U.S. prosecutors are considering filing additional criminal charges against Conrad Black under laws usually used to combat organized crime.

Sources familiar with the proceedings say the U.S. Attorney for the Northern District of Illinois sought a grand jury indictment against Lord Black, and possibly others, under the U.S. Racketeer Influenced and Corrupt Organizations Act (RICO). The RICO charges, which require approval from the Department of Justice in Washington, would supercede the 11-count indictment handed down against Lord Black and three other former Hollinger International executives who were charged with fraud on Nov. 17.

Assistant U.S. prosecutor Robert Kent informed a federal court judge in Chicago last week that additional indictments were forthcoming, but he did not elaborate.

Randall Samborn, a spokesman for the U.S. Attorney's office in Chicago, would not comment yesterday "unless or until any charges are filed and are public record."

Mr. Samborn said "nothing would happen until Thursday at the earliest." Lord Black is scheduled to appear before federal court Judge Amy St. Eve on Friday.

"There is no question Mr. Kent alluded to the possibility of further charges, but I have absolutely no comment to make," Edward Greenspan, the prominent Canadian criminal lawyer representing Lord Black, said yesterday.

If the RICO indictment is filed, Lord Black could face a possible mega-suit, involving alleged conspiracy, in addition to the other criminal charges of mail and wire fraud already filed against him.

RICO, a notorious 1970 anti-organized crime law named after a character in the 1930s film Little Caesar, has often been used to battle political corruption and corporate fraud. The law gives the U.S. government wider powers and entitles its prosecutors to triple the restitution, fines and penalties it is seeking if the court concludes a defendant engaged in "racketeering." Felonies listed under racketeering include murder, witness tampering, kidnapping, counterfeiting, drug offences, embezzlement, wire fraud and mail fraud.

As well, the anti-corruption laws allow prosecutors to confiscate assets that were involved or used to control the alleged criminal activity. In this case, if RICO charges were to be filed, Lord Black's 68% controlling stake in Hollinger International could be frozen by the U.S. government before trial and seized in the event of a conviction. However, mail and wire fraud charges require a conviction before a prosecutor can take custody of the assets.

RICO charges also set a minimum prison guideline of three years for each count for a defendant with no prior criminal record compared with about one year for each count of securities, mail and wire fraud. Currently, Lord Black is facing criminal charges that, if proven, could see him sentenced to up to 40 years in jail.

Unlike most criminal charges, racketeering allegations require an additional level of review by the Department of Justice in Washington. A source familiar with the U.S. prosecutor's plans said there is a "one in a thousand chance" that Washington would not approve RICO charges sought by a regional office.

Another official who asked not to be named said it is common for RICO charges to be added to a criminal indictment that has already been filed because prosecutors often require additional evidence and witnesses.

On Dec. 1, during an arraignment in Chicago, Lord Black pleaded not guilty to charges of mail and wire fraud. The former publishing baron pledged a US$20-million bond and waived his rights to fight extradition. He is expected to return to Chicago for a court appearance on Dec. 16.

U.S. prosecutors accused Lord Black and the others of "cheating public shareholders in the United States and Canada and Canadian taxing authorities," when they allegedly diverted nearly US$85-million in "no-compete" fees from Chicago-based newspaper publisher Hollinger International Inc., when it sold some of its newspaper assets.

Those payments are said to be payments that were really bonuses that were obtained through a series of alleged "secret or false and misleading transactions" and used to avoid paying Canadian taxes, U.S. law enforcement authorities claimed. None of the charges has been proved.

Last year, Lord Black faced a racketeering legal challenge from Hollinger International when the company filed a US$1.25-billion lawsuit against the former chairman and CEO, alleging he had breached his fiduciary duty relating to the sale of some newspaper assets at less than fair value to companies he controlled. The lawsuit sought to triple damages from US$380.6-million to US$1.25-billion under RICO.

But a U.S. federal court judge dismissed Hollinger International's racketeering lawsuit in October, 2004, saying the court viewed the alleged "entire fraudulent scheme" and concluded "it would be actionable as securities fraud and, consequently, may not serve as predicate acts for purpose of a RICO civil action." That ruling was later upheld on appeal.

As a result of the court's decision, Lord Black filed a $110-million defamation lawsuit against Hollinger International last year stemming from allegations that the former chief executive engaged in a pattern of racketeering activity, saying it brought him "hatred, ridicule and contempt."

© National Post 2005