Conrad Black, the former chairman of Hollinger International Inc., looted the company of $85 million over four years, according to a federal lawsuit that seeks to block him from keeping control of the company.
The Securities and Exchange Commission also filed a civil fraud suit against David Radler, the company’s ex-president, and Hollinger Inc., the Canadian company Black uses to control Chicago-based newspaper publisher Hollinger International. The Chicago Sun-Times and the Jerusalem Post are among its holdings.
The 76-page lawsuit, filed today in Chicago’s federal court, seeks to bar Black and Radler from serving as officers or directors of a public company and demands unspecified penalties. The SEC also is asking the court to place Black’s Hollinger shares in a trust so he can’t retain control of the company.
“Black and Radler abused their control of a public company and treated it as their personal piggy bank,” SEC Enforcement Director Stephen Cutler said in a statement.
Black, 60, and Radler, 61, diverted to themselves $85 million in proceeds from Hollinger International’s sale of newspaper publications through so-called non-competition payments, the SEC alleged.
Black’s spokesman James Badenhausen declined to comment. Black’s lawyer, Gregory Craig, didn’t return a call seeking comment. Anton Valukas, an attorney for Radler, didn’t return a call seeking comment.
The two also orchestrated the sale of some Hollinger International publications at below-market prices to another closely held company that they owned, the suit said. One publication was sold for a dollar.
Black authorized a $2.5 million Hollinger International investment in a venture-capital fund that he was affiliated with, the SEC alleged.
The suit contended that Black and Radler misled Hollinger International’s board about the related-party transactions and failed to disclose these transactions in public filings.
Hollinger International’s board ousted Black in January and later sued him, saying he and other top executives looted the company of more than $400 million, or 95 percent of the company’s net income, over seven years. The SEC suit echoes some of the findings of the company’s internal investigation, which was led by former SEC Chairman Richard Breeden.
Black quit as chairman and chief executive officer of Hollinger on Nov. 2. He remains controlling shareholder with 78 percent of the common stock of the company, whose main asset is Hollinger International.
A board committee in August said Black and controlling shareholders “victimized” the company by siphoning millions of dollars and putting their own interest above shareholders.