Accusations Flare as Black's Racketeering Trial Kicks Off

Conrad Black arrives at the federal courthouse in Chicago for his trial. Prosecutors called him a corporate swindler. (By Tim Boyle -- Bloomberg News)

CHICAGO, March 20 -- The racketeering trial of former media baron Conrad Black began Tuesday with a federal prosecutor calling him a corporate swindler who stole millions of dollars and his attorney calling the government's star witness a liar.

"It was theft, it was fraud, it was crime," Assistant U.S. Attorney Jeffrey H. Cramer said in his opening statement.

Defense attorney Edward M. Genson said the money in question was made legally. He dismissed the notion that Black and three co-defendants had defrauded shareholders in the Hollinger International newspaper empire.

"They were entitled to the money," Genson said. "Were they entitled to that much money? That's a philosophical matter."

Genson appealed to jurors not to blame Black for getting millions of dollars in noncompete payments from buyers when he sold hundreds of community newspapers across the United States and Canada. "This was not Enron," he said.

Black, 62, is charged along with Hollinger's former chief financial officer, Jack Boultbee, 63, of Vancouver; former general counsel Peter Y. Atkinson, 59, of Toronto; and Mark Kipnis, 60, a lawyer who served as corporate secretary in the Chicago headquarters.

The men are accused of taking $60 million from Hollinger through asset sales in which all but Kipnis pocketed millions of dollars. Black is alleged to be responsible for $84 million that the company lost through the noncompete payments, which Cramer told jurors eventually turned into "a bold money grab" by the executives.

Genson portrayed the government's star witness, F. David Radler, the No. 2 man in Black's organization for decades, as a liar who would say anything to please the federal prosecutors who have cut him a deal. "David Radler will come into this court and lie to you" and claim every deal Hollinger made "magically became a Black-orchestrated deal," Genson said.

Radler pleaded guilty to one count of mail fraud and agreed to testify against Black in return for a relatively lenient 29-month sentence and $250,000 fine.

Prosecutors say that Black, if convicted, could be sentenced to 101 years in federal prison. The trial is expected to last more than four months.

Black, Boultbee and Atkinson received payments in return for agreeing not to compete with companies that bought hundreds of U.S. and Canadian community newspapers from Hollinger.

Cramer told jurors that the money should have gone to Hollinger shareholders and, when questions were asked about the payments, Black brushed them aside as "an epidemic of shareholder idiocy."

But Genson sought to explain why the deals were legal by telling jurors the story of a fictional "Sam the bartender." He said that anyone who bought "Joe's Bar" would also want to pay Sam, a beloved neighborhood fixture, not to start his own tavern across the street.

Genson also said Radler negotiated most of the noncompete agreements while the one Black negotiated, with CanWest Global Communications, was "done right." He ridiculed the idea that Hollinger's board, with such luminaries as former secretary of state Henry Kissinger and former Illinois governor James R. Thompson, could have been duped by the defendants.

Genson portrayed Black as a brilliant businessman with a bent for politics who built the Hollinger empire only to have it taken away from him.

The company once owned the Chicago Sun-Times, the Toronto-based National Post, the Daily Telegraph of London and the Jerusalem Post, as well as hundreds of community newspapers in the United States and Canada. All of the big papers except the Sun-Times have been sold, and the company has changed its name to Sun-Times Media Group.

Black was born in Canada but gave up his citizenship to accept a British lordship.

Genson said charges that Black's vacation to the Pacific island of Bora Bora aboard the company plane had cost Hollinger $250,000 were "ridiculous." He said the actual total cost was $100,000.

He also scoffed at a charge that Black billed Hollinger $40,000 for a $62,000 birthday party for his wife, the writer Barbara Amiel Black, at New York's La Grenouille restaurant. Genson said the cost to Hollinger was justified because political connections made at the party were highly valuable to the company.