Appeals court upholds Black's fraud conviction
CHICAGO: A federal appeals court on Wednesday upheld Conrad Black's convictions of fraud and obstruction of justice, brushing aside his claim that he and three other former Hollinger International media executives did no harm to the company he once headed.
"They are making a no harm-no foul argument, and such arguments usually fare badly in criminal cases," a three-judge panel of the 7th U.S. Circuit Court of Appeals said in its 16-page opinion.
The appeals court rejected the request of the 62-year-old British baron, known as Lord Black of Crossharbour, and three other former Hollinger International executives for a new trial.
Black is serving a 6 1/2-year sentence at a federal prison in Florida.
He was convicted last July 13 of siphoning off millions of dollars belonging to Hollinger when he was chief executive officer of the company that once owned the Chicago Sun-Times, the Daily Telegraph of London, the Jerusalem Post and hundreds of community papers across this country and Canada.
He also was convicted of obstruction of justice for hauling 13 boxes of documents out of his Toronto office while knowing they were being sought as part of an investigation of his financial dealings.
The jury saw a videotape of Black carrying the boxes out of the offices, loading them into his car and driving away with them. Defense attorneys claimed he had no intention of thwarting the investigation and that he quickly returned the boxes.
"There was evidence that Black knew that the alleged frauds were being investigated by the grand jury and by the Securities and Exchange Commission," the appeals panel said.
The court rejected Black's appeal less than three weeks after it heard oral arguments in the case — an unusually quick turnaround time.
U.S. Attorney Patrick J. Fitzgerald issued a statement expressing satisfaction that the appeals court acted "swiftly and conclusively."
"The court found clear evidence that all four defendants engaged in a brazen, multi-million-dollar corporate fraud scheme and deprived the shareholders of Hollinger International of their right to the executives' honest services," Fitzgerald said.
Black's attorney, Andrew Frey, recalled that at the June 6 oral argument, Judge Richard A. Posner had expressed sharp skepticism.
Frey said he was not surprised at the adverse decision in view of "the court's apparent hostility." He also said he was disappointed and that the decision had reflected "a number of factual misunderstandings."
"We are considering our options," said Frey, adding that it could include a request for a rehearing before the appeals court.
In its opinion, the court also upheld the convictions of two Canadian executives of Hollinger, John A. Boultbee and Peter Y. Atkinson, and the company's former Chicago-based attorney, Mark S. Kipnis.
The opinion, written by Posner, focused on a deal involving a Hollinger subsidiary, APC, which sold most of its newspapers and ended up owning just one weekly paper in Mammoth Lake, Calif.
Black and other executives got $5.5 million for agreeing not to compete with APC for three years after leaving Hollinger's employment.
"That Black and the others would start a newspaper in Mammoth Lake to compete with APC's tiny newspaper there was ridiculous," the court said.
The court also scoffed at a defense claim that the $5.5 million actually represented management fees that APC owed to the executives.
It said no company records were found to indicate that the money represented fees, even though "Hollinger is a large, sophisticated public corporation." It said the checks were backdated to the year when newspapers were being sold to make the deal "seem less preposterous."
All of Hollinger's big papers except the Sun-Times have now been sold and the company that emerged changed its name to Sun-Times Media Group.
On Wednesday, a United States federal appeals court upheld convictions of fraud and obstruction of justice against media mogul , along with three other executives from his former press corporation, Hollinger International.

Black, born in Canada and bearer of the title Baron Black of Crossharbour in the United Kingdom, was found guilty in July 2007 of three counts of wire and mail fraud for giving himself and others millions of dollars in illegal bonuses taken from Hollinger holdings, and for obstruction of justice based on surveillance footage of his moving 13 boxes of documents out of his Toronto office to his home the day after he was informed that he was being investigated. He was sentenced, and from March this year he began a 6 1/2-year prison term. Peter Atkinson and John Boultbee were convicted on the same fraud charges, and were sentenced to terms of 24 and 27 months respectively, while Mark Kipnis, who was implicated in the fraud, was given probation with 6 months of home detention.

The appeals panel from the , who heard the defence attorneys' oral arguments, presented its opinion in a 16-page document in which they rejected arguments against the fraud and obstruction charges. They noted that while the defence had presented a "no harm-no foul argument", in which it was argued that the accused were owed the money appropriated, "such arguments usually fare badly in criminal cases". They also dismissed claims that instructions given to the jury by the judge had been incomplete, or unclear, stating that "the defendants proposed a misleading statement as an alternative", and that in such situations the judge is allowed to stay with the original instruction, and in particular is not required "that a submitted charge be technically perfect to alert the court to the need for a particular charge".

The appeals judges also discounted arguments from the defence regarding the defendants being unaware of the illegality of the transactions, making reference to an "ostrich argument", based on the urban legend that  sensing danger stick their heads in the sand. It was noted that choosing not to investigate the suspicious nature of the payments was equivalent to accepting their illegality. An argument from Black's defence regarding the obstruction charge, that in moving the documents he was not in fact escaping scrutiny, was similarly rejected, as "all that needed to be proved is that the document was concealed in order to make it unavailable in an official proceeding," according to the ruling as written by Judge Richard Posner.

Andrew Frey, the defence attorney for Conrad Black, said that the court's decision was based on "a number of factual misunderstandings", and that the defendants were considering a request for a rehearing of the appeal.