LORD BLACK GETS LIGHT SENTENCE FOR FRAUD: 6-1/2 YEARS Hollinger exec to serve at Eglin; co-defendants get lesser sentences.
Judge Amy St. Eve rejected the requests of federal prosecutors to jail him for 19 to 25 years, saying that federal guidelines for the crime suggested he should serve between 78 and 97 months, or 6-1/2 to eight years.
The judge said she would allow Lord Black to serve his time at the federal prison at Eglin Air Force Base in Florida, 500 miles from his home in Palm Beach, Fla. She ruled he must turn himself in on March 3.
St. Eve also ruled that Lord Black could keep his Palm Beach home and the proceeds from the sale of his Manhattan condominium.
Unrepentant up until the end, Lord Black continues to maintain his innocence and has said he will appeal the conviction. The Chicago Tribune quoted him as saying to the judge that he had "profound regret" for the huge losses in Hollinger shareholder value, but that he didn't apologize for his actions. The paper said he had a "stoic and unemotional demeanor" and that he told the judge, "We have the verdict we have and we can't retry the case."
Lord Black's three co-defendants received lesser sentences: Former Hollinger accounting chief Jack Boultbee was sentenced to 27 months in prison, three years probation and a fine of $152,000; former Hollinger lawyer Peter Atkinson received 24 months in jail and three years probation, while another former Hollinger lawyer, Mark Kipnis, received five years probation, six months of electronic monitoring and 275 hours of community service.
Prosecutors had sought prison sentences of seven to 10 years for each man. St. Eve said that Kipnis' sentence was the lightest because he received none of the non-compete payments, though he did facilitate the fraud.
And while the saga is far from over -- civil lawsuits between Lord Black and Hollinger's successor company, The Sun-Times Media Group Inc., are still in play -- no one could deny that it has been a strange trip that started 4-1/2 years ago because of the insistence of one institutional investor to find out why Hollinger International wasn't performing up to expectations.
Leading up to Hollinger International's annual meeting in May 2003, the investment firms Tweedy Browne Co. LLC of New York city -- which owned 13.2 million shares of Hollinger International at the time -- laid out a complement of five complaints about the company, including its depressed share price, its low debt rating, its poor revenues, concentration of control of the company in the hands of Lord Black and a small number of associates, and the belief that Lord Black was overcompensated.
At the time Hollinger owned not only the Chicago Sun-Times, but also London's Telegraph and Israel's Jerusalem Post. Earlier, it had also owned dozens of papers in Canada, including the National Post, and had a burgeoning U.S. community newspaper group, called Liberty Publishing. Liberty's successor company is today's GateHouse Media Group Inc.
The Tweedy Browne complaints and others motivated a group of Hollinger's outside directors to begin an investigation, which was led by the former chairman of the Securities and Exchange Commission Richard Breeden, that led to the company determining that $32.2 million was given to Hollinger executives without the approval of the board of directors.
That in turn led to the resignations of Lord Black and Kipnis from executive positions and Atkinson's resignation from the board (he remained executive vice president for six more months before his ultimate resignation). Boultbee was fired by the board.
A fourth executive, Chief Operating Officer L. David Radler, also left the company in November 2003. Radler eventually pleaded guilty to criminal charges and testified against the other three last July; he is to be sentenced later this month and is expected to serve about two years in a Canadian prison.
The Breeden report didn't come out for another year and when it did, the 500-plus page document accused Lord Black and other executives of "corporate kleptocracy," and that they essentially used company funds for their own devices.
Hollinger sued Lord Black in an attempt to get back the $32.2 million, while Lord Black counter-sued Hollinger and then sued some members of the Hollinger board.
Canadian newspapers painted the Lord Black sentence as a victory, though one could say there is never a victory where the word "prison" is involved. Nonetheless, from where the government started out -- accusing him of $84 million in crimes, taking away his homes, leveling 14 criminal charges against him and suggesting he go to prison for 91 years -- to where it ended was far short of the goal. So if you squint real hard, you can see something of a Lord Black victory here. Regardless, as the man himself told the National Post today, "As I have said ad nauseam, this is far from over."