Fortune editor at large
December 11 2007: 4:26 PM EST
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Conrad Black's shabby downfall

The newspaper mogul's sentencing featured the same mystery as the trial: Why risk everything for a relatively small fraud? The only answers came from prosecutors: greed and arrogance.

By Richard Siklos, Fortune editor at large

CHICAGO (Fortune) -- Through Conrad Black's four-month criminal trial and 12 days of jury deliberations, Federal Judge Amy St. Eve conveyed a sense of stern impartiality from the bench, giving little sense of what she thought of the larger-than-life former press baron sitting in the middle of her courtroom.

And in calling Black to stand before her today and delivering her sentence of 6 years in prison and a $125,000 fine, St. Eve allowed but one personal observation to Black: "I frankly cannot understand how somebody of your stature - on top of the media empire that you were on top of - could engage in the conduct that you engaged in, and put everything at risk, including your reputation and your integrity."

Indeed, after all the hullabaloo surrounding Lord Black of Crossharbour's downfall, he was ultimately convicted of stealing $6.1 million from his company and obstructing justice by lugging some boxes out of his Toronto office - in plain view of security cameras - after being warned not to do so. All of this went on at a time when, on paper at least, Black was worth close to $300 million and was leading a life among the jet-setting glitterati.

Black didn't have an answer for her, at least directly, although he did tell the court that he had "very profound regret" over what the financial scandal at his former company, Hollinger International, had done to that company's shareholders and employees, and also the effect it had on members of his own family.

At Black's sentencing yesterday, his lawyers had tried to encapsulate all the qualities of generosity, intellect, humor, literary talent and business savvy that had made Black a figure on the world stage since he started buying up newspapers in the 1980s. For a time making Hollinger was the world's third-largest newspaper company by circulation, including the London Daily Telegraph, Jerusalem Post, and hundreds of small papers in the U.S. (It is now the much-diminished Sun-Times Media, consisting mostly of that Chicago tabloid, around which Black fatefully headquartered his publicly-traded newspaper company - the reason why a Canadian-born British peer would end up in court here.)

The efforts came off as too little too late, but necessary in the face of prosecutors trying to paint Black as nothing more than a bank robber in a suit. Indeed, Black's lawyer Jeffrey Steinback quipped - to St. Eve's point - that as the founder and controlling shareholder of the company he built, Black was in some ways stealing from himself. "As far as I know, no bank robbers ever personally built the bank they robbed."

It was a nice line, but off point: the entire case against Black and four of his former colleagues was that they abused their positions as senior executives in a publicly traded company (in which they owned a minority of overall shares) to take more than they were entitled to.

Reflecting the no-nonsense approach that she had brought to the trial since it began on a similarly gray, wintry day last March, Judge St. Eve took into account how far Black has already fallen; that he is a first-time nonviolent offender; and that he is unlikely to be a further harm to society in imposing the minimum sentence suggested by federal guidelines. Black's lawyers had argued that Black should not get more than the 29 months his former partner David Radler - who had pled guilty and testified against Black - would serve under his plea bargain. At the other extreme, prosecutors had been looking to send Black away for more than 20 years.

Prosecutors still tried to spin the sentence as a victory. Outside the court, U.S. attorney Patrick Fitzgerald said: "That's a serious amount of time. Maybe I'm just dumb: I wouldn't be relieved going to 6-1/ 2 years in jail."

Eve employed a complex calculus in coming up with her sentence for Black, determining that the sentencing guidelines in effect when most of the crimes he committed would apply, and adhering to recommendations from a court-appointed sentencing expert that gave Black extra time for such things as abusing his position of trust. Part of her task was to assign a value to Black's ripoff; the $6.1 million she arrived at added meaningful time to the sentence, versus a figure of less than $3 million that Black's lawyers had maintained.

Black earned a couple of demerits for not showing any remorse, but Judge St. Eve did not seem to put great weight on prosecutor Eric Sussman's recounting of Black's various outbursts outside the court that included calling his team "Nazis" and blaming "corporate governance zealots" of trying to steal his money or company. "Mr. Black, even today, has refused to acknowledge the point behind his being here today was his own greed and his own disdain for rule of law," Sussman argued.

Of course, Black's lawyer and Black himself have argued in interviews that he believes he is innocent and hopes to win on appeal, so suddenly showing remorse would be illogical. (Just this past weekend, Black told an interviewer: "I am in fact, not guilty, and the evidence is so flimsy." ) When it came to his own comments to St. Eve - among the briefest I have ever seen the famously orotund Black make - he took pains to say that he has never said anything disrespectful about the judge or jury in the case.

So where does this seemingly definitive, if somewhat whimpering, finale place Black in the pantheon now? As a swashbuckling global newspaper owner, he was one of the last of a dying breed. As a corporate criminal, his was no Enron or Worldcom. His sentence puts him in closest company with Dennis Kozlowski, the former head of Tyco International who was accused of helping himself to unauthorized bonuses. Like Black, Kozlowski, has steadfastly maintained his innocence, even while serving a minimum sentence of eight years in prison. Like Black's Hollinger, Kozlowski's Tyco was an ongoing and in some ways thriving business even as its highly paid CEO was helping himself to more than could be accounted for.

No doubt Black would prefer the legacy of the newspaper baron, but it hardly matters. As he works on his appeal, Black was ordered to begin his sentence March 3 at a low-security prison in Coleman, Florida, about 200 miles northwest, and a world away, from the mansion in Palm Beach where Black will be living until then. To top of page

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