Fraud trials have come a long ways in Chicago since the days of Al Capone as federal prosecutors in the Windy City announced the indictment on Thursday of newspaper entrepreneur Conrad Black and three of his former associates in connection with an alleged fraud scheme that took place while Mr. Black controlled the giant newspaper company, Hollinger International Inc. Charged along with Mr. Black were Jack Boultbee and Peter Atkinson, who were both former vice presidents of Hollinger, Mark Kipnis, the company’s former corporate counsel, and Ravelston Corp., a Canadian company that Mr. Black used to gain control of Hollinger. Mr. Kipnis was charged with fraud in August along with former Hollinger chief operating officer David Radler, who has already copped a plea under which he will serve 2.5 years in the pokey in return for cooperating with prosecutors. The Justice Department’s unusually long press release on the indictment is here.
The indictment contends that the fruits of the fraud were a couple of Park Avenue apartments, a corporate jet, a trip to the South Pacific and over $50 million in allegedly unauthorized payments to executives. Mr. Black and the others are accused of diverting more than $32 million from Hollinger through a byzantine series of transactions that the indictment frankly does not describe well. The indictment also alleges that Mr. Black was involved in the fraudulent diversion of an additional $51.8 million in 2000 from Hollinger’s sale of assets to CanWestGlobal Communications Corp.

Although the indictment is an unwieldly 60 pages, it is at least narrower than the internal Hollinger probe of last year, which concluded that Mr. Black and the others diverted more than $400 million from the company. After that report, the Securities and Exchange Commission filed civil fraud charges against Mr. Black and Mr. Radler regarding $85 million that they allegedly diverted from the company.
Mr. Black was ousted in a shareholder revolt a couple of years ago as chairman and CEO of Hollinger, which is a newspaper publishing company that at one time owned, among other interests, hundreds of North American community newspapers, London’s Telegraph Group, the Jerusalem Post and the Chicago Sun-Times. After Mr. Black’s ouster, a Hollinger board committee report concluded that Mr. Black and and others had taken $32 million in payments that the board had not authorized, which spawned numerous civil lawsuits and the SEC lawsuit. Inasmuch as discovery in certain of the cases has indicated that Hollinger’s board actually approved a substantial amount of the payments that the plaintiffs contend were improperly diverted by Mr. Black, Mr. Black’s defense in the criminal case is likely to be that most, if not all, of the payments were approved by the Hollinger board, and that receiving the benefits of generous (or sloppy, depending upon your point of view) corporate governance is not a criminal act.