By: E&P Staff
The U.S. Securities and Exchange Commission said Monday that it filed a lawsuit in federal court accusing former Hollinger Inc. Chairman Conrad Black and former Chicago Sun-Times Publisher F. David Radler of fraudulently diverting money and assets from the Hollinger International newspaper company.
“Black and Radler abused their control of a public company and treated it as their personal piggy bank,” said Stephen M. Cutler, director of the SEC’s Division of Enforcement. “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 lawsuit accuses Black, Radler, and Hollinger Inc. — the Black-controlled holding company that owns the majority voting stake in Hollinger International — of a variety of fraudulent acts between the years 1999 and 2003.
The SEC alleges Black, Radler, and Hollinger Inc. schemed to defraud Hollinger International, publisher of the Sun-Times and other papers, through a series of “related party transactions” that improperly diverted to themselves and other corporate insiders approximately $85 million in supposed “non-competition” payments taken from the sale of newspapers.
The suit accuses Black and Radler of “orchestrating 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.”
Black and Radler misled Hollinger International’s directors and audit committee and lied to the SEC, the commission lawsuit alleges.
The lawsuit, filed in U.S. District Court in Chicago, demands Black and Radler “disgorge their ill-gotten gains,” and that a voting trust be imposed on the shares of Hollinger International held by Hollinger Inc. The lawsuit also asks the court to bar Black and Radler from ever serving as officers or directors of a publicly traded company.
Neither Black nor Radler could be immediately reached for comment. Hollinger Inc. had no immediate comment.