JUSTICE

THE VERDICT IS IN

An expert panel tackles the big questions. Should Black have testified? Was David Radler credible? Most important: guilty or innocent?

June 25 2007
JUSTICE

THE VERDICT IS IN

An expert panel tackles the big questions. Should Black have testified? Was David Radler credible? Most important: guilty or innocent?

June 25 2007

THE VERDICT IS IN

JUSTICE

An expert panel tackles the big questions. Should Black have testified? Was David Radler credible? Most important: guilty or innocent?

Certainly Black was shown to be a jerk, and most likely a pig— although I don’t think anyone ever disputed that—and I don’t know whether that’s a crime.

— PETER HENNING

Maclean’s invited six lawyers and law professors who have been following the Conrad Black trial in Chicago to weigh the evidence and come to a verdict, based on a majority ruling. What follows is an edited transcript of our mock jury’s deliberations.

Maclean’s: Please give us your general impressions of the prosecution and defence.

Ross Albert: My general impression is I think the prosecution has done a good job. They’re burdened with the weight of having their key witness, David Radler, an admitted liar. That is not unusual for cases like this. I think the defence did an excellent job of diminishing Mr. Radler’s credibility on cross-examination. But they’re still left with the spectacle of Mr. Radler being Lord Black’s closest business associate for 30 years. I thought before the trial that the government’s case would be strong. I’m standing by the prediction that there’ll be convictions. I’m perhaps a little less certain of that than before trial.

Kirby Behre: It seems to me that there’s clearly evidence here from which a jury can conclude beyond reasonable doubt that Black looted the company. What surprises me in this case is how much, really, is not in dispute about the conduct. You have colourful examples of a lavish lifestyle that, in part,

the company funded—so you’ve got the birthday party and the Dom Pérignon and all those things—but beyond that you also have, it seems to me, the undisputed nature of the non-compete agreements. It’s undisputed that he profited directly, and others profited directly from those proceeds. So, it really boils down to a couple of key issues, including did he have the company’s permission to receive those funds? The government’s made a credible case that the audit committee was in the dark and that the company was in the dark and therefore I think the government’s raised credible evidence to support the facts that they need to get a conviction.

Peter Henning: In its opening statement the prosecution talked about how they were going to show a theft, a fast shuffle or, if you will, a three-card monte game. They established that this was a company that wasn’t run very well, that had a terrible audit committee. And certainly Black was shown to be a jerk, and most likely a pig—although I don’t think anyone ever disputed that—and I don’t know whether that’s a crime. And so what you’re left with is, is the jury going to believe Radler or not, and was Radler enough to convict Black, and to convict the other defendants? The defence strategy was to hang tough, and essentially the other three defendants put their lives—or their freedom, at least—in the hands of Black, and so I do think there’s a good chance that they will rise or fall together.

I would leave aside Kipnis: I think Kipnis will be found not guilty.

James Morton: My sense is that the prosecution’s case is not perhaps as strong as some of the other panellists think. My read of the case is that the prosecution has established a lavish lifestyle, a fancy language from Black, and perhaps a sense of entitlement. But they have not established that there was anything other than sloppy business practices. My sense is that the prosecution promised too much and didn’t deliver. By the same token, the defence did not demolish Radler the way they seemed to expect they would. Radler came across, to my mind, with a core of credibility.

THE JURY

A partner with the firm Steinberg Morton Hope & Israel LLP in Toronto, a certified specialist and lecturer in litigation, and president of the Canadian Bar Association.

A professor of law at Wayne State University, a former prosecutor with the U.S. Dept, of Justice, and former senior attorney with the Securities & Exchange Commission.

Senior partner with the Chicago office of Perkins Coie, he has tried cases across the U.S. in areas including non-compete agreements and intellectual property matters.

A partner with the Toronto law firm of Skurka Spina Cugliari LLP, a certified specialist in criminal litigation, and the legal analyst covering the Conrad Black trial for CTV.

A partner at Morris, Manning & Martin in Atlanta specializing in securities litigation, a former prosecutor with the U.S. Dept, of Justice, and a veteran of the U.S. SEC.

A former federal prosecutor and trial lawyer who has practised criminal and civil law for the past 21 years, specializing in securities fraud, antitrust violations and contract fraud.

My sense is that the prosecution promised too much and didn’t deliver. - JAMES MORTON

Radler was definitely abused on crossexamination but he certainly wasn’t demolished. — HUGH TOTTEN

On balance I think that the prosecution oversold their case.

Steve Skurka: I would say that there’s still one unknown factor about Radler and that’s the judge’s charge, because remember there’s no supporting or confirming evidence for an admitted liar who’s an accomplice with a vested interest in protecting a deal. What will the judge say about Radler? Will she say it’s dangerous to accept his evidence without confirming evidence? I disagree that the audit committee was kept in the dark. The reverse is true, indeed there was a bright flashlight shining on the non-competes for the audit committee. I think the best thing that the defence has established is to show not just that they read it but now there’s unchallenged evidence that the chair of the committee—James Thompson—approved the non-competes, and I think that that really puts to rest any notion that the government’s going to succeed on the non-compete counts against any of the defendants at all.

Hugh Totten: I tend to believe that the prosecution had a harder time proving this case than they thought going in. They hit some bumps in the road, particularly with Radler and Thompson. But overall my belief is that they’ve done a pretty good job of dealing with the hand that they were dealt. Radler was definitely abused on cross-examination but he certainly wasn’t demolished. I’ve always had a problem with the issue of these disclosures. They were sort of trotted under Jim Thompson’s nose time and again, and he was definitely sliced and diced on cross-examination and by the end of the testimony he could have walked out of the courtroom underneath the courtroom door. But those disclosures simply disclose the payments that were made, but not the truth of why they were being made. Had they been full disclosures they would have said, “These payments are being made even though no buyer requested it. We insert ourselves in here.” So, I’ve always believed that the disclosures themselves, if you had 11 of them in a row, actually became part of the fraud. I think the evidence with respect to the perks—the Bora Bora trip, the townhome and flat in New York, and the birthday party—is a mess. I think there the prosecution has done far less of a job in putting that together.

Maclean’s: Obviously there’s been a lot of testimony about extravagant lifestyle. Does that testimony help the prosecution?

JM: The very high compensation, the parties, the fancy toilets, are not a problem unless it’s from stolen money. So the lavish lifestyle standing alone will get them nothing. Clearly they tried to paint it that way for the purpose of making the jury dislike and feel alienated from the defendants, but my sense is that that’s not going to help them.

RA: I agree with Mr. Morton that there is a

distinction to be made between ifyou’ve earned the money and you spend it lavishly, there’s nothing wrong with that, but there’s certainly enough here... I think it will ultimately hurt the defence that they were unsuccessful in getting the judge to exclude much of that evidence and testimony.

SS: I just want to add one unique feature of the perks. With respect to all three of the alleged perks, Conrad Black invested his own money, and I think that will help them very much with the jury in the end, as well.

Maclean’s: The fact that he picked up part of the tab in each case?

SS: Exactly.

HT : I think the perks evidence is not nearly as important as the other prejudicial evidence, particularly the musings that were allowed to come in where Conrad Black basically said he wanted to hose down the shareholders and blow their asses off. I think that was extremely prejudicial testimony. I’m not sure what evidentiary value it had except to show that he had a complete disregard for the shareholders’ best interests.

KB: I agree that his colourful, sometimes arrogant musings, are very prejudicial. The bottom line is that in this environment where we as a society become so anti-big-paychequeCEO and where somebody like this has a party that even those of us on this call probably wouldn’t dream of having, it certainly doesn’t help you with the jury, and it’s perhaps a hell

of a lot worse than that.

Maclean’s: How do you think the videotape of Conrad Black carrying those boxes out of his office played?

JM: My sense is that it may well be a significant problem for the defence. It depends how they interpret the video. The video can be looked at as being extremely negative, going to the obstruction of justice charge. To a jury

it can also be seen simply as consistent with Black’s general attitude: not intending to do anything wrong but being royally annoyed at the circumstances. His assistant did not really help much on that point.

HT : If you go by how much time the defence has spent on their case in these different areas, clearly they think that they’ve got a problem with this obstruction charge, in part because of the terrible testimony from the secretary, and also in part because of the way it just looks, having a film of this guy removing stuff. There’s a question, I think, in an average jury’s mind: “Why would Conrad Black show up on a weekend, when he’s got a butler and a driver and an assistant, and then decide that he’s going to all of a sudden comply with his landlord’s wishes to evict the premises?”

SS: I think the obstruct justice charge is one charge where the defence is going to have to rely on a burden of proof, because I tend to agree with James that you can draw it two ways. Remember, he was being evicted from the premises, and there is a suggestion that many of the documents were already in the hands of the SEC.

Maclean’s: Black is not expected to be on the stand at any point. If you’re a juror, how does that affect your impression of things?

SS: I think, in the ordinary case, it hurts you. But I’m not so sure it’s problematic, particularly if none of the other co-defendants take the witness stand. I think if one of them did it would probably be more harmful.

KB: For whatever reason, there’s always this huge gulf between what criminal defence lawyers believe is in the best interests of their client—which is typically not to testify—and what jurors want and expect, and it’s overwhelmingly that they want and expect the defendant to testify.

RA: I think it’s overwhelmingly true that jurors want to hear from a defendant straight from the horse’s mouth, but the problem is I

Black is clearly going down. The idea that he would walk on everything, I think it’s just virtually impossible that that would be the case. — KIRBY BEHRE

think once you put a defendant like Lord Black on the stand the case becomes all about his testimony, and I personally think that he would not likely make a good witness. I think he’d be a very hard witness to control, and he projects such a clear sense of entitlement that any able prosecutor would relish the thought of cross-examination.

JM: It may be that it won’t impact at all, it may be a neutral, but if anything it helps the prosecution.

Maclean’s: So, are you thinking guilty on all charges, guilty on some charges, or not guilty, if you were sitting in the jury box yourself?

HT: Guilty on some charges for three of the four defendants, not guilty on any charge for Mark Kipnis. I think they go down on the non-competes, and I think that Conrad Black goes down on the obstruction charge. Kipnis would have to be guilty of engaging in a conspiracy by telepathy, because there’s not a shred of evidence that he benefited from any

of the allegedly fraudulent conduct. There’s just nothing that ties Mark Kipnis to any of the criminal conduct in this case.

SS: I say not guilty for all defendants on all counts. There’s no human face on a victim in this case. I think the defence has established that it was perfectly proper for the seller to request a non-compete and that there were tax advantages for it and it was fairly common at the time.

JM: Mark Kipnis is acquitted on all charges. My sense is that the remaining defendants will likely be acquitted on all charges. If there are going to be convictions I tend to think it’ll be Lord Black on the obstruct justice.

Maclean’s: If you’re a juror, do you convict Black on obstruction of justice?

JM: If I’m the juror voting? No. My sense is that of the significant charges the prosecution has not established that they were in fact illegal. There’s a fuzz around the charges. In terms of the obstruct justice, that really becomes an interpretation point—what was Black doing? It is interpretable in two ways. And the burden of proof is criminal standard, which means that you have to exclude any other reasonable explanation. To my mind, the prosecution hasn’t gotten them.

PH: On the mail fraud I believe Black will be convicted on at least some of the counts. I think the jury may well divide up the non-competes and may convict on some rather than others. On the perks, I don’t think they will convict. I don’t think it’s clear enough. And because of that, also, I don’t think the [racketeering] count will stand. Racketeering is a much more difficult count to convict on... I think it’s going to be too hard for the government to establish. Boultbee and Atkinson, I think, may be convicted along with Black. I don’t believe Kipnis will be convicted.

Maclean’s: What about obstruction of justice?

PH: I think the jury will convict Black on that. I think there’s enough there that the jury would find that here’s one place where Black’s fingerprints are all over it.

KB: Black is clearly going down. The idea that he would walk on everything, I think it’s just virtually impossible that that would be the case. What he goes down on I think is everything except for the racketeering. I’m surprised they’re even charging [racketeering]; prosecutors rarely charge it is because they almost never get convictions out of it. The obstruction count, particularly for him, just looks horrible. A guy of his stature and his income level toting his own boxes out of the building after-hours certainly has a look to it that is hard to explain. On the fraud counts, it flies in the face of logic that a party engaged in a corporate transaction with a corporation is going to be making payments directly to an executive at the company, so it’s kind of suspect on its face. I don’t think he’s going to be able to get away on that, and I suspect others will face the same fate. I think what you’re going to see are kind of token convictions for the rest of them and Conrad Black getting virtually everything guilty except for the racketeering.

RA: Mark Kipnis is going to be acquitted of everything. As to Lord Black, I agree with what some of the others said about the racketeering count. It is very difficult to get juries to convict on racketeering charges. I think the jury convicts on obstruction of justice. I don’t think the defence will be adequately able to explain why someone of Lord Black’s stature and income level is toting his own boxes in the face of court orders. I think the remaining defendants have mostly tied their star and their chances to Lord Black, so I think they’re going to be convicted along with Lord Black.

Maclean’s: And on the fraud charges?

RA: I think there’ll be convictions.

Maclean’s: Anything to add?

JM: One thing I would throw in there is that the judge in this case seems to have run the trial with eminent competence and common sense. This case did not descend into anything like the circus which people were afraid it was going to.

SS: And just to add to that, I’ve watched these jurors and I know there’s been a lot of commentary about ‘can they grasp it? Is it too complex?’ That’s nonsense. These are good people, they’re attentive, they’re always on time, and I’ve just been really impressed with the jurors.

JM: Yeah. Whatever the decision’s going to be it’s going to be a careful one, sensible one, it’s not going to be arbitrary or based purely on emotion. M

Kipnis would have to be guilty of engaging in a conspiracy by telepathy, because there’s not a shred of evidence that he benefited from any of the allegedly fraudulent conduct. — HUGH TOTTEN