Winner will be one that keeps it simple-A Saga of Conrad Black and a Fall From Grace
Theresa Tedesco Chief Business Correspondent, Financial Post, with files from Peter Brieger
Published: Wednesday, March 07, 2007
For those keeping score, the U.S. prosecutor who has trained his sights on Conrad M. Black just added another high-profile prize to his trophy case.
In a resounding legal victory yesterday, a jury of 12 men and women bought Patrick Fitzgerald's simple version of events and convicted Lewis Libby Jr., the former chief of staff to U.S. Vice- President Dick Cheney, on four counts of obstruction of justice, perjury and giving false statements to FBI agents.
Legal experts say that case should serve as a template for the upcoming criminal trial against Lord Black, which begins in Chicago on March 14.
The U.S. prosecution team of the Conrad Black trial, from left: Edward Siskel, Julie Cramer and Eric Sussman.
For one, the charges against Mr. Libby are similar to the eight-count indictment Mr. Fitzgerald, the U.S. Attorney for the Northern District of Illinois, and his associates levelled against the former chief executive of Hollinger International Inc., a Chicago-based publishing company.
The key to the Washington jury verdict for Mr. Fitzgerald, who personally prosecuted Mr. Libby, is the so-called "Kiss" principle -- Keep It Simple, Stupid.
"The basic rule for a white-collar prosecutor is not to get too complicated," explained Professor John Coffee at Columbia University Law School in New York.
"You really can't teach the average juror, who may not have finished high school, the equivalent of a graduate degree in accounting, during the course of a trial."
Although Mr. Fitzgerald will be on the sidelines supervising the case against Lord Black, expect his team of four assistant attorneys to play by the same principles. "The U.S. government has to simplify its case and focus on key events that can be explained simply," he said.
The 62-year-old Montreal-born media mogul is charged with eight counts of criminal fraud, obstruction of justice and racketeering in connection to US$83- million prosecutors alleged was siphoned from Hollinger International by Lord Black and some of his former business associates. It's alleged the bonuses were disguised as non-compete payments.
"The number one thing you do is try to convince the jury that there were under-the-table payments made for these noncompete agreements," Prof. Coffee explained.
He said the prosecutions argument will look something like this: "These agreements are all a sham. In theory, a non-compete agreement is something the buyer [should] want and the buyer [in this case] appears not to have demanded. It looks as if they were something Conrad Black insisted on. If Conrad Black wants it, and the buyer does not, it doesn't look as if it is performing a serious function -- and is, instead, something that has been used to rationalize the diversion of money to himself that would otherwise have gone to the shareholders."
Conversely, Lord Black's lawyers will need to do the opposite.
"The defendants in white-collar cases often want to confuse the jury so they don't really know what's going on," Prof. Coffee said.
Lord Black's lead defence attorneys Edward Greenspan and Edward Genson will want to offer up a clear, sensible explanation for the non-compete payments -- and avoid using technical commercial jargon that could make the jury's eyes glaze over.
"They are going to want to convince the jury that the government doesn't understand the business world and that they are simply subjecting an honest businessman to a threat of years in prison because of a series of transactions that are more complicated than the government understands," Prof. Coffee said.
At the same time, the press lord will have to contend with allegations that he abused corporate perks, including using corporate money to pay most of a $60,000 birthday party at an upscale New York restaurant for his wife, Barbara Amiel Black, and used Hollinger International's corporate jet for a vacation to the French Polynesian island of Bora Bora.
Those charges yielded salacious evidence about his lifestyle into the public record that Lord Black unsuccessfully attempted to have barred.
"It's much more adversarial down there," says Alan Gold, a prominent Canadian criminal lawyer.
John Rosen concurs. "It's a three-way war. The judges don't trust any of the lawyers, prosecutors don't trust the defence and the defence doesn't trust the prosecution," said the Toronto-based criminal lawyer who defended convicted rapist and murderer Paul Bernardo. "We have an adversarial system, but it's more professional here. There, it's about winning at all costs."
According to Mr. Gold, Lord Black is learning that "American fraud laws regarding white-collar crimes are broader than Canadian laws."
For example, the Toronto-based lawyer said that the fraud charges involving the non-compete payments and those involving personal financial misbehaviour wouldn't likely be lumped together in this country because of the "potential bad effect" on jurors.
"In Canada, a judge could well decide they should be tried separately because a jury considering the corporate matters might be influenced and prejudiced by hearing about a lavish lifestyle," he explained.
In the United States, the rules of evidence are much more liberal than they are in Canada. For example, the on-going squabbles over evidence between Lord Black's legal camp and U.S. prosecutors before U.S. District Judge Amy St. Eve would likely be covered by a publication ban in Canada.
In other words, the titillating information about the couple's US$200,000 monthly expenses, Mrs. Black's jogging attire, expensive handbags, silverware and opera tickets, would have been haggled over by lawyers in a courtroom but that information would not have been made public in Canada.
"The United States has much more generous publicity rules so every comma, every dash on every pleading can be publicized in advance and at great length," Mr. Gold says. As a result, he says, there is a greater danger of jurors receiving prejudicial information. Even though voir dire allows judges and lawyers in the U.S. to question potential jurors to ensure they are going to be fair, Mr. Gold questions whether it provides enough protection for a justice system that assumes everyone is innocent until proven guilty.
"Being a juror in a high-profile American case has almost become an occupation or calling because you can do the TV interview circuit and perhaps write a book. It would seem to me that once you have consented to become a juror, the danger is that people will give false answers in order to get a place on the jury," he explained. "So one can start to wonder whether jury questioning, which assumes the jurors will answer honestly, is a valid protection and antidote for this prejudicial information."
He prefers the Canadian approach of preventing "poisonous information" from the public before a trial, saying it is more prudent "than letting it all be published and then trying to undo it after the fact because you can't put the genie back in the bottle."
But Prof. Coffee says the personal information has a "real impact" and can be effective for the prosecution in convincing the jury that there was "waste and excess" when Lord Black operated at the helm of Hollinger International.
Clearly, the composition of the jury will be critical to the fortunes of both sides. There are approximately nine million potential jurors in the northern district of Illinois and both sides will be looking for very different people.
U.S. prosecutors will be trying to fill the 12 chairs with a "pretty low-level jury without much financial education and literacy," says Prof. Coffee.
Conversely, Lord Black will want "people who have run busineses themselves and consider regulation to be interference with their entrepreneurial style," he added.
In the end, everyone agrees that the case against Lord Black and three other co-defendants will likely rest on the testimony and cross-examination of David Radler, Lord Black's long-time associate, with whom he formed a business partnership for over 30 years.
The 65-year-old former publisher of the Chicago Sun-Times pleaded guilty to one count of fraud and a US$250,000 fine in August, 2005 in exchange for a 29- month prison term and a promise to cooperate with the U.S. government.
It is widely accepted that Mr. Radler provided prosecutors with the ammunition they needed to indict Lord Black in November, 2005.
Legal experts on both sides of the border expect Mr. Radler will be the star witness for the prosecution -- and will likely appear at the end of the trial, which is expected to run for at least 10 weeks.
"Ultimately, Mr. Radler is going to be the critical witness but I'm not sure I'd put him on the stand first," Prof. Coffee said. "You want the jury to understand basic facts before they get into this confrontation about whether he's knifing his friend in the back to get a lesser sentence."
Mr. Gold agreed, saying it would be better for prosecutors to lay "a foundation" around him first using experts to deal with the details that are not contested and then bring in his testimony to add greater significance and help build a stronger case.
"Unless they are absolutely certain that no marks can be made against him, you don't want the jury to listen to the rest of the case being skeptical of him," he explained.
Of course Messrs. Greenspan and Genson will attempt to discredit Mr. Radler during cross-examination as nothing more than an opportunist who negotiated a sweetheart deal in exchange for leniency.
If he performs satisfactorily for the American prosecutors, Mr. Radler could ask for a reduction in his prison sentence, especially if Lord Black and the others are convicted, Mr. Rosen said.
"Everything in the U.S. system is about ratting someone out," he said. "You get brownie points for performing well at trial."
What is not clear is whether Lord Black will take the stand in his own defence. He is willing and eager, but his lawyers have said they'll wait to decide until after the U.S. government has presented its case to the jury.
"Lawyers are very nervous about having their clients testify because it leads to an elaborate cross-examination," Prof. Coffee explained. "However, they also know that the jury expects them to defend themselves in their own words."
Lord Black's lawyers are well aware that it's a double-edged sword. He may score points with the jury, but some of the public comments he has made in the months leading up to the trial - including his bombastic pronouncements of his innocence - could be used against him by U.S. prosecutors.
For example, by musing that the "U.S. Marines couldn't keep me away [from the criminal trial]," Lord Black may have raised the stakes.
"You don't really do that, especially in an American case, unless you are innocent or you believe that you are going to be found innocent," said a Canadian criminal lawyer who asked not to be named. "This is essentially a poker game and he's upped the ante because if he loses, it's going to come back to haunt him big time."
Prof. Coffee said skilfull prosecutors can find a way to use Lord Black's comments against him as long as they are relevant to the case.
"If he were to take the stand voluntarily and testify, they can seek to show that he makes overbroad and unsupported statements and that would make him less credible to the jury," he explained.
Not only that, he says, "I'm sure there are lots of things buried - and not so deeply buried - in Lord Black's past that can be brought up in order to show that he doesn't have the reputation for veracity that he claims to have," Prof. Coffee suggested. "If his lawyers are cautious and prudent, they don't want their client taking the stand.
Legal experts agree the Justice department will keep the trial as short as possible because jurors tend to blame them when trials drag on.
"If the jury looks bored, it'll show. They'll be twiddling their thumbs and yawning," Prof. Coffee says. "If the jury looks like they are just waiting for the morning coffee break, that's not good for the prosecution. The defence will be able to say to the jurors, 'why are we all here?'"
ttedesco@nationalpost.com