Black calls ruling 'immensely gratifying'

Conrad Black has won a partial victory in his prolonged battle to overturn his criminal convictions for fraud and obstruction of justice, but it is unlikely the former newspaper owner will be getting out of jail any time soon.

In a series of rulings Thursday, the United States Supreme Court redefined a key section of the U.S. fraud statute, known as "honest services," and ordered an Illinois appeal court to reconsider Lord Black's conviction, based on the new definition.

The Supreme Court said that under its new interpretation of honest services, the jury in Lord Black's case was given erroneous instructions. However, it left it to the appeal court to determine whether the error was "ultimately harmless" and Lord Black would have been convicted anyway.

The judges also expressed no opinion on whether Lord Black's obstruction of justice conviction should be reversed, leaving that to the appeal court as well.

In a statement from a Florida prison, where he is serving a 61/2 year sentence for fraud and obstruction of justice, Lord Black called the decision "immensely gratifying."

"This has been a long struggle and a difficult time," he said. "I will have no further comment until I have read the judgment, spoken extensively with counsel, and have a clear idea of the sequence of coming legal events."

The "honest services" doctrine has been debated for decades in U.S. legal circles, with many lawyers and judges arguing it has never been properly defined. Congress included it in the fraud statute 22 years ago to help prosecutors go after crooked politicians, under the notion that they committed fraud by depriving citizens of their "honest services."

But prosecutors have gone much further and used the theory in many other cases, including corporate cases such as Hollinger International Inc. and Enron Corp.

Lawyers for Lord Black and Jeffrey Skilling, Enron's former chief executive officer, argued in their appeals to the Supreme Court that the statute was too vague and should be struck down as unconstitutional or reined in. Many legal observers expected the Supreme Court to take aggressive action and throw out the statute. But in a 6-3 decision, the judges instead opted to narrow the definition. They ruled that honest services can only be applied to cases involving bribes or kickbacks.

The judges said that under this interpretation, the fraud convictions must be vacated. However, prosecutors in both the Enron and Hollinger cases used other parts of the fraud statue - not just honest services - to win convictions. It will now be up to appeal courts to decide whether the convictions can still stand.

Miguel Estrada, a Washington lawyer who represents Lord Black, called the ruling "a great victory for Conrad."

"The Black opinion expressly recognizes that the scheme to defraud alleged here did not involve any bribes or kickbacks," he said. "It also holds that the judgment is wrong. It leaves open the possibility that the government could argue in the [appeal court] that [honest services] did not matter anyway, but under governing law the government cannot succeed on any such argument unless it shows it to be true 'beyond a reasonable doubt.' Which they could never do, even if they tried."

Mr. Estrada added that he will be seeking bail for Lord Black pending the appeal court review.

Lord Black was sentenced to three years for fraud and 61/2 years for obstruction of justice. The sentences are concurrent. Three other former Hollinger executives were also convicted of fraud and another one, David Radler, pleaded guilty to fraud and testified against the others. He received a 29-month sentence and was released after about 10 months.

But Eric Sussman, a Chicago lawyer and former lead prosecutor in the case, doubted Lord Black will get bail and he said the ruling was good news for prosecutors. "Other than them completely affirming [the convictions], I think this is probably one of the best outcomes the government could hope for," he said. "I don't think it's good news for Black."

He added that when Lord Black's case first came to the appeal court immediately after his conviction in 2007, the court ruled that the convictions would likely stand up without the honest services doctrine. "They went through this issue in a slightly different context," he said. "The new argument in the [appeal court] will be, was there sufficient evidence to sustain a mail fraud conviction? The [appeal court] has already pretty much told us, yes."

The appeal court is expected to review the case later this year. If it reverses the fraud convictions, prosecutors will have to decide whether to retry the case on those charges. Even if prosecutors win another conviction, Lord Black and the others could not receive longer sentences.

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What became of Lord Black's empire

All Conrad Black's holdings central to the case against him have either gone out of business, gone into bankruptcy protection or were sold. Here's what happened to the major names:

Hollinger Inc. was the central holding company in Lord Black's media empire. Shortly after his conviction, the Toronto-based company filed for bankruptcy protection in August, 2007. In a settlement with a creditor in May, 2008, Hollinger handed over its voting control of newspaper publisher Sun-Times Media. Hollinger was delisted from the Toronto Stock Exchange in August, 2008.

Hollinger International was the publisher of the Chicago Sun-Times and a stable of smaller U.S. newspapers, as well as international papers The Daily Telegraph and The Jerusalem Post. It also owned the National Post and the Southam newspaper chain before they were sold to CanWest Global Communications Corp. in 2000. The international papers were also sold. Now known as Sun-Times Media Group Inc., the company filed for U.S. bankruptcy protection in March, 2009, and in October, 2009, it was bought for $5-million (U.S.) by a group of investors led by Chicago banker James Tyree, who also agreed to assume nearly $22-million in liabilities.

Ravelston Corp. Ltd. was a private holding company through which Lord Black controlled the Hollinger companies and collected management fees. As fraud allegations against Lord Black and his associates became public, the company filed for creditor protection under the Companies' Creditors Arrangement Act in April, 2005, placing it under the control of a receiver, RSM Richter Inc. Ravelston was also charged with, and pleaded guilty to, fraud and was named in a number of lawsuits. The company was placed into bankruptcy in December, 2008.

Susan Krashinsky

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WHERE THE HOLLINGER DEFENDANTS ARE NOW

CONRAD BLACK

Convicted of three counts of fraud and one count of obstruction of justice, Lord Black received three years for each fraud charge and 61/2 years for obstruction of justice (all are concurrent). He is serving time in the Coleman Federal Correctional Complex in Florida. He is expected to seek bail pending the Illinois appeal court's review of the case.

JOHN BOULTBEE

Convicted of three counts of fraud, he received 27 months for each charge, all concurrent. He was released on bail last year after less than a year in prison while the U.S. Supreme Court considered the case. He will likely remain free on bail at home in Victoria while the appeal court now reviews the case.

PETER ATKINSON

Convicted of three counts of fraud, he received a 24-month sentence, all concurrent. He initially did not join the appeal to the U.S. Supreme Court, preferring to push for a transfer to a prison in Canada. That happened last year and he was released. He lives in the Toronto area. His lawyers then asked the Supreme Court if he could join the appeal; the court agreed and its ruling Thursday will apply to him.

MARK KIPNIS

Convicted of two counts of fraud, he received five years probation. The only American in the case, he lives in Chicago where he has had trouble making ends meet. Judge Amy St. Eve recently terminated his probation early so he could get a licence to become a real estate agent. He also joined the Supreme Court appeal.

DAVID RADLER

Pleaded guilty to one count of fraud. He testified against the others and received a 29-month jail sentence. He was released in 2008 after serving 10 months. He lives in Vancouver and runs Alberta Newspaper Group.

Paul Waldie