Media chief settles fraud charge

The former chief operating officer of the media company Hollinger International has agreed to pay $28.7 million (€21.6 million) to settle fraud charges, the US Securities and Exchange Commission (SEC) said yesterday.

The commission alleges that the executive, David Radler, and Conrad Black, Hollinger International's former chief executive, who goes on trial on Monday in Chicago, engaged in a fraudulent scheme to divert cash and assets from the company from 1999 through to 2003.

The SEC accused Radler of misappropriating millions of dollars from the Chicago-based company and of making numerous misstatements to shareholders.

Radler, who was also deputy chairman of Hollinger International, agreed to pay $23.7 million in disgorgement and $5 million in civil penalties. He was also barred from serving as an officer or director of a public company, the commission said.

He agreed to the settlement without admitting or denying the charges.

An attorney for Radler could not be reached for comment.

"The tough sanctions in this settlement, including one of the largest civil penalties in recent years against an individual wrongdoer, reflect our resolve to act forcefully against corporate officers who perpetrate fraud against those whom they were supposed to serve, the shareholders of the company," the enforcement director of the SEC, Linda Thomsen, said in a statement.

The SEC alleges that Black and Radler diverted to themselves, other corporate insiders and Hollinger some $85 million of the proceeds of Hollinger International's sale of newspaper publications through supposed "non-competition" payments.

The Toronto-based holding company of Hollinger International - now called Sun-Times Media Group - was once a worldwide media giant under Black's control. It sold off hundreds of Canadian and US newspapers as well as London's Daily Telegraph and the Jerusalem Post.

The SEC also accused Black and Radler of selling certain newspaper publications at below-market prices - as low as $1 - to another private company owned by them.

Radler has pleaded guilty to a single fraud count in a criminal case and has agreed to testify against Black.

Black insists that charges of pilfering millions represents the persecution of the powerful.

The judge presiding over his criminal fraud trial settled on a jury late on Thursday after quizzing more than 80 people about their thoughts on the powerful and wealthy.

The judge said that 20 people had been picked, 12 of whom will comprise the jury and six of whom will be alternates.

The trial is likely to last four months.