Conrad Black: Back To Jail Or Not?

You may recall that the United States Supreme Court struck down the law on “honest services fraud” and sent Lord Black’s case back to the Appeal Court in Chicago for reconsideration, based on their analysis that the law was unconstitutional for vagueness and that “honest services fraud” required evidence of bribes or kickbacks.

Black had his day in Court where his lawyer argued that the fraud convictions should be set aside as should Black’s conviction for obstruction of justice. (removing boxes of documents from his office that were relevant to the fraud charges)

Several days ago the Court of Appeal delivered their judgment wherein they vacated Black’s two convictions for “honest services fraud”, but refused to vacate a separate fraud conviction, that was not “honest services fraud”, and upheld the obstruction conviction. The three Judges ordered that Black be re-sentenced by the original trial judge, taking into account the absence of the “honest services fraud” convictions.

Black’s counsel will now review the Court’s Reasons and determine if a further appeal should be launched on the two remaining convictions. The prosecutors could also decide
to retry Black on the conduct that resulted in the “honest fraud convictions” by proving these counts are capable of being characterized as pecuniary fraud. It is noteworthy that the Appeal Judges suggested in their Reasons that the State drop the matter in light of the already protracted litigation and the State’s dwindling finances.

But, the big question is “Will Conrad Black go back to jail or will the Court free him based on time served?” Black has already served two years of his six and a half year sentence.

State lawyers have been zealous with respect to their prosecution of Lord Black’s alleged criminal behavior and there is no reason to expect that they will now let their guard down. Black is in for another battle, which will add to his now $40 million tab for legal fees. Who knows how much this has cost the State of Illinois?

The saga continues.

Lawdiva aka Georgialee Lang

Judges Jail Juveniles For Cash

When I think of judicial corruption, I think of Russia, Iran, Zimbabwe, Yemen and other countries where justice can be bought and sold. I never think of Pennsylvania. When I think of Pennsylvania I envision rustic Amish carts drawn by horses and little girls wearing bonnets.

I hope the little Amish girls were not victims of the kickback operation engineered by former Pennsylvania State Court Judges Michael Conahan and Mark Ciavarella Jr. Together they arranged to close down the government-run juvenile detention facility and deliver young offenders to serve time in two private juvenile detention centres owned by a friend, in exchange for money: $2.8 million.

It went something like this. A juvenile offender would appear in their court on a petty offense, say theft or failing to appear. With no lawyer to assist them and contrary to a probation officer’s recommendation, Judges Conahan and Ciavarella would find the minor guilty and order them to serve a custodial sentence in their friend’s juvenile prison. One of the conspirators in the plot was a well-known lawyer, Robert Powell, who eventually wore a wire to obtain incriminating evidence against the Judges in exchange for a plea deal for himself.

Upon their arrests in 2009 the Judges resigned their elected positions and almost immediately entered into plea bargains to plead guilty to honest services fraud, wire fraud and tax evasion, in exchange for seven year prison sentences. At the plea hearing, it was apparent to the trial judge that Mark Ciavarella would not admit that he was involved in a “cash for kids” deal, minimizing the transactions to payments he called “finders fees”. The trial judge refused to accept the plea deals and ordered bail of $1 million for each of the accused.

A grand jury recently handed down a phalanx of new charges including racketeering, fraud, money laundering, extortion, bribery and multiple tax violations. Not to mention a class action civil suit brought by 400 of the victimized juveniles and their parents.

While Judges Conahan and Ciavarella are protected by judicial immunity for their judicial functions, counsel in the class action suit intend to argue that their deliberate fraud ought to permeate that immunity. As well, administrative decisions made by a judge are not caught by judicial immunity.

Judge Conahan has now made a second plea deal for one count of racketeering while Judge Ciavarella vows to fight on.

The reputation of a province or state’s justice system cannot tolerate rogue judges who do more than damage the victims of their crimes; they undermine a community’s trust in one of the most sacred foundational principles of a democracy: The Rule of Law.

Social reformist Henry Ward Beecher succinctly stated: ” Taking all the robes of all the Judges that have lived on the face of the earth, and they would not be large enough to cover the iniquity of one corrupt Judge.”

Lawdiva aka Georgialee Lang

Internet Lothario

He dressed like a successful executive and showed up with his driver and Bentley automobile, all in his quest to con women across Canada into investing in his venture capital business. But not before he wined and dined them and popped an engagement ring on their fingers.

He met his girlfriends/victims through a popular dating website and charmed them and their family members into investing over $1.5 million between 2007 and 2010. Women from Vancouver, Montreal and Halifax tell a similar story about Arvind Sanmugam, 49 years old, who was recently arrested in Toronto for fraud over $5000. None of the women have received any return on their investments.

His six victims agree that he wooed them, schmoozed them and then took their money. His schemes financially devastated his victims, with one woman selling her home to survive. Another of his victims, who says she is his fiance, still does not believe she has been duped. The police contacted her as she was traveling in the Philippines, ostensibly on business for Mr. Sanmugam.

He appeared today in a Toronto courtroom with his wife and one girlfriend in attendance. The Toronto police believe there are more victims, particularly in the Toronto area and hope to bring more charges.

An internet search shows that an “Arvind Sanmugam” is a member of Linkedin, a popular world-wide business network. He describes himself as a “market commentator, venture capitalist, public speaker on entrepreneurship, charities and capitalism… the Chairman of the World Police Academy and Chez Leeloo”. The websites for the Police Academy and Chez Leeloo are perfect examples of puffery. His Linkedin site says he has structured his businesses so that he can donate 90% of his income to the poor.

Other internet sites associate him with other activities and organizations, all of which look highly suspicious. The simple fact is if any of his victims had googled Mr. Sanmugam it would have been easily apparent that he is a con artist.

Arvind Sanmugam is a leech who needs to be locked up.

Lawdiva aka Georgialee Lang

SEC Busts Insider Trading with Help of Ex-Wife

Karen and David Zilkha’s marriage ended in messy divorce proceedings that included spousal abuse, restraining orders, an ongoing battle over their nine year old twins and a SEC investigation.

The marriage began in 1998 in Washington State where Mr. Zilkha worked for Microsoft. By 2001 the family had moved to Connecticut and a new job for Mr. Zhilka as a trader with hedgefund Pequot Capital Management. By 2003 their marriage was over and the divorce wars began. Eventually the financial aspects of the divorce were completed with Ms. Zilkha receiving $750,000.00 in assets including the family home.

The conflict started up again when in 2008 child support was to be reviewed. Mr. Zilkha filed updated financial information which included disclosure of a sum of $2.1 million. His ex-wife and her lawyer were mystified about the emergence of this asset, but then Ms. Zilkha remembered that before the collapse of the marriage, her husband had told her that he was negotiating a payment from Pequot.

Ms. Zilkha’s attorney knew that her client had kept the family computer and wondered if there was information about this money in old emails. What she found turned the case from a high conflict divorce case to a Securities Exchange Commission investigation of insider trading.

Emails retrieved from the computer hard drive provided proof that Mr. Zilkha had obtained confidential information from a former colleague at Microsoft that led to Pequot selling Microsoft shares with a payout to Pequot of $14 million.

Investigators at the SEC had long suspected that Mr. Zilkha had been involved in insider trading but with no “smoking gun” the investigation had languished.

CEO of Pequot, Arthur Samberg and Pequot paid fines and penalties to settle the case amounting to $28 million. Mr. Samberg, once the world’s largest hedgefund manager, sold the assets of Pequot and shut it down. Mr. Zilkha faces adminstrative charges with respect to his role as “tipper”.

Did Ms. Zilkha eventually get her child support? Don’t know, but under new legislation she received a reward of $1 million from the SEC for providing the evidence that was needed to convict.

Lawdiva aka Georgialee Lang

Roger and Me (With Apologies to Michael Moore)

Thank goodness for billionaire friends! Without them, I’m not sure that Conrad Black would have been in a financial position to post the $2 million bail set today by Chicago trial judge Amy St. Eve.

But Roger came through, big time. Roger Hertog, that is. He is a wealthy American philanthropist who is part of the conservative intelligentsia that includes Lord Black.

There is much speculation about Black’s current net worth after five years of litigation.
The mainstream media reports that he no longer owns his home in Palm Beach Florida, however, Black’s lawyer advised the Chicago Court that Black is in a position to recover the home upon payment of certain liens against it.

There is also the matter of the IRS’s claim that Black owes the United States government $71 million in income taxes for the benefits he received from Hollinger over the years. Black’s attorneys maintain that this claim is bogus, since Black did not reside in the United States and therefore had no obligation to pay taxes in the US.

So what’s next? Black’s current bail terms do not permit him to travel outside of the United States. However, he has been granted liberty to file an updated net worth statement which may persuade the Court to amend his bail conditions to permit him to travel to Canada. It is reported that his wife, Barbara Amiel, spends her time between Toronto and Palm Beach.

Word is that there are already plans in place to invite Black to speak at the prestigious Massey Lectures in Toronto and while several Canadian private clubs have expressed their disdain for his continued membership, it is noteworthy that he still holds his Order of Canada and likely will retain it.

I predict that Lord Black will make a triumphant return to Canada, even if it is just for the book tour for his new book due to be released this fall entitled “The Fight of My Life”.

Lawdiva aka Georgialee Lang

The Triumphant ConradĀ Black

Today the Seventh Circuit Court of Appeal in Chicago ordered that Lord Black be granted bail pending the trial court’s review of his fraud convictions. For Black “groupies”, you will know that the United States Supreme Court found that the charges he faced under the rubric of “honest services fraud” could not be sustained unless his conduct included bribes or kickbacks. It did not. The Supremes found that the law was overly broad and that behavior amounting to no more than aggressive business practices could be caught by it.

This turn of events leaves Mr. Black with only a conviction for obstruction of justice related to his removal of 16 boxes of documents from his office. The nub of the obstruction charge was that Black was under investigation and his removal of documents interfered with the investigation.

So what now? Criminal law pundits have a number of theories, including the observation that he will never go back to jail, as his time served is sufficient punishment for the obstruction conviction. He has served 28 months. Others opine that this case is too hard to predict. After all, the only person who continued to believe that he would be found innocent of the serious fraud charges was Lord Black.

Black’s prophetic utterances in 2003 and 2004 include the following:

” I urge you, (the press) no matter how addicted you are to representing me as having
been shamed, disgraced and chased out as a scoundrel, to contemplate the possibility
that there’s just a chance I may be innocent. As time will prove, I am.”

“When everyone is finished dancing on my grave, they may be disconcerted to find that I
am not in it.”

Black’s pursuit of justice is equally matched by his articulate and charming banter.

Lawdiva aka Georgialee Lang

Justice Delayed is Justice Denied

No system of justice is perfect, but Canadians are becoming increasingly perplexed and even angry about the speed (or lack thereof) of Canada’s trial process.

Case in point: Garth Drabinsky, the theatre impressario who mounted extravagant productions of Broadway musicals across Canada was arrested for fraud and forgery in 2002. By this time his productions had amassed 19 Tony awards and he was a member of the Order of Canada. It took years for his trial to begin. Finally in August 2009 he was sentenced to seven years in prison. He was released on bail to await the outcome of his appeal, however, the appeal is nowhere close to being heard as his lawyers have not even filed their written argument with the Ontario Court of Appeal. White-collar criminal Drabinsky still enjoys his freedom and the luxuries provided by his ill-gotten gains.

Had Drabinsky been tried in the United States, like Conrad Black, he would have been charged, tried, and sentenced within a couple of years.

An even starker example of systemic failure is the debacle known as the Air India trial. Bagri and Malik were charged with over 300 counts of first degree murder in 2000, some 15 years after the explosion of Air India flight 182 off the coast of Ireland. They were not tried until 2003 and it took a further three years to conclude the process. The pair were acquitted in 2006.

Swift, measured justice is necessary if one wishes a justice system that is revered and respected. I’m not suggesting that speed should trump careful deliberation and fairness, however, Canadian courts must recognize that the administration of justice is debased in the face of trials that seem to never begin and never end.

Free Conrad Black

The United States Supreme Court has set aside Lord Black’s convictions for three counts of fraud based on the overreaching parameters of the law of honest services fraud. I say hurrah!

The Court has struck down the law on honest services fraud and has sent the case back to the trial judge for a reconsideration based on the USSC’s interpretation of the law. The only conviction that remains is the finding of guilt for obstruction of justice. This charge related to Black’s removal of several boxes of legal files and documents from his office, a video camera recording his actions as he stacked the boxes into a waiting vehicle.

So what’s next? I agree that there is merit to the position that the trial judge’s directions to the jury on the alleged fraud tainted and influenced the jury to convict for the removal of the documents. It is entirely possible Black’s remaining conviction will also be vacated.

In the meantime, he will apply for bail and by all rights should be released from prison pending the trial court’s review of the new law from the US Supreme Court.

I only hope that with Lord Black’s release from prison he continues to write about the politics and culture of the day. He is one of my favorite authors and I highly recommend his book on Richard Nixon: A Life in Full.

** For my previous post on Conrad Black see May 13, 2010.

Legal Chutzpah

Marc Dreier is another convicted white collar crook, and he’s today’s example of legal “chutzpah”.

In 2009, about the time Bernie Madoff was exposed, Marc Dreier’s world came crashing down. Dreier was a lawyer in New York City who founded a major law firm. He was the sole partner and his 250 plus lawyers and staff were well paid, but did not participate in the firm’s profits.

Dreier was successful, but he wanted to be a billionaire, not just a millionaire.

One of his most audacious acts was to borrow $100 million from a hedge fund on behalf of a wealthy client. Dreier impressed the hedge fund manager and after the manager reviewed Dreier’s forged documents, the hedge fund loaned the money, without ever speaking to Dreier’s client. Dreier used the funds to prop up his over-extended law firm and to indulge in the finer things of life, including a large beach house in the Hamptons and an opulent yacht.

One day Dreier got a call from the hedge fund manager. Dreier’s client had defaulted on a payment. Dreier assured the manager that all his client needed was a short extension of time and all would be well.

Dreier suggested that the hedge fund manager come to his client’s lavish Wall Street office, to meet with him and his client and sort things out.

Here’s where the chutzpah comes in! Dreier called his client and asked if he could use a boardroom at his office. Not a problem.

Dreier showed up with an actor hired to impersonate his wealthy client and convinced the hedge fund manager that everything was under control. Dreier bought himself a little more time before his Ponzi scheme collapsed in ruins. He was arrested in Toronto, in the midst of another scam.

Dreier escaped the media scrutiny that Madoff couldn’t avoid, mainly because Dreier’s fraud only amounted to $400 million, while Madoff’s was $65 billion. As well, Dreier turned himself in two days before Madoff was arrested and thereafter, Madoff took centre stage.

Dreier is where he belongs, serving 20 years. He gets my vote today for legal chutzpah!

Brian Mulroney: Are His Irish Eyes Still Smiling?

Mr. Justice Oliphant released his Report today which detailed his findings arising from the Mulroney/Schreiber Commission. Oliphant J. must have poured over his thesaurus to find the least offensive word to describe Brian Mulroney’s financial and business dealings with now-imprisoned convict Karlheinz Schreiber. He settled on “inappropriate”. He could have chosen “improper”, “unseemly” or even “malapropos”, but he was required by his mandate to avoid language that insinuated any civil or criminal liability.

Despite his softball adjective, he did make it clear that our former prime minister’s concealment of his seedy business relationship with the German arms dealer was a breach of Mr. Mulroney’s own ethics guidelines. He found that Mr. Mulroney’s receipt of $225,000 in 1993 and 1994 (or was it $300,000 as Schreiber testified?) was glaringly suspicious given that it was passed to Mulroney in hard cash, in plain white envelopes and then secreted by Mulroney into private stashes, either at his home or tucked in his safety deposit box.

What is most galling, however, is that Mulroney sued the federal government in 1996 for their allegedly defamatory accusations with respect to Mulroney’s relationship with Mr. Schreiber and to settle Mulroney’s lawsuit paid him the princely sum of $2.1 million. But money is only money. What Mr. Mulroney received from the government that was far more valuable to him was a public apology for their mistaken understanding of his dealings with Schreiber. Their payment and apology, however, was based on Mulroney’s sworn testimony that he met with Schreiber for coffee, a few times.

So where does this leave this ignominious tag-team? Well, Schreiber is serving a 8 1/2 year prison sentence while Mulroney remains in his own version of purgatory.