Ex-Hollinger executives indicted (Fraud in Chicago-- Fitzgerald says NO again)

Reuters/CNN ^ | 8-19-05

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Two former executives and a holding company in the toppled media empire of Conrad Black were charged with fraud for diverting $32 million in fees generated by newspaper sales, prosecutors said on Thursday.

David Radler, who was president and chief operating officer of Hollinger International Inc., Hollinger's in-house lawyer Mark Kipnis, and Ravelston Corp. Ltd., Black's insolvent Toronto-based holding company, were charged in a seven-count indictment alleging fraud.

In the latest blow to Black's unraveling empire, prosecutors alleged that when newspapers were sold the defendants pocketed payments disguised as non-compete fees. Such agreements prohibit the seller from opening a rival newspaper in the same area.

The indictment charged the defendants and unnamed Ravelston "agents" were paid bonuses that were disguised as non-compete fees to avoid paying Canadian taxes. The fraud amounted to $32 million.

Radler, 63, is cooperating with prosecutors and is expected to plead guilty, said Patrick Fitzgerald, the U.S. Attorney in Chicago.

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Black and Radler have also been sued by Hollinger Inc., essentially a Chicago-based subsidiary of Hollinger International in what is a complicated web of holding companies. Hollinger Inc. owns the Chicago Sun-Times, where Radler was the former publisher, and other newspapers. Canadian and U.S. securities regulators have also accused Black of wrongdoing.

"Whaddya want me to do?? I'm a crime fighter." (My words ;)

[furquhart]

To make a criminal case out of this is, in my view, absurd. It's another example of the dangers of aggressive prosecutors attempting to regulate business, together with busy-body shareholders.

Hollinger, etc., wouldn't have existed without Black and Radler. Period.

And it isn't a cut-and-dry case. The guy who paid them most of the non-compete fees says, specifically, that they were meant to go to them. They weren't concerned that Holligner would create another paper - they were concerned that Black and Radler would.

[stylin19a]

this oughta be good. Radler flipped on 'em.