It emerged on Friday that David Radler, soon to testify against former associate Conrad Black, has reached a settlement with the US Securities and Exchange Commission regarding his role in the alleged fraudulent activities undertaken by the former Hollinger boss.
Under the terms of the settlement announced last week, Radler was ordered to pay approximately $23.7 million in disgorgement and prejudgment interest; ordered to pay a $5 million civil penalty; barred from serving as an officer or director of a public company; and enjoined from violations of the antifraud, proxy, books and records, reporting, and internal control provisions of the federal securities laws.
Linda Chatman Thomsen, Director of the Commission's Division of Enforcement, announced that:
"Radler and others misappropriated millions of dollars from Hollinger International and made numerous misstatements to shareholders as part of their scheme. The tough sanctions in this settlement, including one of the largest civil penalties in recent years against an individual wrongdoer, reflect our resolve to act forcefully against corporate officers who perpetrate fraud against those whom they were supposed to serve, the shareholders of the company."
On Nov. 15, 2004, the Commission filed its action against Radler, Lord Black, Hollinger International's former Chairman and CEO, and Hollinger, Inc., Hollinger International's controlling shareholder, alleging that from approximately 1999 through 2003, the defendants engaged in a fraudulent and deceptive scheme to divert cash and assets from Hollinger International, Inc., through a series of related party transactions.
The Commission's complaint alleges, among other things, that Black and Radler diverted to themselves, other corporate insiders and Hollinger, Inc. approximately $85 million of the proceeds from Hollinger International's sale of newspaper publications through purported "non-competition" payments.
The complaint also alleges that Black and Radler orchestrated the sale of certain of Hollinger International's newspaper publications at below-market prices to another privately-held company owned and controlled by Black and Radler, including the sale of one publication for $1.00.
The complaint further alleges that in order to perpetrate their fraudulent scheme, Black and Radler misled Hollinger International's Audit Committee and Board of Directors concerning the related party transactions and also misrepresented and omitted to state material facts regarding these transactions in Hollinger International's filings with the Commission and during shareholder meetings.
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