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Black’s Lawyer Urges Court to Throw Out Conviction

Sept. 29 (Bloomberg) -- Conrad Black’s 2007 convictions for fraud and obstructing justice should be thrown out because it’s impossible to tell whether jurors found him guilty under a now-invalid legal theory, his lawyer told a federal appeals court.

A three-judge panel in Chicago is hearing Black’s case today for the second time following a U.S. Supreme Court decision that narrowed the scope of the so-called honest services fraud statute, the law used to prosecute the former Hollinger International Inc. chairman.

“None of the fraud or obstruction convictions can survive examination of the trial record,” Black’s appellate lawyer, Miguel Estrada, told the judges during oral arguments. Prosecutors, in court filings, said there’s ample evidence to support Black’s conviction on other grounds.

Black, 66, was convicted by a U.S. jury in July 2007 after a four-month trial. He and three other former executives at the Chicago-based publisher now known as Sun-Times Media Group Inc. were found to have stolen $6.1 million from the company as they engineered its sale of assets.

The Supreme Court, ruling on former Enron Corp. Chief Executive Officer Jeffrey K. Skilling’s appeal, said the statute can be applied only to allegations involving bribes or kickbacks that deprive citizens or shareholders of honest services. Federal prosecutors also used the law in cases against ex-Illinois governors George Ryan and Rod Blagojevich.

Jury Instructions

In a separate opinion, the court returned Black’s case to the Chicago appellate judges to reconsider how the jury arrived at its verdict. Jurors were allowed to base their vote for convictions of Black and the other Hollinger executives on either honest-services fraud or conventional fraud without having to specify.

The men were convicted on three fraud counts spanning two separate transactions, one involving a $5.5 million payment and another for $600,000.

Hollinger General Counsel Mark Kipnis’s conviction for aiding in the smaller theft was thrown out when U.S. District Judge Amy J. St. Eve decided he hadn’t been with the company long enough to have formed a culpable intent.

“The erroneous honest-services instruction was harmless beyond a reasonable doubt,” prosecutors said in an August filing with the appeals court. “The fraud convictions here should be affirmed because the record shows, beyond a reasonable doubt, that a rational jury found the defendants guilty on the valid money-fraud theory.”

Skeptical Judge

U.S. Circuit Judge Richard Posner expressed skepticism when Assistant U.S. Attorney Edmond Chang returned to that theme today, telling the court that the jury was presented with one set of facts and two legal theories under which they could convict.

“You must have felt having honest services in there was a help to you,” the judge said to Chang.

Posner, together with Circuit judges Diane Sykes and Michael Kanne, were hearing the case for the second time. In 2008 they denied appeals by Black and his co-defendants, setting the stage for the U.S. Supreme Court ruling earlier this year.

Posner challenged assertions from both sides, focusing in one dialogue with Estrada on the $600,000 payment shared by Black, Executive Vice President Peter Atkinson and Chief Financial Officer John Boultbee, ostensibly for agreements not to compete with purchasers of Hollinger newspapers, for which there were no corresponding contracts.

Finding of Intent

“They must have found intent to defraud,” Posner said of the jury, rendering the erroneous honest-service fraud instruction harmless.

The balance of the money, $5.5 million, was paid to Black, Atkinson, Boultbee and ex-Chief Operating Officer David Radler for their prospective promises not to compete with a single-paper Hollinger subsidiary.

Radler pleaded guilty to fraud and testified at the trial.

Estrada argued that if the judges find the honest-services jury instructions tainted its deliberations, they should also throw out Black’s obstruction conviction, based upon his removal of boxes of documents from his Toronto office during the U.S. government probe.

A jury willing to convict Black for fraud may have believed it more likely that he was trying to obstruct, Estrada said.

Black, who served more than two years of a 6 1/2-year sentence in a federal prison in Coleman, Florida, was freed on $2 million bail by St. Eve on July 21, pending the outcome of the appeal.

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, 7th U.S. Circuit Court of Appeals (Chicago).

To contact the reporter on this story: Andrew M. Harris in Chicago at

To contact the editor responsible for this report: David E. Rovella at

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