Conrad Black and the end of an era

NEW YORK (Fortune) -- As the last great corporate fraud trial of the last great stock market bubble winds to a close, former media tycoon Lord Conrad Black sits, mostly expressionless but with a defiant jut to his chin, in a packed Chicago courtroom.

Because Black is on trial with three of his former top executives - Jack Boultbee, Peter Atkinson and Mark Kipnis - even his formidable presence gets diminished amid the lawyers clustered around the large tables in the well of the courtroom. Among the counselors are Black's double Eddies - Eddie Greenspan, a Canadian who's a long-time Black confidant, and Eddie Genson, a flamboyant, old-school Chicago defense lawyer who, as the son of a bail bondsman, grew up in the courtroom.

Kipnis's lawyer is Ron Safer, who used to be the criminal chief in the Chicago U.S. Attorney's office, while Boultbee has the 80-year-old Gustave Newman. But if the defense has big names and white hair on its side, then the prosecution has youth: Most of them, including lead prosecutor Eric Sussman, are under 40.

In these final days, there are also spectators aplenty, including Black's three children and his (in)famous wife, Lady Barbara Amiel Black, who injects a little glamour into the proceedings. (After testimony about gifts from Black such as a $2.6 million diamond ring and $100,000-plus shopping trips at Yves St. Laurent and Fendi, I couldn't resist giving Lady Black the once-over. I didn't get past her fabulous and discreetly sexy nude fishnets.)

On the prosecution side, Chicago U.S. Attorney Patrick Fitzgerald, who was in the courtroom all day yesterday, also offers some sizzle, albeit of a more intellectual sort. The scene is presided over by Judge Amy St. Eve, who is small in stature - my guess is just over five feet - but large in presence, and has won praise across the board for how she's handled the case.

The show may be one of a kind, but in substance, this is a typical trial in which the lawyers have offered the jury two radically different worldviews. The prosecution, as the 34-year old Julie Ruder argued in her closing statement, says that Black and his co-defendants "systematically stole" $60 million from Hollinger International, mostly by extracting non-compete payments from the buyers of Hollinger's newspapers - money that would otherwise have gone to shareholders. They "checked their fiduciary duty at the doorstep," she said.

Hollinger International has since been renamed Sun-Times Media Group (Charts).

The defense, for its part, argues that Black's long-time number two, David Radler, who testified against his former colleagues, told lies in exchange for a lenient plea agreement. If there was fraud, the defense says, then it was Radler's alone, because their clients thought they genuinely deserved the payments. The general view from the media is that the case, which consists of a mish-mash of deals, each of which was allegedly fraudulent in a slightly different way, has been confusing. If it were up to the media - which, of course, it isn't - I suspect Black would have a good shot at walking.

Ruder's closing, though, was clear and succinct, and seemed to resonate with the jury. "It's stealing, plain and simple," she said. One blond juror in particular almost seemed to be beaming at Ruder, who is remarkably calm, but allows her sense of humor to shine through at opportune moments. She told a compelling story of executives who believed that the company's money belonged to them, and took it, whether through non-competes or perks like having Hollinger International pick up half the tab for a allegedly $500,000 junket that Lord and Lady Black took to Bora Bora. Ruder unified the deals by making the point that unless the buyers requested the non-competes - which they didn't - then there was "no reason at all" for giving the money to the executives.

While Black didn't testify, Ruder also used his prolific (and sometimes profane) written words against him to show what he thought of his shareholders. "Much as I would like to blow their asses off..." he wrote in one memo, before pointing out that he still needed the money from the public market. "The Goose keeps laying a golden egg every year, and the best by far is yet to come," he also wrote.

But today, Eddie Greenspan, who thus far has not won plaudits from the pundits, also delivered a seemingly effective, albeit dry, closing argument. (That said, the blonde woman who seemed to like Ruder so much sat with her arms folded across her body for much of Greenspan's soliloquy.) He skewered Radler, who I'm told was "squirrelly" on the stand, as a "liar."

Greenspan also bashed the former audit committee of the board, which included luminaries like Marie Jose Kravis, former Illinois governor James Thompson, and former U.S. ambassador Richard Burt, all of whom testified that they simply didn't see multiple disclosures about the payments in Hollinger's financial statements. "Absurdity," said Greenspan. (Burt and Kravis said they "missed" the disclosures, while Thompson said he "skimmed" the documents.") Even the prosecutors had to concede that the board members failed in their duty. (Absurd and awful as it might be, I'm willing to believe that the board members didn't even skim the documents - they simply didn't bother reading them.)

The most effective moment of the morning, though, came when Genson, who due to a physical disability sometimes gets around on a walker, and who seems to be well-liked by the jury - they smiled as he began his argument - theatrically destroyed a key piece of the prosecution's evidence. Yesterday, Ruder outlined how Black, who apparently was being hounded by his creditors, used a $4.3 million allegedly illegal payment to pay exactly $4.3 million of bills. (During this part of the argument, Black was animated, whispering and gesturing to his lawyers.) Genson showed that in fact, that $4.3 million payment landed in his bank account the day after the bills were paid, and that the bills were paid with money everyone agrees Black got legitimately. Genson's big point was that the prosecution was "manipulating the facts." "That's not right, it's not fair," he said. And Genson's evisceration was smart, because he tapped into the fear we all have of being manipulated.

Closing arguments are expected to last until early next week, with lawyers for Boultbee, Atkinson and Kipnis getting their chance to address the jury, before the prosecution has its final say. From that point, who knows how long the jury will deliberate? (It took the Enron jurors just six days.) Then, whether Black and his colleagues are found guilty or innocent, it will be the end of an era that most people are eager to forget.

But the trial, like all these corporate fraud trials, is also about something larger than Black, and the evidence and the anecdotes about Black's view of his shareholders are a pungent reminder of why there's so much rage about those years. Both Black and - yes - his board had a patrician disregard for the shareholders they served, and while Hollinger might be an extreme case, it certainly wasn't unique. Guilty or innocent, the bigger question is, have things changed?