July 21 (Bloomberg) -- Conrad Black, the former Hollinger International Inc. chairman, was granted $2 million bail guaranteed by a family friend and may be released from a federal prison as early as today.
U.S. District Judge Amy J. St. Eve in Chicago granted Black’s request for bail and said he isn’t permitted to leave the U.S. at this time. St. Eve signed the release order, which will be transmitted to the prison. Black is required to make his way to Chicago for a July 23 hearing at which St. Eve will instruct him on the terms of his release.
“His home is in Canada,” defense attorney Miguel A. Estrada told St. Eve, seeking greater freedom for his client. The judge said she’d consider that request after seeing a Black financial statement and hearing from a pre-trial services officer.
Black, 65, has been in the low-security Coleman Federal Correctional Institution since March 2008. He’s appealing his fraud conviction.
A federal appeals court granted Black’s petition for bail this week, following a U.S. Supreme Court decision narrowing the scope of a law relied upon by prosecutors in their case against him.
When he’s freed from prison, Black must immediately return to Chicago to be instructed by St. Eve on the terms of his release and what he can and can’t do.
Release Maybe on Friday
Estrada’s co-counsel, Marc Martin, told the judge that could happen as soon as Friday, depending on when his client exits the Coleman facility. Martin was part of the team that defended Black at trial in 2007.
The bail amount was guaranteed by Roger Hertog, a former vice chairman of Alliance Bernstein Holding LP and chairman of the New York Historical Society.
Hertog, who attended today’s hearing, afterward declined to talk to reporters.
When he gets out of prison, Black will likely spend his first hours and days of freedom with his wife, Barbara, who divides her time between Florida and Toronto, said Peter White, a longtime Black friend and a former Hollinger executive who remains in touch with him 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,” he said.
Joan Maida, an assistant to Black, declined to comment yesterday. She said e-mail at the prison in Coleman hasn’t been working since July 16 and Black couldn’t be reached for comment. Black’s wife didn’t respond to an e-mail seeking comment.
Before trial, St. Eve required Black to post $21 million worth of property and cash to secure his freedom and 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 while on bail.
Black, writing in a column for Canada’s National Post newspaper in April, 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, under which he can reacquire title if he pays off an outstanding lien by September.
The house is on the market, Estrada told the judge.
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 in federal prison for obstruction of justice. He also got a five-year concurrent sentence for fraud.
Representing the U.S. in court today was Assistant U.S. Attorney Julie Porter, the last member of the four-person prosecution team still working under Chicago U.S. Attorney Patrick J. Fitzgerald.
The amount of Black’s new bond was consensual, she told the court today.
Siding with Black and former Enron Corp. Chief Executive Officer Jeffrey Skilling in separate rulings on June 24, the Supreme Court 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.
This month, Black asked the U.S. Court of Appeals in Chicago to grant him bail while he continues his appeal.
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.
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 report and pay taxes on income stemming from personal use of Hollinger’s corporate jets, the use of corporate money to acquire papers written by former President Franklin D. Roosevelt and Roosevelt’s private secretary, and Hollinger’s 2000 purchase of a $5.9 million New York apartment for his use. Black wrote a book on 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.
A status hearing on remaining U.S. Securities and Exchange Commission allegations in its case against Black, which was on hold while criminal proceedings advanced, is set for Dec. 16, according to a July 19 court filing.
The SEC, which sued Black in 2004 claiming he and former Hollinger President David Radler stole $85 million from the company, won a partial judgment in 2008 that Black violated securities laws by making false statements about Hollinger’s dealings.
Separately, Radler settled with the SEC in 2007 and Black’s bankrupt holding company Hollinger Inc. settled with the SEC in 2008.
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 editor responsible for this report: John Pickering at email@example.com.