CHICAGO (AP) - Attorneys for Conrad Black assured jurors as his corporate fraud trial opened in March that the case involving the former media tycoon and British lord was not another Enron.
It wasn't. But Enron turned out to be inextricably linked to his downfall.
A federal court jury's convictions of Black and three other former executives of Hollinger International Inc. on Friday signaled the latest in a series of triumphs by government prosecutors in an Enron-inspired crackdown on corporate crime that began five years ago this month.
If not for the widespread outrage generated by the Houston energy company's scandal, which left thousands jobless and wiped out billions of dollars in market value and employee pension plans, legal experts say Black and his cohorts likely would have gotten away with their crimes.
'On an order of magnitude, this case doesn't compare to Enron or WorldCom,' said Robert Mintz, a former federal prosecutor who represents companies and individuals accused of white-collar crimes. 'But ... it's another example of federal prosecutors aggressively pursuing a once-powerful CEO and successfully convincing jurors that his conduct amounted to an intentional fraud.'
'That's not an easy thing to do,' he said. 'Five years ago, that was almost unthinkable.'
Amid anger and frustration at scandals from the dot-com era involving Enron, WorldCom, Tyco and other corporations, Washington took two major steps in July 2002 to try to minimize corporate misdeeds.
The White House created a corporate fraud task force to root out and prosecute white-collar criminals -- a mission Treasury Secretary Paul O'Neill likened at the time to the work of mob-buster Eliot Ness.
Congress and President Bush then teamed up three weeks later in the toughest crackdown on boardroom fraud since the Depression, setting stringent new standards for all U.S. public company boards, management and public accounting firms in the form of the Sarbanes-Oxley Act.
After five years of catching executives in those nets, the rate of corporate convictions has slowed, due in part to the higher levels of accountability and scrutiny. But prosecutors continue to go after such cases aggressively when evidence surfaces.
'There's no doubt that beginning a few years back -- and particularly Enron focused people's attention on it -- there's a grave concern with integrity and making sure that corporate fraud is stamped out,' U.S. Attorney Patrick Fitzgerald said following the Black convictions.
'They're clearly a priority,' he said of corporate crime cases. 'And they became more of a priority a few years ago.'
At a time when shareholder lawsuits were proliferating, prosecutors got a big assist in the Hollinger case when a special committee of its board responded to angry stockholders by compiling a 500-page report in 2004 detailing how Black conspired with associates to loot the company of millions in bogus fees.
The U.S. District Court jury in Chicago was convinced of enough key parts of the scheme to convict Black of three counts of fraud and one of obstruction of justice. The Canadian-born magnate now faces a maximum sentence of 35 years in prison and $1 million in fines, while associates Jack Boultbee, Peter Atkinson and Mark Kipnis could spend up to 15 years in prison with fines of $750,000.
'Black got caught up in intensified Justice Department white-collar criminal activity and he suffered from it,' said David Ruder, professor emeritus at Northwestern University of Law and a former chair of the Securities and Exchange Commission. 'Maybe it wouldn't have gotten to that point,' he said, without the accelerated push against corporate crime.
Bernard Harcourt, a professor of law at the University of Chicago Law School, said Black's case differs from Enron because it wasn't about him running Hollinger with pervasive, fraudulent behavior.
'I would view this more as the greedy CEO who is just trying to stuff his pockets at the end of what was a pretty successful career,' he said.
Black will be sentenced Nov. 30. However, while he likely won't face terms as long as those of convicted CEOs Jeffrey Skilling of Enron (24 years, 4 months) or Bernard Ebbers of WorldCom (25 years), the verdict showed that Enron's legacy remains alive.
'Although the unprecedented wave of major corporate prosecutions has abated, this verdict is further evidence that jurors are still willing to dissect complex allegations and buy into the government's theories that tie the person at the very top of the corporate hierarchy to serious misconduct,' said Mintz.
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