Jury Sifts Newspaper Sales in Black Case

One-time media baron Conrad Black leaves federal court Wednesday, June 27, 2007, in Chicago. A federal judge sent the fraud and racketeering trial of Black and other former executives at Hollinger International to a jury Wednesday after 3 1/2 months of testimony. (AP Photo/Charles Rex Arbogast) (Charles Rex Arbogast - AP)

CHICAGO -- For all the sexy testimony about a Bora Bora vacation on the company's dime and a lavish Park Avenue apartment bought at a suspiciously low price, the center of the case against former media baron Conrad Black comes down to a decidedly unglamorous topic: Non-compete payments.

Black has denounced the U.S. government's case as "pure fiction," a terse comment he made in French to Canadian reporters as he left U.S. District Court here Wednesday after the 3 1/2-month trial went to a jury.

But it is the jury's review of factual documents, thousands of them, about payments from newspaper sales that is likely to determine whether the 62-year-old former head of the Hollinger International newspaper empire goes to jail.

The Hollinger case, while drawing less attention in this country than the Enron, Tyco and WorldCom scandals, continues a trend of top management of major corporations being held more accountable for their conduct.

Black and fellow ex-Hollinger executives Jack Boultbee and Peter Atkinson, along with Chicago lawyer Mark Kipnis, are accused of participating in schemes in which more than $60 million was siphoned from the company. Most of that was from payments received in exchanges for promises not to compete with the new owners of U.S. and Canadian newspapers the executives had just sold. All have pleaded not guilty.

Black and former Hollinger International vice presidents Boultbee and Atkinson got the money along with the company's No. 2 man, F. David Radler, who has pleaded guilty and was the government's star witness. Radler was promised a lenient 29-month sentence for testifying.

Kipnis, who is accused of helping to engineer the payments, never pocketed any of them. But he received $150,000 in bonuses under Black.

The big question the jury must answer: Were they legitimate non-compete payments or were they a smoke screen for ripping off the company, as the government contends?

Non-compete payments are commonplace in the newspaper and other industries, with buyers wanting to ensure they're not paying millions to sellers just to see them remain in the same market as competitors. It is virtually unheard of for them to end up as the focus of a criminal trial.

Black also is accused of cheating Hollinger International by taking the company plane on a vacation to Bora Bora in French Polynesia, billing shareholders $40,000 for his wife's birthday party and paying below the market rate when he bought a company apartment on New York's Park Avenue.

"Some of the other issues might be easier to understand," said Jeff Riffer, a Los Angeles attorney who has represented newspapers. "You don't have to be an expert in business to understand them. But the big money here is the non-competes and whether they legitimately belong to individuals or Hollinger."

Riffer couldn't recall such large non-compete fees from his three decades practicing law. But he said it's unlikely they would have drawn any significant attention had they gone straight to Hollinger and remained in company coffers.