Conrad Black Freed on $2 Million Bail as He Appeals Convictions for Fraud

Conrad Black, the ex-Hollinger International Inc. chairman, was freed from prison after posting a $2 million bail bond guaranteed by a family friend.

Black, 65, today left the Coleman Federal Correctional Institution, where he had been since March 2008, prison spokesman Gary Miller said. Black will be free as he appeals mail fraud and obstruction of justice convictions.

U.S. District Judge Amy J. St. Eve in Chicago set the bail amount today and said Black isn’t permitted to leave the U.S. at this time. He must make his way to Chicago for a July 23 hearing at which the judge will instruct him on terms of his release.

“His home is in Canada,” defense attorney Miguel A. Estrada told St. Eve at this morning’s bail hearing, seeking greater freedom for his client. The judge said she would consider it after seeing a Black financial statement and hearing from a pretrial services officer.

Black departed from the prison without being spotted by about 30 reporters and photographers across the road from the low-security institution.

Shortly after noon, a black Lincoln Navigator entered the grounds. The assembled press didn’t see it again. About 45 minutes after it arrived, two men in the parking lot said they saw Black leave in the vehicle by another exit.

Photographer: Tim Boyle/Bloomberg

Conrad Black, former chief executive officer of Hollinger International. Close

Conrad Black, former chief executive officer of Hollinger International.

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Photographer: Tim Boyle/Bloomberg

Conrad Black, former chief executive officer of Hollinger International.

Black earlier this week won the right to bail from a federal appeals court, based on a June 24 Supreme Court decision. The high court narrowed the scope of a law prosecutors used to convict him. The court ordered the Chicago-based appeals court to reconsider its prior ruling upholding the conviction.

Bail Guaranteed

The bail was guaranteed by Roger Hertog, a former vice chairman of Alliance Bernstein Holding LP and chairman of the New York Historical Society. Hertog attended today’s hearing, declining to comment afterward.

Black will probably spend his first days of freedom with his wife, Barbara, who divides her time between Florida and Toronto, said Peter White, a longtime friend and former Hollinger executive who has stayed in touch by e-mail.

“The key question about where Conrad will spend his first days of freedom is whether the terms of his bail allow him to leave the U.S.,” White said in a phone interview. “He’s still a wealthy man, but his wealth will be affected by the outcome of outstanding lawsuits against him.”

Before trial, St. Eve required Black to post $21 million worth of property and cash to secure his freedom. She restricted his travel to the regions surrounding the federal courthouse in Chicago and his Palm Beach, Florida, mansion. He was barred from traveling to his native Canada.

Florida Home

Black, writing in an April column for Canada’s National Post newspaper, denied that his Palm Beach home had been foreclosed on and sold. Toronto’s Globe and Mail newspaper in March reported the property was conveyed to a Connecticut investment firm, Blackfield Holdings LLC.

Local property records show the house at 1930 South Ocean Blvd. was sold in February for $11.6 million. Palm Beach real estate agent Linda Gary, reported by Toronto’s Globe and Mail to be handling the sale, didn’t return calls seeking comment yesterday.

St. Eve, inquiring about the status of the property today, was told by Estrada that Black has retained a “contract interest” in the house and can reacquire title if he pays an outstanding lien by September.

The house is on the market, Estrada told the judge.

Black’s Conviction

Black and three associates were found guilty of stealing $6.1 million from Hollinger International as they engineered sales of its assets. Black was sentenced to 6 1/2 years on the obstruction of justice charge and received a five-year concurrent sentence for fraud.

The amount of Black’s new bond was agreed to by both sides, Assistant U.S. Attorney Julie Porter told St. Eve today.

The Supreme Court, siding with Black and former Enron Corp. Chief Executive Officer Jeffrey Skilling in separate rulings, said a law that makes it a crime to “deprive another of the intangible right to honest services” may be used only in cases involving bribery or kickbacks. Black faced no such allegations in his prosecution, the justices said.

The Supreme Court didn’t deal with Black’s crime of obstructing justice.

Black led Hollinger, then the world’s third-largest publisher of English language newspapers, as its CEO from 1995 to 2003, and served as its chairman from November 2003 to January 2004. The Chicago-based company is now known as the Sun- Times Media Group Inc.

IRS Case

The U.S. Internal Revenue Service claims Black owes the U.S. government almost $71 million in unpaid taxes and penalties, according to court records.

The IRS said Black failed to pay taxes on his personal use of Hollinger jets, corporate money he spent on papers by President Franklin D. Roosevelt and his private secretary, and Hollinger’s 2000 purchase of a $5.9 million New York apartment for his use. Black wrote a biography of Roosevelt.

Black has asked the U.S. Tax Court to throw out the assessment, which covers payments due for 1998 to 2003. He said in a petition that the IRS relied on “sloppy and careless” findings, from an investigation that led to his conviction, when authorities compiled estimates of his income and unpaid taxes.

Black said he wasn’t required to file tax returns because he wasn’t a U.S. resident, court records show.

The IRS suit against Black was filed April in federal Tax Court in Washington.

SEC Allegations

A hearing on U.S. Securities and Exchange Commission allegations against Black is set for Dec. 16.

The SEC sued Black in 2004 claiming he and former Hollinger President David Radler stole $85 million from the company. The agency won a partial judgment in 2008 that Black broke the law by making false statements about Hollinger’s dealings.

Separately, Radler settled with the SEC in 2007. Black’s bankrupt holding company Hollinger Inc. did so the next year. Sun-Times Media agreed in 2007 to pay investors $30 million to settle U.S. and Canadian securities-fraud cases.

The trial court case is U.S. v. Black, 05-cr-00727, U.S. District Court, Northern District of Illinois (Chicago). The appellate case is U.S. v. Black, 07-4080, U.S. Court of Appeals for the Seventh Circuit (Chicago).

To contact the reporters on this story: Andrew M. Harris in Chicago at aharris16@bloomberg.net; Linda Sandler in New York at lsandler@bloomberg.net.

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