By: Mark Fitzgerald
On his first day of testimony as the prosecution?s star witness in the federal criminal fraud trial of Conrad Black, his former trusted lieutenant David Radler told a federal jury in Chicago that he never made a move without the consent of the deposed press baron.
?I did not make a major financial decision without contacting Conrad Black,? Radler said. ?I have no recollection of selling a newspaper anywhere, at any time, without consulting Conrad Black.?
After eight weeks of trial, Conrad Black came face-to-face Monday with his one-time trusted lieutenant, now the star witness in the federal fraud case against him, former Chicago Sun-Times publisher David Radler.
Radler strode into U.S. District Court Judge Amy J. St. Eve’s courtroom shortly before noon looking calm, wearing a blue suit, a red tie, and a white shirt that showed off his signature deep tan.
Black?s lawyers in opening statements argued that it was Radler, not Black, who managed the many American and Canadian community newspapers that Hollinger International — now known as Chicago Sun-Times Media Group — sold off during the late 1990s and early 2000s.
The defense claims Black had nothing to do with the crimes alleged by the federal government, which include improperly diverting phony non-compete payments to entities allowing Black and other key executives to pocket the cash.
But Radler testified that he and Black talked frequently about all aspects of the chain?s business.
Radler also testified about their former friendship. Radler was in the wedding party when Black married the conservative columnist Barbara Amiel. Radler and his wife socialized and traveled with the Blacks, once vacationing together in Hawaii.
In his afternoon testimony, Radler laid out the history of the newspaper and holding company acquisitions made during that 1970s that would become the world-wide Hollinger International newspaper chain.
By 1985 or so, Radler testified, he, Black and minority partner Peter White came to a ?meeting of the minds? and decided to concentrate on the newspaper industry.
?It was the one business we actually liked,? Radler said. ?The one business in which we would be able to add value. The one business we believed had a future was the newspaper business.?
Radler was calm in the witness stand, often laughing at little glitches in the proceedings, and chuckling while answering the prosecutor?s questions.
Radler got a taste of the vigorous cross-examination that awaits him in future days. Attorneys for all of the defendants objected to an illustrated chart that showed the stakes Radler and Black had in Hollinger International, and other corporate entities that ultimately controlled the newspapers.
Black?s Canadian attorney, Edward Greenspan, tried but did not succeed in rattling Radler about some transactions.
Prosecutor Sussman?s questions repeatedly returned to the theme of how involved Black was in the newspaper business.
For example, Radler testified that when it seemed the chain could not sell the trucking industry magazine American Trucker, Black lined up a potential buyer in Henry Kravis, a Hollinger board member. Hollinger had pulled the magazine off the market when it failed to attract more than $30 million, Radler said. Ultimately, in an auction, the Kravis group bought the publication for $76 million.
The courtroom was packed when Radler strode in at about 11;45 a.m.
E&P witnessed the proceedings from a media overflow room with a video feed that did not show Radler. Nevertheless, his voice was calm, and within five minutes of testimony he was chuckling under the direct examination of Assistant U.S. Attorney Eric Sussman.
Radler began his testimony by describing the plea bargain that turned him into the chief prosecution witness against Black. Radler pleaded guilty last September to a single count of wire fraud in exchange for a reduced prison sentence likely to be served in Canada, restitution of some R8.5 million, and a fine of $250,000.
“I pled guilty to taking money from Hollinger International under circumstances that were not allowed,” Radler said.
The 62-year-old Black is charged with swindling Hollinger out of $84 million. Much of the fraud charges are related to his selling off small papers and keeping payments from the buyers. These payments, which were in exchange for “noncompete” promises from Hollinger, should have been paid to the company, and not to Black and the company’s executives, according to federal prosecutors.
Radler described his first meeting with Black in 1969, when he was 27 years old. He was introduced to the future press baron by a mutual friend who would become a longtime business partner of the two, Pete White.
White had spotted a money-losing English-language daily in a small French-speaking town in Quebec. The three new partners bought the Sherbrooke Record for $6,666 each, Radler said.
Within three months, the Record was turning a profit, Radler said.
In the courtroom, Black was seated sideways to the witness stand, and appeared to be avoiding looking at his old partner. Black’s Chicago attorney, Edward Genson, on the other hand, who is hobbled by a neuro-muscular condition, moved his seat so he could stare directly at Radler through the testimony.
Radler said he considered Black a friend in those early days in Quebec, recounting how they once vacationed in New Orleans together.
Of his first meeting with Black in 1969, Radler said “I was impressed with Mr. Black’s knowledge and his ability, and I thought he would be a great partner to have.”
Before Radler electrified the courtroom with his appearance, the proceedings Monday morning mirrored the mixture of tedium and vaguely scandalous gossip that has characterized the trial for the past eight weeks.
Much of the morning was taken up with eye-glazing cross-examination of a KPMG financial analyst who sparred with Black’s attorney over how to value non-compete agreements in the newspaper industry.
The testimony veered back to Black’s famously lavish lifestyle, however, when his former New York-based executive assistant Janice Akerhelm testified about making arrangements for a December 2000 surprise 60th birthday party for Black’s wife, the conservative columnist Barbara Amiel Black.
The party at the posh New York restaurant Le Grenouille cost a total of approximately $42,800. Akerhelm testified that Black instructed her that Hollinger International should pick up two-thirds of the restaurant tab while he would pay the remaining one-third. Under cross-examination by Genson, Akerhelm confirmed that among the boldfaced names attending the party — including Donald Trump, Peter Jennings, Henry Kissinger, William F. Buckley Jr. and Michael Bloomberg — were several members of Hollinger International’s board of directors.