The ex-G-man testified there was no fraud. None. Nothing illegal.
ENTER THE FUNKSTER
The ex-G-man testified there was no fraud. None. Nothing illegal.
There have been two FBI guys in this case. The first was a rather callow youth dispatched by the Feds to search Conrad Black’s office at 10 Toronto St., Toronto. A sharp-eyed observer of the crime scene, he testified that he’d seen some LPs in the room. Alas, asked by defence counsel about Black’s taste in music, the G-man was unable to recall what precisely the LPs were. The correct answer, of course, is: “Your honour, it was NanaMouskouri’s Greatest Hits. So we know he has a criminal record.”
The second FBI guy was all detail. His name was Mister Funk. Not the Mister Funk who does the midnight shift every weekend at KISS-FM in Detroit. This Mister Funk is Alan of that ilk, and a less aptly monikered Funkster I’ve yet to see. He looks like a cuddly nebbish, although his habit, as an ex-G-man who specializes in white-collar fraud, of hiring as his highly expert “associates” only members of his family—sons, brothers, cousins, etc.—gives him a faintly Sopranoesque
air. Anyway, Al Funkeroonie had been called as an expert witness to testify, as a highly expert expert, that the government’s case was total rubbish. Apparently, you’re allowed to do that in a U.S. court. Funk thought the case was bunk. Jeffrey Cramer, the prosecution’s chippy little punk, thought Funk was full of junk. He tried mocking him for his 425 bucks an hour, which by mid-afternoon on Tuesday had brought his take from this case to 800 grand. “And when does the billing stop?” marvelled Cramer.
“As soon as you sit down,” said Funk merrily.
Can’t see the Cramer kite flying, myself. If the issue is the money the defence is spending to stay out of jail, it’s as nothing to the money the government of the United States is blowing to put ’em behind bars. And Mr. Funk’s $425 per is half the hourly rate of the pricier guys like Richard Breeden and Jonathan Rosenberg—and they’ve both been living high off the post-Black Hollinger hog for almost four years now.
But Cramer’s hostility to Funk was palpable, and you can see why. Funk testified that there was no fraud. None. Nothing illegal. No criminal intent. All material information about the disputed “non-compete” payments was provided to Hollinger’s directors, auditors and lawyers. “They knew the parties, they
knew the numbers, they knew the nature of the transaction,” testified Mr. Funk. Short of being called as an expert witness on the chief prosecutor’s curiously capacious suits (see this space a couple of weeks back), it would have been hard to imagine anything that struck more fiercely at the heart of the case.
Still, Mr. Cramer slogged on, pulling up contracts and tax records and KPMG work papers and saying to Funky, “There’s nothing about the ‘why’ in here, is there?” Apparently he wanted some University of Southern California film-school psychological motivation, but instead it was all just numbers and legalese and bank wire instructions and signatures and witnesses and similar yawneroo stuff: no “whys,” but a ton of “wherefores” punctuated by the “party of the first part”type yada-yada. I don’t know for certain but I suspect Mr. Cramer’s tax return’s a bit like that, too. Just a bald number for deductions for dependents, but nothing really arresting like “Well, Junior’s out of middle school now, so we figured it was time to start salting a little something away for college..
The government’s line is that the fact that everything’s been done by the book only shows how cunning the “scheme” was. Or, as chief prosecutor Eric Sussman likes to plead to the judge while the jury’s out of the room, “Your honour, these are sophisticated men...”
“Sophisticated men”: it sounds like a cologne ad (“Sophisticated men wear Non-Compete by Fabergé”) or a dating agency: at e-Hollinger. com, you’ll meet sophisticated men and enjoy
an evening of elegant candlelit dining at the shareholders’ expense. But, after a while, the smell you pick up is not the scent of sophisticated Conradian aftershave from the Napoleonic barbiere he had installed in his Park Avenue apartment, but the whiff of prosecutorial desperation.
Three months on, Cramer is still flogging not a dead horse but a stillborn one. His proposition is that the buyers of Hollinger International’s newspapers in its great late-nineties selloff either “didn’t ask for” a non-compete agreement with Hollinger Inc., International’s Canadian parent, or alternatively “didn’t care” about it one way or the other.
But, if they didn’t care, why should the United States government? The fact is those buyers freely signed lawful contracts in which the non-competes were a condition of closing. “This is the document that the buyer and the seller agreed to,” testified Mr. Funk. Prettyboy pop stars like George Michael can sign disadvantageous contracts when they’re 17 and then claim 10 years later they had no idea what they were doing.
But it’s a bigger stretch for a 58-year-old CFO of a Midwestern multimedia corporation. And furthermore the premise of this case—that a binding agreement freely entered into can be overturned by oral testimony a decade later—is not in the long-term interests of the law of contract.
When the prosecution had the buyers of Hollinger International’s newspapers on the stands, they made a great song ’n’ dance about asking them: “Now, had you heard of another company, a Canadian company, called Hollinger Inc.?” Answer: No. “And did you want this Canadian company, Hollinger Inc., included in the non-competition agreement?” Answer: No.
I don’t believe them, and it reflects poorly on the defence counsel that they weren’t able to establish the ludicrousness of these answers. For example, the most cursory “due diligence” that any purchaser does would have established that only five or so years earlier all these newspapers had been owned by Hollinger Inc., rather than Hollinger International. Hollinger International, the “good Hollinger” down in America, and Hollinger Inc., the “bad Hollinger” up in Canada, were both holding companies: it
was subsidiaries of subsidiaries who actually ran the papers. What’s more, Inc. and International were run by exactly the same halfdozen executives. Had these buyers got what they supposedly wanted—a non-compete with Hollinger International only—and Hollinger Inc. had come back into the market a couple of years later, these people would
have been the first to run to their lawyers and cry “Unfair!” And they’d have been right, too: unlike the present case, that would have been a fraud.
Which brings us back to that first FBI agent—the one poking around in Conrad’s LP collection in Toronto.
Around June 25, this case will go to the jury, with verdicts expected before Independence Day. There’s some other national holiday 72 hours or thereabouts before Independence Day, but it doesn’t seem to be observed down here, and its assumptions are not accepted by the prosecution, for whom Dominion Day is just another day to enforce their dominion over the gramophone records in downtown Toronto commercial buildings. It’s a measure of the slightly surreal quality of this case that Conrad Black is at most risk from the most peripheral and preposterous charge—the idea that a man clearing out his office in compli-
anee with an eviction order in a foreign jurisdiction is obstructing justice in a U.S. investigation. I’ve never been one for the sadly insecure nationalist twitchiness to which so many boosterish Canadian media types are prone, but I surely can’t be the only one who raised an eyebrow when Joan Maida, Conrad Black’s assistant in Toronto, testified that an FBI agent, a U.S. postal inspector and an assistant U.S. attorney, accompanied by a token Mountie, had called unannounced at her home. She wasn’t in, and I gather her man demanded to know why Donald Rumsfeld wasn’t with them and then told them to get lost. But it’s all a bit extra-jurisdictional for my tastes: this wouldn’t even be a criminal case in Canada, Britain or most other parts of the Western world. As for postal inspector Dave Leonhart, who sits in court every day with a ridiculously wannabe-cool slickered hairdo for a postal inspector, “mail fraud” as understood in the U.S. isn’t a crime in Canada. And, if we’re going to pretend that it is, just as the FBI guy was accompanied by the RCMP, shouldn’t U.S. postal inspectors be accompanied by someone from our mail service? Inspector Leonhart ought to be escorted by Canada Post, who in compliance with Canadian postal standards would either take three weeks to get him from the border to Ms. Maida’s home in Toronto, if not lose him entirely or get him misdelivesred to Chicoutimi.
Justice operates best within confines: the extraterritoriality assumed by the U.S. Attorney ought to be strenuously resisted by all Canadians. And the prosecution’s underlying assertion—that you can do all the paperwork, sign all the contracts, get it approved by directors and file it with the government, and years later they’ll say that only goes to prove how “sophisticated” the crime is—ought to be decisively rejected by Americans. M
ANYTHING BY THE BOOK SHOWS HOW CUNNING THE 'SCHEME' WAS
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