SEC Files Civil Fraud Charges Against Conrad Black

by Glen Shapiro, LawAndTax-News.com, New York

19 November 2004

It emerged on Monday that the US Securities and Exchange Commission has filed an enforcement action in the US District Court, Northern District of Illinois, against Hollinger International's former Chairman and CEO Conrad M. Black, former Deputy Chairman and Chief Operating Officer David Radler, and Hollinger, Inc., a Canadian public holding company controlled by Black.

The SEC alleged that between 1999 and 2003, Black, Radler and Hollinger Inc. engaged in a fraudulent and deceptive scheme to divert cash and assets from Hollinger International, Inc., a US public company and a subsidiary of Hollinger, Inc., and concealed their self-dealing from Hollinger International's public shareholders.

The US securities regulator has asked the court to enjoin the defendants from further violations of the securities laws, order them to disgorge their ill-gotten gains and pay pre-judgment interest and civil penalties, bar Black and Radler from serving as an officer or director of a public company, and impose a voting trust upon the shares of Hollinger International held directly or indirectly by Black and Hollinger, Inc.

Speaking with regard to the action, Stephen M. Cutler, Director of the Commission's Division of Enforcement, explained that:

"Black and Radler abused their control of a public company and treated it as their personal piggy bank. 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 former Telegraph boss is also being investigated by the US Department of Justice, and may face criminal charges as a result.

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