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Witness against media mogul Black sentenced

David Radler receives 29 months for fraud in exchange for testifying at the trial of four ex-Hollinger executives.

December 18, 2007|From Bloomberg News

F. David Radler, the chief government witness in the fraud trial of former Hollinger International Inc. Chairman Conrad Black, was sentenced to 29 months in prison for his role in a scheme to defraud the company and its investors.

U.S. District Judge Amy St. Eve, who last week sentenced Black to a 6 1/2 -year term, approved a 2005 plea bargain under which the U.S. wouldn't oppose any bid by Radler, a Canadian citizen and former Hollinger president, to serve his term in Canada. Under Canadian law, he's likely to be released 20 months earlier than in the U.S., where there is no federal parole.

"You have breached your duty of trust; you have breached your duty of loyalty to Hollinger," St. Eve told Radler on Monday in Chicago federal court. He has repaid $61 million to the company, the judge noted before pronouncing sentence, which included a $250,000 fine. Radler is to report to prison Feb. 25.

The sentencing ends one of the last major white-collar prosecutions after the collapse of Enron Corp. in 2001. U.S. and state prosecutors obtained convictions of former chief executives of WorldCom Inc., Adelphia Communications Corp., Tyco International Ltd. and Enron over the last five years. Black has said he would appeal his conviction and sentence.

Radler, 65, and Black, 63, were among five former Hollinger executives indicted in 2005 for stealing from their company as they engineered the sale of more than $3 billion in assets from 1998 through 2001.

"I made mistakes and they hurt me and my family and others," Radler told the judge at Monday's hearing.

Starting with ownership of a single newspaper in Sherbrooke, Canada, in 1969, Black and Radler built Hollinger -- now known as the Sun-Times Media Group Inc. -- into the world's third-largest publisher of English-language newspapers, including the Chicago Sun-Times, Canada's National Post, the Jerusalem Post and Britain's Daily Telegraph.

Radler pleaded guilty to a fraud count and agreed to cooperate with prosecutors. Black, ex-Hollinger Vice President Peter Atkinson, former Chief Financial Officer John Boultbee and ex-General Counsel Mark Kipnis were convicted in July of three counts of mail fraud after a jury found they took part in the theft of $6.1 million from Chicago-based Hollinger.

Radler testified for eight days, during which he described the defendants' theft of $5.5 million. The money was listed as payments by Hollinger to some of the defendants for their agreement not to compete with a subsidiary after they quit.

Black, Atkinson and Boultbee were also convicted of taking $600,000 from Hollinger, falsely claiming it as payment for agreements not to compete with two companies buying newspapers from Hollinger.

During cross-examination at the trial, Black's lawyer Edward Greenspan questioned Radler about his motives for cooperating with prosecutors, claiming the former executive knew he might serve as little as five months of his 29-month sentence if he was transferred to Canada. In the U.S., Radler may be released after about 25 months at the earliest.

Radler attorney Anton Valukas of Chicago-based Jenner & Block acknowledged the promise by prosecutors not to oppose a request by his client to serve his sentence in a Canadian prison. That request, the lawyer said, "is something we will be considering, but no final judgment has been made."

U.S. prosecutors asked St. Eve to calculate Radler's sentence under federal guidelines from 2000. For Black, they urged her to use the current, stricter guidelines. St. Eve rejected the request as unfair to Black.

Although the judge said she was initially "surprised" at the short sentence proposed for Radler, she acknowledged his repayment of $61 million and granted the bid for a prison term below the 57- to 71-month range suggested by the guidelines.

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