Former Hollinger Exec Pleads Not Guilty

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By: NATHANIEL HERNANDEZ, Associated Press Writer

A former executive of the company that owns the Chicago Sun-Times pleaded not guilty Wednesday to charges that he participated in a scheme to wrongfully divert $32 million in company funds.

Mark S. Kipnis, 58, who was the top in-house lawyer for Chicago-based Hollinger International, entered the plea during his arraignment on fraud charges in federal court. Kipnis, who resigned in 2003, is free on a $250,000 personal recognizance bond. He did not comment to reporters as he left court with his attorneys.

Kipnis, former Sun-Times publisher David Radler and Toronto-based Ravelston Corp., a private company owned until this spring by Conrad Black, were each indicted Aug. 18 on five counts of mail fraud and two counts of wire fraud. They were accused of cheating shareholders in the United States and Canada, as well as Canadian tax authorities.

Black, the ousted CEO of Hollinger International, was not charged in the indictment. Prosecutors have stressed that the investigation is continuing and have said that Radler, 63, of Vancouver, British Columbia, is cooperating.

Radler, who resigned in 2003, is scheduled to appear in court Sept. 15 to plead guilty, his attorney, Anton Valukas, said Wednesday.

Ravelston’s arraignment was postponed until Sept. 7 after Assistant U.S. Attorney Eric Sussman told U.S. District Judge Amy J. St. Eve that the company had not decided yet how it will respond to the charges.

Ravelston — the privately held Canadian company that Black and Radler used to control and which went into receivership after they resigned this April — is the majority owner of Hollinger Inc., the Toronto-based holding company that has voting control over Hollinger International.

The indictment alleged Radler, Kipnis and Ravelston diverted the money through a series of secret deals by disguising it as noncompete fees connected to the sale of newspaper publishing groups.

Kipnis is accused of participating in the scheme and failing to disclose the illegal payments to Hollinger International’s audit committee, according to the indictment. The indictment says Kipnis participated in the documentation and closing of each deal, the business terms of which were supervised by Radler.

If convicted, Radler and Kipnis face up to five years in prison and a $250,000 fine for each count of the indictment. The court also could impose an alternative fine of twice the gross profit to any defendant or twice the loss to any victim, whichever is greater.

If Ravelston is convicted, it faces a fine of $500,000 for each count or the alternative fine.

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