From The Sunday Times
December 2, 2007
The hunt for Black’s hidden millions
The media tycoon Conrad Black is likely to be jailed for fraud next week and the search is on for the loot, but oddly not everyone seems keen to find it, says his biographer
Sipping his favourite French dry white wine while gazing over the Atlantic ocean from his $37m (£17.8m) home in Palm Beach, Florida, Conrad Black appears to visitors not to have many cares in the world. In the winter sunshine, Conrad the Cool enjoys a servant attending to his whims, a chef producing his favourite meals, the gardeners maintaining the manicured lawns and the fawning solicitations of Barbara Amiel, his trophy wife.
To the invited eyewitnesses, Black’s billionaire lifestyle has been barely influenced by his imminent return to Chicago next week for sentencing to imprisonment after his conviction last July for fraud and obstruction of justice. Instead of showing remorse and pleading for mercy, the 63-year-old swindler has been brazenly broadcasting his confidence of a successful appeal and his eventual revenge against “persecution over the last four years . . . to impoverish me and imprison me for life”.
His movements are restricted under his $21m bail conditions, but he has been appearing on television and radio shows by satellite from his home, blaming “bourgeois” enemies. As Ray-mond Chandler might have written, Black is as inconspicuous as a tarantula crawling across the icing of a birthday cake.
Some sigh that his self-delusion is breathtaking, while others insist that his flawless facade is as phoney as ever. All agree that once he exchanges his tailored jackets for an orange jumpsuit, inhales the prison stench and enters a cell for incarceration with fellow inmates, his performance will collapse. Certain of spending several years without privacy and privileges, Black will finally confront reality.
Yet shortly after settling down on his narrow, hard bed, he will be able to enjoy some self-congratulation. Although the target of legal proceedings to recover about $1 billion, he has so far outfoxed those hunting for the $175m that he pocketed in cash from Hollinger International, his publicly owned New York newspaper company.
The starkest proof that Black still retains millions of dollars in unidentified offshore accounts is offered by David Radler, his business partner for 34 years. After pleading guilty to fraud, repaying about $100m and accepting a 29-month sentence, Radler testified in Black’s trial.
“He’s still got lots of money,” Radler told me. “I’m sure he hasn’t spent it all.”
Radler personally stole at least $150m, some paid into offshore accounts in Barbados. In a damning report by a special committee of Hollinger’s directors in 2004, Black was also shown to have diverted millions of Hollinger’s funds into bank accounts in Barbados and the Cayman Islands. That money has disappeared into the offshore ether.
Some speculate that Black retains about $100m – plus the mortgages he has raised on his Palm Beach and Toronto homes (together worth about $50m), plus $15.8m that Radler paid him for his share of Horizon, their private local newspaper empire, plus the millions he accumulated before committing the frauds, including money deposited in his children’s trusts.
Then there is all the expensive furniture and art placed in storage after Black sold his London and New York homes. No one has bothered to assess its value. Nor has anyone quantified the jewellery that he bought Amiel and the rare books he collected.
Black’s living costs are still high. He maintains two huge homes, kept a suite at Chicago’s Ritz-Carlton hotel for five months during the trial and has contributed about $10m to his own legal expenses. The location of the fortune that pays for this remains a mystery.
Finding money deposited offshore is by definition made as difficult as possible. Hollinger has to establish where the money was first deposited after leaving the United States and then ask the local court for help to find the proceeds of fraud in a named bank.
If successful, Hollinger would have to discover the next destination of the funds, probably in another offshore account, and would need to repeat the process again and again until the final goal was reached.
The alternative is to enter into the shady black market world of private detectives. A small network of proven experts possess relationships with bankers who, for a price, will reveal the secrets of their depositors.
In parallel, the detectives would mount a surveillance operation against the Blacks. Besides phone-tapping, intercepting e-mails and post and rummaging through the Blacks’ dust-bins, the detectives would be most interested in credit card statements. Debits for airline trips, hotels and cars might reveal whether associates have visited well-known haunts in Switzerland, Gibraltar or elsewhere.
“I’ve been looking for the money for some time but I don’t know where it is,” said Wes Voorheis, chief executive of Hollinger Inc, the Canadian company that was used by Black to control Hollinger International. Voorheis, an aggressive Toronto lawyer, is suing Black to recover C$750m (£365m). “Black has done everything to make finding the money harder,” he said.
Hollinger Inc hardly helped its cause by retaining Juval Aviv, a controversial Israeli private investigator based in New York, to follow the money trail last year. Aviv, who claimed to be a former Israeli commando and Mossad intelligence officer, provided nothing new and Edward Greenspan, Black’s lawyer, described him in court as a con artist.
Since that humiliation, Voorheis has hired more reliable investigators. “It’s a very sensitive area,” he said. Part of the sensitivity is that until Voorheis’s appointment earlier this year, Hollinger Inc’s Canadian directors were paying themselves huge salaries for doing practically nothing. “I earn a living searching for money and now we’ll get on,” said Voorheis.
To Black’s glee, the farce in Toronto has been compounded by internecine strife among the directors overseeing the remnants of his empire. Voorheis represents those in Canada responsible for administering the huge debts of Hollinger Inc – while in the United States another board of directors is struggling with the debts of Hollinger International. There has been aggressive litigation between the two Hollinger companies to recover money.
At its height, Hollinger International owned more than 500 newspapers across North America and the Telegraph group in London. But although notionally worth $2.1 billion, the company bore massive debts. By 2004, after Black had been ousted, its only asset was the stricken Chicago Sun-Times.
Ever since, the surviving directors have grappled with the newspaper’s falling circulation, debts, endemic dishonesty and their bid to recover $542m from Black and others on account of their alleged “unjust enrichment” and frauds.
Black’s conviction should have galvanised the Chicago directors to pursue their claim. Surprisingly, his obduracy has sapped their energy. Some in Chicago want to “move on”.
“We would pursue Conrad if we had confidence that there is a pot of gold at the end of the rainbow,” said one of the directors, “but we don’t have that confidence. We wonder: should we spend money if there’s nothing at the end?”
The evaporation of their resilience is prompted by the absence of hard evidence that millions have been deposited in offshore bank accounts and by the directors’ belief that Black has already spent millions of dollars, not least on legal fees.
“After all, he stole the money to live like a billionaire, so it’s probably gone,” sighed another director. “What he didn’t spend has been well concealed.”
The pessimism is encapsu-lated by Gordon Paris, a former banker who is chairman of Hollinger International’s special committee of directors. He was unimpressive while testifying in Black’s trial and his depressive personality undermines those enthusiastic for the hunt. Black has capitalised on that defect, especially since his conviction. While repeatedly denying any misconduct, he has rejected Paris’s offers of negotiations.
Those hunting for Black’s millions suspect that money may have been nominally transferred into Amiel’s name, not least because it protects Black from charges of perjury when declaring his assets to any court.
To date nobody has produced any hard evidence against Amiel personally to suggest that she has done anything unlawful, yet she remains, understandably, a target for investigation.
Investigators cite as partial proof that Amiel, or their joint trustees, may control some of the money testimony given during a court hearing in Toronto in August 2006. Amiel, it was revealed, had “lent” her husband $2m to pay domestic expenses, including $9,000 every month for the gardeners in Palm Beach.
The precise source of Amiel’s income will remain a secret until the court’s self-imposed discretion unravels after Black’s final appeal, which his pursuers expect will be dismissed when it reaches court next year. With Black effectively unable to sabotage the judicial process from jail, his pursuers expect the courts to impose judgments ending the litigation and ordering his repayment of millions.
“Either we’ll then find the money or we give up,” volunteered one director.
The question all the directors and their lawyers remain reluctant to answer is whether Amiel will be personally pursued to recover the money after Black’s imprisonment. Legally she is an obvious target of the hunt, and her notoriety as a rude snob encourages the bloodthirsty to settle old scores.
As a director of her husband’s principal companies, Amiel, along with the rest of the board, failed to challenge his excesses and frauds. She also voted to reward herself with $1.1m a year as a director and pocketed millions in additional fees that were not approved by the board of directors.
There were dozens of occasions, both private and public, when Amiel heard explanations of the evidence against her husband. She has chosen to ignore the facts. Now she is listed with her husband as a defendant of several legal actions to recover millions of dollars.
The question is whether, if she returns to London as expected after he is jailed, the pursuers will seek a court order to compel her disclosure of the source of every pound that she spends.
The process to seek a court’s declaration of “fraudulent transfer” would start in Toronto and Chicago and, if successful, shift to the High Court in London.
Voorheis is enthusiastic for the chase. But a weary Chicago director asked rhetorically: “Will we chase Barbara if a court supports a claim of fraudulent transfer? Would it be worth all the angst? I’m not sure.”
Black’s immediate fate depends on Judge Amy St Eve, the 42-year-old fraud expert who presided over his trial.
The prosecution has demanded that Black serve 19 to 24 years. He has countered that, since he was convicted of stealing only $2.9m – compared with the original charges of $80m – he should be treated leniently, not least because Radler will serve less than one year of his 29-month sentence.
The judge must follow government guidelines, however. To Black’s consternation, these mean the revised guidelines issued in 2006 which increased the sentences for financial crimes by nearly 50%. He has appealed to St Eve to apply the old guidelines that were in force when the crimes were committed.
The judge has received a probation officer’s postsentence report based on interviews with the prosecutors, Black himself, his friends and his victims. She will also be guided by her interviews after the verdict with the jurors – nine of whom, according to newspaper interviews with them, wanted to convict Black on everything.
Last month, in a 39-page strident judgment dismissing Black’s first appeal, St Eve quoted the jury’s unanimous view that he was guilty of at least some of the charges. Now, in sentencing him, she is entitled to consider his guilt on all of the charges, regardless of the acquittals. Her criteria would not be “beyond reasonable doubt” but the more likely than not “preponderance of the evidence”.
Black’s lack of contrition is also relevant. Noting from the media reports that he still demands that the world obey his rules, the Republican judge is likely to sentence the last of the 20th century boom tycoons to 10 years. Parole is limited to 20% of the sentence. As a British subject, Black could apply for transfer to a British open prison but the prosecutors are unlikely to agree.
When he emerges aged 70, he will be dependent upon Amiel to finance his dotage. But Herb Denton, a fund manager in New York who originally helped to expose Black’s frauds in 2003, speculates that Amiel “is likely to go to London, buy herself a house” and may not be around.
Denton has lost interest in finding the millions but is determined that Black go to prison. “Until he’s carted away in an orange suit, I won’t be easy,” he said. “All I want is to prevent him slipping out. I don’t care about the money.”
He has written to the judge urging that Black is “locked away from society long enough so when he pops out in his seventies he’s too old to do any damage. He’ll have lost his thunder and credibility”.