Hollinger International Inc. has hit back at federal prosecutors in Chicago who want to put the brakes on its lawsuit against Conrad Black and several other former company executives.
Patrick Fitzgerald, the U.S. Attorney for the Northern District of Illinois, wants the civil case put on hold until after the conclusion of a criminal trial of Lord Black and three others, which is not expected to start until March, 2007, at the earliest. Hollinger argues there is little overlap between the cases and says the civil action should proceed.
The U.S. Attorney “seeks to bring this litigation to a grinding halt until at least spring 2007. Such drastic relief is unnecessary and would unfairly prejudice Hollinger,” the Chicago-based company said in a court filing.
The legal spat has highlighted the growing complexity of the many lawsuits swirling around Hollinger and Lord Black. Prosecutors in the criminal action have already produced more than 1.3 million documents, while lawyers in the civil case have received more than two million pages of documents including 50 interview summaries with key witnesses.
The civil case began a year ago when Hollinger sued Lord Black and several others over allegations they had “looted” the newspaper company for years. Hollinger is seeking more than $425-million (U.S.) in damages. Lord Black and the others have denied any wrongdoing and have filed countersuits for an equal amount.
In November, the U.S. Attorney filed fraud charges against Lord Black and four other former Hollinger executives over allegations they took $84-million from the company. Lord Black, who also faces racketeering and money-laundering charges, has pleaded not guilty. Three others, Peter Atkinson, John Boultbee and Mark Kipnis, have also pleaded not guilty. David Radler has pleaded guilty to one fraud charge and is co-operating with prosecutors.
Two weeks ago, Mr. Fitzgerald filed a motion to stop all discovery in the civil case, which is also taking place in Chicago. Discovery involves the exchange of documents between both sides and the case could not continue if it was stopped. In his motion, Mr. Fitzgerald said discovery in the civil case could hamper the criminal trial since the rules of disclosure are different. He noted that prosecutors have already turned over a substantial number of documents to Lord Black and the others in the criminal proceeding and that further disclosure through the civil case could give the defendants an unfair advantage.
In its filing last week, Hollinger said the civil case is much broader and that any halt to discovery should be limited. Hollinger noted that the civil suit includes allegations against several other people, including Lord Black's wife, Barbara Amiel Black, former director Richard Perle and former executive Daniel Colson, who have not been charged criminally.
The civil suit also contains more alleged misconduct than the criminal complaint, the company said. For example, the civil action includes allegations relating to the sale of Hollinger newspapers to companies controlled by Lord Black and Mr. Radler as well as alleged illegal payments to Mr. Perle. There are also allegations that Lord Black used $8-million of company money to buy the personal papers of former U.S. president Franklin Delano Roosevelt. Those allegations are not included in the criminal case, the company said.
Lord Black and the others have denied all of the civil allegations, which have not been proven in court.
In its filing, Hollinger said it is also worried that a delay “will make it more difficult to obtain restitution, as defendants' assets disappear.” The company noted that Lord Black recently said in court filings that he needed money seized by prosecutors to pay his “mounting legal expenses.” Mr. Boultbee also had to borrow $1.5-million to post his bail, Hollinger added.
A judge is expected to rule on the issue in the next few weeks.
© The Globe and Mail
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