SEC files charges against former Hollinger CEO
NEW YORK (AP) – The Securities and Exchange Commission has filed a lawsuit against Conrad Black, the ousted CEO of Hollinger International Inc., and his top deputy David Radler, accusing the men of using the newspaper publisher as their “personal piggy bank” over a period of four years, the SEC announced on Monday. The SEC accused Black and Radler of engaging in a “fraudulent and deceptive scheme” to take cash and other assets from Hollinger International from 1999 to 2003, and then concealing their actions from the company’s shareholders.
The suit adds to the legal troubles for Black, who is already being sued by his own company for the recovery of money they say he improperly diverted to himself and his associates. That lawsuit makes broader accusations against Black and claims that he caused more than $500 million in damages to the company.
The SEC suit focuses on a narrower period of time and seeks civil penalties against Black as well as an order barring him and Radler from serving as officers or directors of public companies. The SEC also wants Black’s voting shares of Hollinger International placed in a trust.
Black has been removed as chairman and CEO of Hollinger International after an internal investigation found that he and his associates schemed to siphon away millions of dollars in company funds. However, he remains the company’s controlling shareholder.
“Black and Radler abused their control of a public company and treated it as their personal piggy bank,” the SEC’s director of enforcement, Stephen Cutler, said in a statement. “Instead of carrying out their responsibilities to protect the interest of public shareholders, the defendants cheated and defrauded these shareholders through a series of deceptive schemes and misstatements.”
The SEC filed the lawsuit against Hollinger in federal court in Chicago, where Hollinger International is based. Hollinger publishes the Chicago Sun-Times and The Jerusalem Post, and until recently it also owned The Daily Telegraph of London.
A special committee of Hollinger International’s board of directors is suing Black and his associates to recover what they say are hundreds of millions of dollars that were siphoned away from the company. That lawsuit also names company director Richard Perle as a defendant, alleging he breached his fiduciary responsibility. Perle is a commentator on defense issues and a former Assistant Secretary of Defense.
Black has steadfastly denied any wrongdoing. A spokesman for Black did not immediately return a call for comment, and a spokesman for Radler declined to comment.
In its suit, the SEC accuses Black and Radler of several instances of self-dealing, including diverting money to themselves as part of the sale of several newspapers; of orchestrating the sale of several newspapers from Hollinger to a privately held company controlled by Black and Radler at below-market prices; and of misleading the company’s board regarding the transactions.
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AP Business Writer Marcy Gordon in Washington contributed to this story.
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