may sue them over the allegations that executives stole from the company.
Citing anonymous sources familiar with the matter, the Chicago Tribune, the Chicago Sun-Times and The New York Times reported that the notices of a possible lawsuit were sent last month to Thompson, Richard Burt, a former U.S. ambassador to Germany, and Marie-Josee Kravis, the wife of New York financier Henry Kravis.
Thompson and Burt remain board members but are scheduled to leave next month. Kravis left Hollinger's board in 2003.
Thompson headed the Chicago-based company's audit committee charged with overseeing Hollinger's financial activities, and Burt and Kravis both served on the committee. The three have not been accused of receiving any money as part of the alleged scheme.
SEC spokesman John Heine and a spokesman for Kravis declined to comment. Telephone messages left for Thompson and Burt were not immediately returned. Hollinger International spokesman Jeremy Fielding also declined comment.
Members of the audit committee have come under criticism for their failure to notice Black's activities or challenge the former Hollinger chairman. Committee members have maintained that Black and the others, who have since been criminally charged with fraud, covered up the scheme with lies, misrepresentations and phony documents.
Hollinger's board forced Black out in late 2003 after an internal investigation revealed that he and his longtime deputy and business partner, F. David Radler, were taking millions that should have gone to the company.
Radler, the former Sun-Times publisher, pleaded guilty this fall to taking part in a scheme to siphon off $32 million in proceeds from the sale of Hollinger newspapers in the United States and Canada. He agreed to cooperate with prosecutors.
- 185 Corruption