Former tycoon Black accused of insider trading

Less than two months before the start of a fraud and racketeering trial, US prosecutors have brought new insider trading claims against former newspaper tycoon Conrad Black.

They say Black engaged in insider trading and illegally posted information about his former company on a financial message board.

Papers filed at a district court in Chicago outline a dozen alleged misdeeds by the former Hollinger International chairman and CEO, who is accused of plundering millions of dollars from the company's coffers.

Black was forced from the helm of the company and is scheduled to go to trial on March 1.

The newspaper empire, which once included The Daily Telegraph, The Jerusalem Post and a major Canadian newspaper group, has since been largely dismantled. The Chicago Sun-Times is the last remaining major property of the company, now called the Sun-Times Media Group.

Prosecutors asked US District Judge Amy St Eve to include the newest allegations as evidence in the continuing case against Black.

“Black did not make a distinction between his money and that belonging to a public company,” prosecutors wrote. “It is this mind-set that contributed to his fleecing of International.”

Black is charged with misusing company money to bankroll his lavish lifestyle and cheating on his taxes. He has pleaded not guilty.

Edward Greenspan, Black’s lawyer, said the federal allegations included “misstatements”.

“We’re preparing our response now and we will file and we will object to what the prosecutor has put forward,” he said, adding: “There are misstatements in the material they have filed.”

Federal authorities say in 1998 Black urged a company vice president to respond to a post on a Yahoo message board about Hollinger’s seemingly static stock price.

When the executive, Paul Healy, explained responding would violate federal guidelines from the Securities and Exchange Commission, Black posted a response anonymously, prosecutors said in the filing on Monday, but not before chastising Healy for his hesitation.

“Don’t be so strait-laced,” Black wrote to Healy. “… Get our story out.”

Authorities said Black, along with other officials, used insider trading to boost Hollinger stock in 1998, arranging for the Canadian company Brascan to buy Hollinger shares at the same time short-sellers were unloading their stock. At the time, Black was a director at Brascan, now called Brookfield Asset Management.

“While Brascan used its own funds to purchase the shares, Black guaranteed their downside and interest rate, and also guaranteed their profit,” prosecutors wrote, saying Black and other executives received cash from the deal.

Katherine Vyse, a spokeswoman for Toronto-based Brookfield, said the company was reviewing the matter and could not comment.

Among the other allegations, prosecutors say Black deliberately withheld documents from prosecutors, spent nearly €6.8m of Hollinger’s money to purchase memorabilia from Franklin Delano Roosevelt, and used company money to pay for handbags, jogging attire, opera tickets and other personal items for himself and his wife.