CHICAGO (CN) – The 7th Circuit rejected the appeal of former press baron Conrad Black and three ex-colleagues, who were convicted of swindling Hollinger International shareholders by pocketing $6.1 million through bogus transactions disguised as “management fees.”
Black, a Canadian-born member of Britain’s House of Lords, effectively controlled Hollinger through a now-defunct Canadian company called Ravelston, in which he was the majority shareholder.
He directed Mark Kipnis, Hollinger’s attorney, to prepare and sign an agreement on behalf of a subsidiary called APC, which owned a weekly community newspaper in Mammoth, Calif., requiring APC to pay Hollinger executives $5.5 million in exchange for their promising not to compete with APC.
“That Black and the others would start a newspaper in Mammoth Lake to compete with APC’s tiny newspaper there was ridiculous,” Judge Posner wrote.
Hollinger executives then tried to conceal the scheme by omitting the dubious transaction from their financial reports. They later admitted to having sought private gain, but claimed they had done so at the expense of the Canadian government.
But Posner rejected this “no harm-no foul” argument: “(I)f you embezzle money from your employer and replace it (with interest!) before the embezzlement is detected, you still are guilty of embezzlement.”
Black is serving a 6.5-year sentence for fraud and obstructing justice. Kipnis and former Hollinger executives Peter Atkinson and John Boultbee were also convicted of fraud.
Hollinger was once the world’s third-largest publisher of English-language newspapers, according to Reuters.