Former chiefs of Black empire are charged with £17m fraud

Published on Friday 19 August 2005 12:04

A FORMER president and a lawyer with media mogul Conrad Black's tarnished empire have been charged with fraud involving £17 million.

The pair are alleged to have diverted the cash through a series of bogus newspaper deals.

David Radler, ex-president of Hollinger International and former Chicago Sun-Times publisher, and Hollinger's leading in-house lawyer, Mark Kipnis, face seven counts of fraud.

Both men were indicted along with Toronto-based Ravelston Corporation, a private firm that until recently was owned by Mr Black, the ousted chief executive of Hollinger International.

Mr Black quit the board of Hollinger International in 2003 and the company has subsequently sued him.

However, Mr Black was not personally accused of any fraud in this instance, although he still faces charges on other matters.

It is alleged that Mr Radler, Mr Kipnis and Ravelston diverted the money through a series of secret deals by disguising it as so-called "non-compete" fees connected to the sale of newspaper publishing groups.

They were also alleged to have cheated shareholders in the United States and Canada, as well as the Canadian tax authorities.

"Shareholders in public companies have a right to expect that their monies will be managed properly," said US attorney Patrick Fitzgerald when announcing the charges.

According to prosecutors, Mr Radler was cooperating with the investigation and was expected to plead guilty. However, his lawyer did not comment any further.

Mr Kipnis' legal representative said his client disagreed with the indictment. "We will enter a plea of not guilty and expect to be vindicated," Michael Swartz said.

Mr Black had no comment, spokesman Jeff McAndrews said. A spokesman for Hollinger Inc

said: "We're pleased that the US attorney has made significant progress in its investigations.

"Hollinger Inc will continue to co-operate in these and other related investigations."

Hollinger Inc is the Toronto-based holding company that has voting control over Hollinger International. Ravelston - the privately held Canadian company that Mr Black and Mr Radler used to control and which went into receivership after they resigned this April - is the majority owner of Hollinger Inc.

Federal prosecutors said in March they were conducting a fraud investigation into Hollinger Inc, Mr Black and Mr Radler.

According to the indictment, non-compete fees were paid by companies that bought newspapers from Hollinger International so Hollinger International would not later run a rival newspaper.