Conrad Black case goes back to court (UPDATED) - Macleans.ca
 

Conrad Black case goes back to court (UPDATED)

Judges express skepticism over bid to overturn obstruction conviction


 

Lawyers for Conrad Black return to court today in Chicago in what could be the climax of his long legal battle for his freedom.

They have already achieved the improbable – persuading the United States Supreme Court to take up Black’s appeal (the court grants only about four percent of petitions that come its way) – and the more unlikely still, getting a 7-2 decision in their favour. Today they are seeking to use the new precedent from the top court to have the convictions reversed. Black is has been out of prison on bail pending the decision. He has served more than two years of a six and a half year sentence.

On June 24, the US Supreme Court ruled that part of the law used to convict Black, along with other Hollinger executives, Peter Atkinson, John Boultbee and Mark Kipnis, of fraud, was so broad as to be unconstitutionally vague. The court remanded the case back to the appeals court to decide whether a jury instructed on the narrower definition of fraud, and faced with more limited evidence, would have still convicted Black and the others, or whether the legal error was merely “harmless.”

The case comes down to this: the jury had been instructed that fraud had two aspects to it: the theft of money from the corporation and the denial to the corporation of the “honest services” of its executives. The Supreme Court said that the honest services theory of fraud had come to be defined too broadly in American law. In a June opinion, the Supreme Court said that to be convicted of honest services fraud there has to be evidence of a bribery or kickback scheme – neither of which were alleged in the case of Black and his associates.

The jury that convicted the defendants did not explain what theory of fraud it based its convictions on: theft, denial of honest services, or both. Black’s lawyers have asked the Seventh Circuit Court of Appeal to reverse the convictions of the executives’ on the grounds that it is possible that the jury found them guilty on the theory of fraud that the Supreme Court has now said was incorrect. Federal prosecutors argue that the evidence of theft was “overwhelming” and that the legal error in the jury instruction on honest services would not have made a difference. In other words, that the error was “harmless.”

Below are several of the basic disagreements presented in the legal briefs that the court will have to sort out:

1. What does the government have to prove to show the error was “harmless”?

  • a. The government says it needs to show that “rational jury would have found the defendant guilty absent the error.”
  • b. Black’s lawyers argue that the government must prove that not even one juror voted to convict based on the incorrect theory of fraud. The court must reverse the convictions “if there is a reasonable possibility that the error complained of might have contributed to the conviction.”

2. Was the jury told that they could convict for a denial of “honest services” even if they did not find evidence of theft?

  • a. Black’s lawyers argues that prosecutors incorrectly led the jury to believe that they could convict of honest services fraud if the defendants had failed to make proper disclosures to the Board and its Audit Committee, thus “permitting a guilty verdict even if no juror through that the defendants schemed to steal money.” They argued that rather than stealing money, the defendants falsely categorized millions of dollars in management fees (that were rightfully owed the defendants) as non-compete payments in order to escape Canadian taxes, but that this did not defraud shareholders.
  • b. The government responds that it never told the jury that they could convict in the absence of theft. The government had argued that “defendants stole Hollinger International’s money by making false representations, that is, by disguising money they stole as non-competition payments.” Prosecutors say they never argued that there was an “independent, stand-alone honest services violation that the jury should use to convict defendants.”

3. Was the jury so persuaded by the government’s evidence of theft that they would have convicted regardless of the definition of honest services?

  • a. Blacks’ lawyers argue no.
    • i. The fact that the jury acquitted the defendants on 9 fraud counts, two tax counts, and (Black only) a racketeering charge that “turned on theft” shows that “the jury in this case was deeply skeptical of the government’s witnesses and theories.” The jury’s “sweeping rejection of the government’s theft theories” implies that the jurors convicted on the basis that the defendants violated “honest services” by failing to make purportedly required disclosures or by not placing corporate interest above all else.
    • ii. The government’s “own star witness,” David Radler, said there was no theft in the transaction at issue. Payments that the government argues were fraudulent non-compete payments were merely management fees disguised as non-compete payments because such payments had recently been made tax-free by Revenue Canada.
  • b. The government makes the case that there was strong evidence that executives pocketed millions in fake non-compete payments from a company that owned only a tiny paper called the Mammoth Times and lied about it to the company. (The defense argues that the non-competes covered all affiliated newspapers, which numbered in the hundreds.)
    Further, prosecutors told the jurors they could only convict if they found “unfair dealing” or an “unfair price” in the transaction. Therefore, if the jurors believed that the money was merely mis-labeled management fees owed to the defendants, there was no unfair dealing or unfair price and they would not have found fraud. The convictions therefore imply that the jurors did not believe the defendants explanations regarding the payments and must have considered them to be stolen money.
    The government responds that Radler was hardly their star witness and that the jury was told they could conclude he was lying and still convict.

4. Did the evidence on honest services make the jury more likely to view Black’s removal of 13 boxes from his Toronto office as an attempt to obstruct justice?

  • a. Black has maintained all along that he was removing the boxes because he was being evicted from the premises. He had no criminal intent, he argues. He had already complied with five document requests, producing more than 112,000 pages of documents. Lawyers had already spent weeks photocopying everything in the office. His lawyers had not told him that a new document request had been made by the Securities and Exchange Commission so he could not have been trying to hide the documents.
  • b. The jury’s view of his actions was tainted by the reams of evidence that established his non-disclosure which now is not a crime.
  • c. If the fraud convictions are struck down, his lawyers ask for the 78-month sentence to be lowered.
    The government argues that the evidence of obstruction is “strong”: “Everything the defendant did in sneaking out the boxes was evidence of corrupt intent.”

UPDATE:

First impressions….

It was a mixed bag for Conrad Black’s legal case this morning judging by the questions asked by the three judges in a rapid-fire oral argument that lasted just over 40 minutes.

  • The judges seemed skeptical that his obstruction of justice conviction should be overturned. In one instance Judge Posner said bluntly, “I don’t see a connection” between honest services fraud and the obstruction conviction.
  • Judge Posner repeatedly expressed doubts about overturning a fraud conviction relating to $600,000 in payments pocketed by the defendants in deals with Paxton and Forum.
  • Judges Posner and Sykes seemed more sympathetic to reversing the fraud conviction relating to $5.5 million in fees paid to the defendants in the deal with APC.

More to come…


 
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Conrad Black case goes back to court (UPDATED)

  1. Don't want him back in Canada. He betrayed his country. Go back to Great Britain and wear your crown or whatever.

    • He's a deceitful businessman and a dull blowhard politically, but if he beats all his criminal charges there is no reason he shouldn't where he wishes.

  2. He's one of the greatest Canadians ever. He was unjustly treated by the US justice system and by Jean Chretien before that.

    FREE CONRAD!!!

    • It's imnportant to realize this was not an example of justice failing. The prosecutors had ample reason to bring a case against him, especially considering how broadly the cases at the time were interpreting the law (it was only narrowed to kickback and fraud in a case decided at the same time). he will likely still do time over defying a court order to move those boxes.

      Plus, he fleeced the shareholders by treating Hollinger like his own private petty cash fund.

      An innocent man? We shall see. A great man? Hardly.

      • I'm enjoying the part where his lawyers are saying "Look, sure, he's a thief and a fraudster, but not the type of thief and fraudster the jusry might have thought he was."

        • That's not what they're saying. They're saying that he was convicted on a definition of fraud that could ensnare just about anyone. But glad to see a few on here throw jurisprudence out the window the second that it involves a person they hate politically. So much for tolerance and civility, right?

          • hallmark of the left, tolerance is only good for their heroes and causes.

      • Well if I was a Hollinger shareholder, I would rather be "fleeced" by Conrad, and have my investment grow, then to be "rescued" by the feds and have my investments dwindle to nothing. That's just me though.

        He was completely innocent. He was entirely entitled to have an amount from the sale of newspapers directed to a non-compete for him personally. These non-competes are actually enforceable in a court of law, and they were approved by the board of directors. it was 100% above board.

        he's one of the most successful canadian business men ever, and he built one of the largest media empires of his generation. that's pretty great by any standard.

        • The shares only grew until his cheatin' ways were revealed. Much like a Ponzi scheme.

          • the shares grew until his non-cheating ways were unfairly characterized as theft and hollinger was taken over by 'corporate governance experts'. than they tanked to zero.

          • no no no.

          • perhaps you would like to explain what it is you think Conrad did that was illegal?

            was it accepting money in return for an agreement to not personally compete against the purchasers of Holligner's papers, pursuant to agreements that were approved by the board of directors? (hint, that was the prosecution's case, only problem is, its perfectly legal)

          • Well, it wasn't legal, at least according to the jury's findings. We'll see if that conviction holds up after today.

          • I mean that legality of anything aside, the lavish parties for Barbara expensed to the company and the real estate holdings for his own use were clearly ridiculous extravagances made with no respect for investor's interests.

            Even if he walks and none of his business decisions were illegal, they were wasteful disgraces. He is simply not the kind of man you want running your company.

          • The CEO of a multi-million dollar corporation threw a lavish party for his wife? Im sure that's the first (and hopefully the last) time this happens in the history of business.

            He's the kind of man you want running your company if you want it to be successful. He made Hollinger successful and got very good prices on the assets that he sold at a time when the industry was declining.

          • hands over ears , saying I can't hear you, I can't hear you

          • Actually, the shares grew until the newspaper industry in general tanked. It's not like the Hollinger papers are the only ones in North America that have been in trouble.

  3. With enough money, Black can slime his way out of anything.

  4. Black still faces that obstruction charge, where he violated court orders to NOT remove documents from his offices, and was caught on tape doing just that. Even if he escapes the underlying fraud charges, one needn't be guilty of the original crime to be found guilty of obstructing the investigation and court proceedings. Indeed, Federal Prosecutors and judges aren't fond of this kind of behaviour.

    More to the point, where's all of the cash suddenly flowing from — to fund his appeals and to reclaim his Florida mansion?
    I'm sure this is a question of interest to Hollinger investors and creditors, too.

  5. Conrad Black was railroaded by the legal system, it's nice to finally see justice.
    Conrad Black should be appointed CEO of the CBC, he's got a great media track record and could turn the network into something that people would actually watch.

  6. The jury disagreed with your view, at least according to the law as it was presented to them at the time, didn't they?

    I tend to be sympathetic to Mr. Black's plight, but you can't ignore the legal system when it doesn't go your way. He was charged with serious crimes and found guilty. Let's not forget that.

    • Clearly Im not disputing that he was convicted. Im saying he should not have been.

      If anything, I'd say its a lot more signficant that the Supreme Court found the honest services statute under which CB was convicted to be unconstitutionally vague, than that the jurors were convinced by crown prosecutors that CB had deprived Hollinger of his 'honest services'.

      • You were claiming that he did nothing illegal. The justice system obviously found otherwise. And, judging by the update, that finding might well stand.

        • He would not be the first innocent convicted by the justice system, nor the last.

          Im not disputing the obstruction of justice charge. But if this is all that's left, then he will effectively have been martha-stewarted – i.e., not convicted for what he was investigated, but how he reacted when investigated.

          Im not sure what's going on with Paxton and Forum or how these deals differ from the rest. What I do know is that the main thrust of the prosecutor's case was these non-compete payments which were personally received by Black. There is nothing illegal in such non-competes and its only by twisting a very vague law into legal pretzels that you can fool a gullible jury and obtain a conviction for those, unless you can show that these non-competes were fraudulent – which in my view the prosecutors failed to do.

  7. Can Black's lawyers make an argument of entrapment on the obstruction of justice charge? That charge resulted from Black's behaviour in response to the other charges. If the other charges are thrown out, then they can make the argument that the obstruction of justice was entrapment, a case where the defendent is lead to commit a crime by the actions of law enforcement, a crime that would never have occurred otherwise.

    • Nope. He wasn't allowed to move the boxes and he did. It's not like the police set up some grand elaborate sting designed to trick him into becoming the leader of a nefarious box-taking ring.

      • That's right. The old adage "It's not the crime, it's the cover-up" comes to mind.

        The obstruction charge has to do with his conduct towards the investigation and trial and is independent of the original fraud charges.