(CN) – The 7th Circuit reversed two of former press baron Conrad Black’s convictions for “honest-services” fraud, but upheld two other convictions for fraud and obstruction of justice.
Black, a Canadian-born member of Britain’s House of Lords, and three former colleagues were convicted in 2007 of pocketing $6.1 million from Hollinger International’s shareholders through bogus transactions disguised as “management fees.”
Black allegedly manipulated the company’s financial reports to cover the scheme.
Two fraud charges against Black involved agreements with Hollinger subsidiaries not to compete with local papers after they split from Hollinger.
Hollinger subsidiary APC paid Hollinger executives $5.5 million for their promise not to compete with APC’s Mammoth Lake, Calif., community newspaper. Black also received $600,000 from subsidiaries Forum and Paxton through a similar agreement, though no contracts were ever drawn.
The Hollinger executives tried to conceal the schemes by omitting the dubious transaction from their financial reports. They later admitted to having sought private gain, but claimed to have done so at the expense of the Canadian government.
The Chicago-based federal appeals court upheld the convictions in June 2008, but Black appealed to the Supreme Court, which found the so-called “honest-services law” used to convict Black too broad.
On remand, the 7th Circuit reversed Black’s convictions under the honest-services law in light of the high court’s finding that the law requires proof of bribery or kickbacks.
“That was not proved here so defendants could not lawfully be convicted of honest-services fraud,” Circuit Judge Richard Posner wrote in the recent ruling.
But Black argued that the submission of the honest-services charge to the jury had contaminated the obstruction of justice charge, entitling him to a retrial on both counts. He had been caught on video removing 13 boxes of documents under investigation from his office.
Posner disagreed with Black’s logic.
“No reasonable jury could have acquitted Black of obstruction if only it had not been instructed on honest-services fraud,” he wrote. “It would still have been the case that Black had known he was being investigated for fraud and could not have known that years later the Supreme Court would invalidate one of the fraud charges.”
The circuit panel reversed the convictions and sentences stemming from the APC scheme, but upheld the fraud conviction involving the Forum and Paxton deal and the obstruction conviction.
The government may now choose to drop the APC charges in order to conserve resources and proceed directly to resentencing.
Black has served two years of his 6.5-year prison term. Depending on the results of his upcoming resentencing by U.S. District Judge Amy St. Eve, he may avoid a second trip to prison.
Co-defendants in the case include former Hollinger executives Peter Atkinson and John Boultmee, and the company’s attorney, Mark Kipnis.
Hollinger International, once the world’s third-largest publisher of English-language newspapers, owned the Chicago Sun-Times, the Daily Telegraph and several smaller local newspapers.