Secret Conrad Black Spending Deal Becomes Issue In Court

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By: E&P Staff

The U.S. District Court Judge who will oversee Conrad Black’s fraud and racketeering trial next spring wants to know the details of a secret settlement that eased a Canadian court order freezing his assets.

At a hearing in Chicago federal court Thursday, Judge Amy St. Eve told Black’s U.S. attorney that she wants to see a copy of the agreement, which Black reached with Hollinger Inc., the Toronto-based holding company that Black once used to run his global newspaper empire.

Hollinger is suing the former chairman in Canada, and in August obtained a court order freezing Black’s assets worldwide, and limiting him and his wife to a budget of about $45,000 a month.

In September, Black and Hollinger reached a settlement apparently easing that freeze, but the details have not been publicly disclosed.

U.S. prosecutors have repeatedly accused Black of fudging his financial situation in discussions about the assets that secure his $20 million bond. Much of that bond is secured by Black’s Palm Beach, Fla., mansion, which is valued at $35 million. The property has a $10 million mortgage that according to court filings by prosecutors is in default, and accruing interest at 26% rate.

In court, Black’s U.S. attorney Edward Genson said the mortgage holder has agreed not to foreclose on the property — which would sharply reduce the assets backing his bail — if Black pays the interest. A payment of $1.14 million was recently wired to the mortgage holder, the attorney said in court, according to an account by The Associated Press.

Black had previously agreed to pay off the mortgage to secure the bond, and prosecutors contend he is using the Canadian court settlement as an excuse to shirk that obligation.

Genson told Judge St. Eve that he would ask Black’s attorneys if he can obtain a copy.

In another development in court Thursday, St. Eve entered a permanent restraining order against the sale of a 2.6-carat diamond ring and other items Black bought for his wife on a one-day shopping spree. The U.S. intends to seize that property if it wins a verdict in the case.

Black is scheduled to go to trial in March on charges he and other key executives looted Hollinger International — the Chicago-based newspaper publishing company now know as Sun-Times Media Group — of hundreds of millions through bogus non-compete agreements and other improper payments. Black also faces wire fraud and tax evasion charges.

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