CHICAGO — Conrad Black, who once controlled the Hollinger International media empire, was charged with three other executives Thursday with looting millions of dollars from the company, cheating on taxes and dipping into corporate coffers to finance his lavish lifestyle.
"What has gone on here is the grossest abuse by directors and insiders," U.S. Attorney Patrick J. Fitzgerald said in unveiling the 11-count indictment.
An arrest warrant was issued for the 61-year-old Black, a former Canadian citizen who is now a member of the British House of Lords. Fitzgerald said that if he fails to appear before Judge Amy St. Eve to answer the charges the government will seek to have him extradited.
Hollinger International Inc. owns the Chicago Sun-Times and other publications in the United States and Canada and formerly controlled the Daily Telegraph of London and the Jerusalem Post.
The indictment charged that Hollinger International's $2.1 billion sale of several hundred U.S. and Canadian publishing properties was rife with fraud.
Black's attorney, Edward Greenspan, said in a statement that Black is confident he will be found innocent "if given a full and fair opportunity to defend himself."
"Conrad Black asserts his innocence without qualification with respect to each and every one of the charges set forth in the indictment," Greenspan said. "It will be shown that he has, at all times, acted within the law."
Molly Morse, a spokeswoman for Hollinger International, said the company had no comment on Thursday's indictments. Hollinger Inc., the Toronto-based holding company that has voting control over Hollinger International, also declined comment.
The indictment follows by two months former Sun-Times publisher David Radler's guilty plea to charges of taking part in a scheme to siphon off $32 million in proceeds from the sale of newspaper properties in the United States and Canada through bogus contracts with purchasers.
Radler agreed to cooperate in the government's ongoing investigation.
Black also was charged with defrauding Hollinger through bogus noncompete agreements.
The indictment said he used a similar bogus agreement to siphon $51.8 million out of Hollinger International's multi-billion-dollar sale of assets in 2000 to CanWestGlobal Communications Corp.
In addition, the indictment said that Black used company cash to bankroll a lifestyle that included Park Avenue apartments in New York and a vacation in Bora Bora in French Polynesia.
It said Black and his wife used a corporate jet to fly to Bora Bora in July 2001 and remained there for a week. When company auditors asked him to reimburse them for the travel, he told them "no such outcome is acceptable," the indictment said.
He said he used $42,000 in Hollinger International funds to pay for a $62,000 surprise birthday party for his wife in December 2000 at a New York restaurant, La Grenouille. The tab included 80 dinners at $195 each and $13,935 for champagne and other wine.
According to the indictment another defendant, John A. "Jack" Boultbee, 62, of Toronto swindled Hollinger International out of millions of dollars by having the company pay for the renovation of one Park Avenue apartment for Black's servants and buying another Park Avenue apartment from the company at far below the fair price.
Besides Black and Boultbee, those charged are Peter Y. Atkinson, 58, a Canadian attorney, and Mark S. Kipnis, 58, of suburban Northbrook, who served as secretary to Hollinger International's board of directors when the board was approving some of the agreements.
Kipnis was charged with fraud in August. He has pleaded innocent and was reindicted Thursday.
Atkinson's attorney, Benito Romano, declined to comment, saying he hadn't seen the indictment. Kipnis's lawyer Ronald Safer did not return calls seeking comment. It was unclear who represents Boultbee.
Another defendant is the Ravelston Corp. Ltd., a Canadian company that Black used to gain control of Hollinger International. It held 30 percent of the shares but 70 percent of the voting rights on the International board.
Fitzgerald told reporters that "for years, Conrad Black lived large on millions of shareholder dollars — a federal grand jury has returned an indictment that says he did so by means of criminal fraud."
Black is charged in eight counts of the indictment, each of which carries a maximum five-year prison sentence. But any sentence would more likely be governed by sentencing guidelines that would be unlikely to call for a term as long as four decades.