Pleads not guilty to fraud in Chicago; Former Hollinger boss freed on bail of $20 million, secured by Florida mansion

In a brief court appearance yesterday, Conrad Black pleaded not guilty to fraud charges, setting the stage for what could be the most dramatic trial in Canadian corporate history.

Black, who could go to jail for up to 40 years if convicted, dismissed the charges as "completely without merit."

"The prosecutors have tried to strangle me financially, and they've defamed me for two years," Black told a throng of reporters who swarmed him as he left the courthouse.

"Now they're going to have to prove beyond a reasonable doubt to 12 assumedly reasonable people that innocent men are guilty of crimes that they would not in a hundred years have dreamt of committing."

Black, 61, and three other former executives of Hollinger International Inc., the newspaper publishing company he once controlled, were charged last month with fraudulently diverting nearly $84 million U.S. from the company.

He and his associates are accused of concealing "self-dealing" transactions from the company, thus cheating its shareholders and Canadian tax authorities.

After pleading not guilty, Black was released on a $20 million bond secured by his Palm Beach mansion and $8.5 million seized by federal prosecutors from the sale of a New York apartment where he and his wife, Barbara Amiel, used to live.

Judge Amy St. Eve said he can travel freely between the United States and Canada, where he currently resides, but must seek court approval to travel elsewhere. He is only permitted to reside in Canada, Chicago or Florida.

Former head of legal affairs Peter Atkinson, 58, also pleaded not guilty and was released on a $1.5-million bond.

Former Hollinger executives Mark Kipnis, 58, and Jack Boultbee, 62, have also been charged for their role in the alleged scheme. Kipnis has pleaded not guilty, and Boultbee's lawyers say he will appear for arraignment next week.

Reporters and TV crews staked out a federal courthouse for hours yesterday in anticipation of Black's arrival. His arraignment had twice been postponed so he could choose the U.S. lawyers who will represent him.

But yesterday, Black stepped out of a limo and into a building across the street from the courthouse.

"Always glad to be in Chicago," he joked as he boarded an elevator to the office of one of his U.S. lawyers, Edward Genson.

Later, Black strode into the courthouse accompanied by Genson, who drives a scooter due to a neuromuscular disorder. They were also joined by Black's Toronto lawyer Edward Greenspan, Greenspan's daughter Juliana, and Marc Martin, the other U.S. lawyer who is representing Black. Amiel did not appear.

Dressed in a navy suit with a pale blue shirt and gold tie, Black had little to say as he passed through a metal detector in the courthouse lobby and removed his belongings from a tray, calmly putting a silver pen back in his pocket.

He was then processed by the courthouse's pre-trial services office, who fingerprinted and photographed the former media mogul.

Later, led by Genson on his scooter, Black strolled into the packed courtroom, one hand in his pocket. He was not wearing handcuffs.

St. Eve peppered him with basic questions, including whether he has recently been hospitalized or treated for a psychiatric condition.

St. Eve set a hearing for Dec. 16. No trial date has been set.

After the arraignment, Black made what are believed to be his first comments about his former deputy David Radler since Radler pleaded guilty to fraud charges in September and agreed to a 29-month jail sentence in exchange for his co-operation in the investigation.

"If the truth is he did commit a felony, better to admit it," Black said. "If he goes farther and tries to incriminate innocent people, that is something else."

Greenspan later said Radler received a "sweetheart deal," and promised to challenge Radler in court. "One day in a court of law, Mr. Radler will know my thoughts about Mr. Radler in court."

With the help of Radler, Black built Hollinger into the third-biggest newspaper publisher in the world, an empire that at its peak included The Gazette.

The charges centre on "non-compete fees" that Black and his associates allegedly pocketed as Hollinger sold a big chunk of its papers from 1998 to 2001. Such fees are frequently paid to companies so they won't launch another publication on the same turf. Prosecutors allege that Black and his associates arranged for the payments to be paid to them, when the payments should have gone to Hollinger.

Ottawa Citizen

© The Gazette (Montreal) 2005