Two Ex-Execs of Hollinger Indicted
Former Chicago Sun-Times publisher David Radler, a lawyer for the newspaper’s parent company and a media holding company controlled by Conrad Black were indicted on federal fraud charges Thursday for allegedly diverting $32 million through a series of bogus deals.
The indictment alleged the three diverted the money through a series of secret deals by disguising it as noncompete fees connected to the sale of newspaper publishing groups.
Radler, Mark S. Kipnis, the former top in-house lawyer for Chicago-based Hollinger International Inc., and Toronto-based Ravelston Corp., a private company controlled by Black, were accused of cheating shareholders in the U.S. and Canada, as well as Canadian tax authorities.
All three were charged with five counts of mail fraud and two counts of wire fraud. They will be arraigned at a later date.
Black was not accused of any wrongdoing.
Prosecutors said Radler, 63, of Vancouver, Canada, was cooperating with the investigation and was expected to plead guilty at a later date.
“Shareholders in public companies have a right to expect that their monies will be managed properly by officers and directors and that the officers and directors won’t steal it,” U.S. Atty. Patrick Fitzgerald said in announcing the charges.
There was no immediate comment from any of the principals involved.
Federal prosecutors said in March that they were conducting a fraud investigation into Hollinger Inc., Black and Radler.
Hollinger Inc. is the Toronto-based holding company that has voting control over Hollinger International. Ravelston, the privately held Canadian company that Black has long controlled, in turn is the majority owner of Hollinger Inc.
The government acknowledged the criminal investigation in court papers when it asked to intervene in a U.S. Securities and Exchange Commission lawsuit filed in November against Hollinger Inc., Black and Radler.
The SEC alleged the men engaged in a “fraudulent and deceptive scheme” to take cash and other assets from Hollinger International, the parent company of the Sun-Times, and conceal the actions from investors.
Black was forced out as chief executive and chairman of Hollinger International after an internal review found that he and several associates had improperly siphoned off millions of dollars from the company.