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U.S. Prosecutor Warns of New Hollinger Charges; Boultbee Pleads Not Guilty

Posted on: Wednesday, 7 December 2005, 21:00 CST

By TARA PERKINS

TORONTO (CP) - The U.S. Attorney's Office says it may lay new charges next week stemming from its investigation into Hollinger International Inc., the Chicago-based newspaper publisher once controlled by Conrad Black.

Five former executives of the company, including Black, have already been charged with fraud over an alleged scheme to swindle more than $80 million US from the company.

In a Chicago courtroom Wednesday morning, Canadian John (Jack) Boultbee pleaded not guilty to eight counts of fraud and was released on a $1.5-million-US cash bond.

Boultbee also told U.S. District Judge Amy St. Eve that he would transfer ownership of a rifle that has been in his family for generations to his son as a condition of his release.

During the arraignment, Robert Kent, chief of the complex fraud section at the U.S. Attorney's Office, told St. Eve that more charges could be coming Dec. 15, said Randall Samborn, spokesman for the Attorney's Office.

Kent "informed the judge of the possibility that there could be additional charges returned in the case as early as next week . . . specifically Thursday," Samborn said.

He would not elaborate.

A status update is scheduled in the Chicago court for Dec. 16. St. Eve has said she expects both Black and Boultbee to appear again that day.

Also Wednesday, Hollinger International announced that it has signed a settlement deal with Torys LLP, which will see the prominent law firm pay the company $30.25 million US to settle allegations that relate to Black's time at the helm of the company.

Hollinger said Wednesday that Torys has co-operated with the company's special committee in its investigations to date, and the settlement agreement says that the law firm will continue to co-operate in ongoing investigations and litigation.

Torys is required to make the payment to Hollinger International by the end of this year. The firm was an advisor when Hollinger sold a series of newspapers to CanWest Global Communications of Winnipeg for $3.2 billion Cdn.

At certain times, Torys represented both Hollinger and Black's holding company Ravelston, which has also been charged with fraud by the U.S. Attorney. Ravelston is currently controlled by a court-appointed receiver.

In a statement late Wednesday, Torys said it is pleased to have reached a settlement which includes no admission of wrongdoing.

The U.S. Attorney's case against Black and some of his former colleagues revolves largely around the CanWest deal, which saw "non-compete" fees go to Hollinger's executives rather than the company.

The U.S. fraud charges against Black also allege that he abused company perks, for instance having Hollinger pay $42,000 US for his wife Barbara Amiel Black's lavish birthday party in New York five years ago and using the company jet to fly to French Polynesia on vacation.

Boultbee were supposed to be arraigned last week, along with Black and former Hollinger executive Peter Atkinson, but Boultbee failed to show up.

Defence attorney Patrick Tuite said Wednesday it was because Boultbee, who lives in the Vancouver area, was moving.

"There was no hiding or disrespect for the government and they understood that," Tuite said. He declined to comment further, except to say that any trial could be as much as a year away.

The U.S. Attorney's Office charged Boultbee, a 62-year-old Toronto native and former chief financial officer of Hollinger, and Black, Hollinger's former CEO-chairman, on Nov. 17.

Both men face eight counts of fraud and a potential jail sentence of 40 years if found guilty on all counts.

The Nov. 17 indictment added new defendants and new charges to an August indictment. The August charges led to a guilty plea, a jail term and a co-operation deal for Black's former top business associate, David Radler.

In addition to naming Black and Boultbee, the Nov. 17 indictment named Atkinson, who once oversaw legal affairs for Hollinger, and tacked new charges onto those faced by Mark Kipnis, a former Hollinger lawyer.

Last week, Black pleaded not guilty to the charges against him, and was released on a $20 million US bond.

The 61-year-old businessman, who gave up his Canadian citizenship to become Britain's Lord Black of Crossharbour, is allowed to travel between Canada and the U.S. only with permission from the court.

Source: Canadian Press

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