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Monday, May 20, 2024 | Back issues
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Hollinger to Recoup $6.1 Mil. From Conrad Black

CHICAGO (CN) - Lord Conrad Black must return $6.1 million in earnings and interest to his former media conglomerate, Hollinger, after defrauding shareholders, a federal judge ruled.

A Canadian-born member of the British House of Lords, Black once controlled Hollinger International, the third-largest newspaper conglomerate in the world. It published the Chicago Sun Times, Canada's National Post, the Jerusalem Post, Britain's Daily Telegraph, and hundreds of small papers.

He was convicted of fraud in 2007 for pocketing $6.1 million of shareholder money in bogus transactions disguised as "management fees." After successfully appealing some of his fraud convictions to the Supreme Court, however, his initial 6 1/2-year sentence shrank to 42 months.

Black was released from prison in May 2012.

Based on a stipulation, the 68-year-old agreed to disgorge $3.8 million in earned compensation to Hollinger International, now known as Sun-Times Media Group, but the Securities and Exchange Commisssion also sought to impose additional penalties.

Black objected, citing the criminal penalties already imposed upon him, including the prison term, a fine of $125,000, a forfeiture of $600,000 and a civil judgment of $8.6 million.

U.S. District Judge William Hart did not have any sympathy for Black's predicament, but decided to impose interest on the $3.8 million as the sole additional penalty.

"Black's violations of the securities laws in this case occurred over two years, part of a wide-ranging fraud," Hart wrote. "In 1982, in a different enforcement action, Black consented to the entry of an injunction prohibiting him from violations of the anti-fraud and tender offer provisions of the Exchange Act. His conduct in these proceedings is a repeat violation of the securities laws. Black has advanced no reason to believe that he now has any respect for the securities laws or any regret for the losses or costs his violations have caused. He is intransigent in his denunciation of the courts and the justice system."

"Black is required to disgorge the compensation International paid him subsequent to the 2002 date he would have been discharged had he made proper disclosures," he added.

Hart was matter of fact in explaining the decision to withhold further penalties.

"Under the circumstances of this case, where the ill-gotten funds have been forfeited or recovered and the fraudulent conduct has been criminally punished and fined, civil sanctions in the form of disgorgement plus payment of compound interest is found to be sufficient without the addition of a third-tier penalty based on the disgorgement remedy," he wrote.

Black must pay his former company $3.8 million, plus $2.3 million in compounded interest from 2002.

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