Conrad Black's lawyers calls for court to throw out fraud convictions
Former media tycoon's bid for freedom runs into choppy water in U.S. appeals court
Conrad Black leaves a bail hearing in Chicago. A U.S. judge on Wednesday released former media baron Conrad Black from prison on US$2-million bond, while she decides whether to throw out his 2007 conviction for defrauding shareholders.
Photograph by: REUTERS/John Gress, National Post
CHICAGO — Conrad Black's attorney appeared before a three-judge panel in U.S. appeals court Wednesday and told them that in light of the recent Supreme Court ruling on honest services, his client's conviction should be overturned.
"The government must confront the entire record," lawyer Miguel Estrada said. "It is our submission that none of the fraud or obstruction charges can survive."
But any hopes Black might have harboured privately that his appeal before the lower circuit court would be a technicality on the way to absolution were dashed by the tone of the hearings in the wood-panelled courtroom.
The 45-minute hearing, in a courtroom packed to capacity, was punctuated by heated exchanges and the verbal sparring was as much about legal arguments as it was theatre and the preening of two of the leading legal minds in America.
Honest services is a section in U.S. federal fraud law that makes it illegal "to deprive another of the intangible right of honest services."
The concept was central to Black's conviction on three counts of mail fraud for arranging $6.1 million U.S. in payments to himself and his associates from Hollinger International, where he was chairman and CEO.
The notion had been broadly interpreted in the U.S., but in June the U.S. Supreme Court narrowed the concept to include just bribery or kickback schemes.
Judge Richard Posner, a highly respected and influential jurist, academic and author, told Estrada he found his legal brief "puzzling."
He said he was not convinced Black and his co-defendants should be cleared of the fraud charge for pocketing $600,000 U.S. from the sale of Hollinger International Inc. assets without approval from the company's board of directors and in the absence of a non-competition agreement.
"How could a jury convict only on the basis of honest services fraud?" Posner inquired. "It looks like old-fashioned fraud."
Estrada argued the $600,000 payment was never characterized as a management fee, and that it was due to an accidental oversight that proper disclosure wasn't made.
"The issue was the intent to defraud," Estrada said, reinforcing that U.S. prosecutors relied on the controversial honest-services statute throughout the trial.
"That doesn't make sense," Posner responded.
The judge and the attorney sparred on this point for several minutes, after which a clearly exasperated Posner concluded that either there was no agreement and it was an oversight not to document the payment, or it was fraud.
"The jury in finding it was a fraud rejected your accident theory and I don't know what else there is to say," he told Black's Washington-based lawyer. "So the jury must have found them guilty of fraud. If you have $600,000 and no agreement entitling you to it, that looks like old-fashioned fraud."
At one point, Posner dismissed Estrada's argument, saying "you've lost me," and later interrupted him in mid-sentence, declaring "that does not make any sense."
Estrada, whose nomination to a federal appeals court in 2001 by former president George W. Bush was blocked in the Senate by the Democrats in a two-year filibuster, pleaded with Posner that he would be "appreciative" if he "permitted three sentences to respond."
On the issue of obstruction of justice, Estrada, who convinced Posner to release Black from a Florida jail in July, argued that his client acted without any criminal intent when he removed 13 boxes from Hollinger Inc.'s downtown Toronto head office six days before he was to be evicted by new management.
Estrada, who was a judicial adviser on former New York mayor Rudy Giuliani's failed 2008 presidential bid, said that "a jury is more likely to find you guilty of obstruction if they think you are guilty of a crime."
Again, Posner was unconvinced, saying he saw no connection between honest services fraud and the obstruction of justice conviction. When Estrada said there must be corrupt intent, Posner replied, "there is certainly corrupt intent," adding, "there is plenty of evidence" of corrupt intent.
That prompted Estrada to muse: "It's difficult to understate the circularity of that argument."
He kept forging ahead, trying to convince the court that Black simply relocated the boxes to another place. Posner bluntly said the former media mogul was trying to hide documents from the U.S. Securities and Exchange Commission.
Even during a rare moment of levity, the tension was palpable. Estrada tried to make a legal point by saying if he had an affair with the Disney character Minnie Mouse, and "if I (then) burn my Disney comics, I can't be convicted for trying to cover up a relationship with Minnie Mouse."
"On the contrary," Posner shot back. "You burned them because you were going to be prosecuted for Minnie Mouse."
Assistant U.S. Attorney Edmond Chang was pressed about the government's argument that any error caused by the use of the honest services statute in securing the fraud convictions was harmless and should not be reason to set them aside. Although Chang was peppered with questions, his was a minor grilling by comparison.
By the time it was over, it was clear that the Supreme Court's ruling would not likely fast-track the vindication of Black.
Posner and his peers are expected to render a decision before a bail hearing scheduled for Oct. 19.