Ex-aide tells of Conrad Black apartment buy

The former head of investor relations at Conrad Black’s company testified Monday that he had warned the onetime media baron that his shareholders would look askance at Black’s purchase of a multimillion-dollar corporate apartment on Park Avenue.

“I relayed to him shareholders’ concerns” over “the appearance of having a luxury apartment,” Paul Healy said.

“I said for a company that had limited cash flow -- which was about $100 million at that point [in 1994] -- it seemed excessive.”

Nevertheless, Black’s company, Chicago-based Hollinger International Inc., bought the unit, a luxury cooperative apartment at 635 Park Ave. in Manhattan, in 1994 for $3 million.

The company, now known as Sun-Times Media Group, had planned to pay for an additional $2 million in renovation costs until Healy warned Black that shareholders would complain, and Black agreed to pay for the renovation himself.

Black subsequently bought a ground-floor apartment in the same building in 1998 for $499,000, this time saying it was for company officers and his staff, with the company paying the $1.4-million cost of renovation. Healy said company executives as well as Black’s friends stayed there.

Ultimately, at Healy’s urging, Black agreed to buy a larger upstairs apartment in 2000 -- but only at its $3-million cost and not fair-market value as had been agreed upon in a contract giving him the option.

“I told him I was delighted he was buying the apartment,” Healy said, adding that he expected Black would pay the prevailing price given the soaring New York real estate market.

But Black responded, “rather emphatically, ‘No, it’s cost,’ ” Healy recounted.

In the end, Black had the ground-floor apartment valued at $850,000, nearly 60% higher than what he paid for it and not accounting for the cost of renovation. He then paid the remaining $2.15-million cost of the upstairs unit in cash. Hollinger’s restive institutional shareholders later ousted Black in 2004 for what an internal investigation said amounted to his running the company as a “corporate kleptocracy.”

Black is criminally charged with racketeering, tax evasion, obstruction of justice and fraud, which include accusations that he abused company perks such as the New York apartment, a company-paid surprise birthday party for his wife and a trip on a company-leased jet to the South Seas island of Bora Bora.

He faces as many as 101 years in prison, millions of dollars in fines and $92 million in possible forfeitures. Three other executives are on trial with him, facing lesser charges.

Together the four executives are accused of siphoning off about $60 million from Hollinger for personal gain as they dismantled what had been one of the world’s largest newspaper conglomerates.

When Black sold the New York apartment in 2005, FBI agents seized the $9 million in proceeds. An additional $1 million in escrow was seized by the government to pay taxes, and Black still faces a $557,000 lawsuit from the broker over the unpaid commission on the sale.