April 10, 2007 / 5:01 PM / 12 years ago

Mistrial motions denied at Conrad Black trial

CHICAGO (Reuters) - Conrad Black’s lawyer called for a mistrial minutes after testimony resumed on Tuesday in the fallen media magnate’s criminal fraud trial but the motion was swiftly denied.

Conrad Black arrives at the Dirksen federal courthouse in Chicago, March 20, 2007. Black's lawyer called for a mistrial minutes after testimony resumed on Tuesday in the fallen media magnate's criminal fraud trial but the motion was swiftly denied. REUTERS/John Gress

It was the second mistrial motion in two days dismissed by U.S. District Judge Amy St. Eve, who has wrestled with complaints from attorneys for Black and three co-defendants that testimony citing some defendants’ words might implicate other defendants.

Defence lawyers argue they cannot rebut such testimony by directly cross-examining other defendants, who do not have to testify.

On Tuesday, prosecutor Julie Ruder questioned Fred Creasey, a former accountant for Black’s Toronto-based holding company Hollinger Inc., about what he had been told by co-defendant Peter Atkinson, a former Hollinger Inc. vice president. Black’s lawyer Edward Genson rose to object.

“Objection and move for a mistrial,” Genson said before Creasey could answer Ruder’s question about whether Atkinson had ever referred to certain “non-compete” payments to executives as “bonuses.” The payments are at the centre of the trial.

“Motion denied. He can answer the question,” St. Eve said.

On Monday, as the trial moved into its fourth week, St. Eve denied a similar motion for a mistrial by Gus Newman, a lawyer for Black co-defendant Jack Boultbee, the former chief financial officer at Hollinger Inc.

Outside the presence of the jury, lawyers from both sides have jousted with each other and St. Eve over what degree she should limit questioning of witnesses about what one defendant said that might prejudice another defendant.

The heart of the racketeering and fraud case against Black and three former associates revolves around the non-compete payments paid to the executives and to related companies for the sales of Hollinger International Inc. newspapers.

E-MAIL RAISES CONCERNS

The fourth co-defendant is former Hollinger International attorney Mark Kipnis. Another former Hollinger executive, David Radler, has pleaded guilty in exchange for a 29-month prison sentence and an agreement to testify against the others.

Prosecutors say millions paid to executives for non-compete agreements, essentially promises not to re-enter a market where a newspaper has been sold, were a ruse used by Radler, Black and the others to reward themselves untaxed bonuses.

Black and the others are accused of violating their fiduciary duty to shareholders by diverting $60 million in such payments that should have gone to Chicago-based Hollinger International, now renamed Sun-Times Media Group Inc.. The company once owned hundreds of newspapers including the Daily Telegraph of London and the Jerusalem Post.

Black, who is also accused of misusing company perks and other crimes, has called the charges a “massive smear job” and he and the three other executives have pleaded not guilty. If convicted, Canadian-born Black, 62, could spend years in prison and face $92 million in forfeitures.

So far, defence lawyers have sought to show the payments were properly disclosed in government filings and approved by the boards of directors of Hollinger International and its parent, Hollinger Inc.

Prosecutors on Tuesday introduced an e-mail message from Atkinson to Boultbee as evidence that the two were worried about how the payments were perceived. Atkinson also referred to a trip Black took to the South Seas island of Bora Bora on one of Hollinger International’s two corporate jets.

“I’m becoming concerned about disclosures we make about executive compensation,” Atkinson wrote to Boultbee. “I also wonder about the personal use of the jets ... shouldn’t this be disclosed?”

Based on earlier testimony, Black offered to pay half the C$565,326 round-trip cost of the flight that ended up being charged to Hollinger International and one of Black’s Canadian holding companies.

On Black’s U.S. customs declaration, which was introduced as evidence, he reported the purpose of the trip as “personal.” Three friends who accompanied him declared the trip was for “business” purposes.

Whatever its purpose, the trip was later described by Black as a “shambles” in a note to friend Seth Lipsky, a journalist.

“Came down with bronchitis and nearly drowned snorkelling as a result,” said Black’s note, which prosecutors read out in court. An outbreak of dengue fever forced the visitors to “spend our time applying insect repellent.”

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