To hear Conrad Black tell it, the U.S. Department of Justice couldn't touch him.
As recently as three days ago, the fallen press baron was dismissive of persistent rumours that U.S. Attorney Patrick Fitzgerald was on the verge of slapping him with fraud charges for allegedly siphoning money away from his newspaper empire, Hollinger International Inc. Confidently working a Toronto banquet hall filled with such Canadian celebrities as singer Gordon Lightfoot, actress Kim Cattrall, former Ontario lieutenant-governor Hilary Weston and a group of Catholic dignitaries at the 100th anniversary party for Maclean's magazine, Lord Black advised a handful of party-goers that the Chicago prosecutor "has nothing" on him.
Tuesday night's party was only one in a series of high-profile social and media events that Lord Black and his wife, Barbara Amiel, have attended in the past two months as part of an apparent public-relations offensive to discredit U.S. critics and regulators who have accused him of improprieties. According to people attending the sessions, Lord Black has been unfailingly courteous and charming. If anyone asked him about the U.S. criminal investigation, he offered that prosecutors were using "egregious" tactics and that his former lieutenant, David Radler, had made a fatal error by co-operating with investigators.
Some who attended these sessions came away impressed.
"He was quite charming, pleasant and engaging, not at all like I thought he would be after reading all the media reports," said Eric Penz, chair of the Dominion Institute, who sat at Lord Black's table Tuesday night.
Lord Black's remarkable campaign came crashing to a halt yesterday, with an 11-count indictment that accused him and three other former Hollinger executives of pocketing $84-million (U.S.) of company money.
The charges, which Lord Black vigorously denies, immediately thrusts him into an infamous fraternity of toppled U.S. chief executives at Enron Corp., WorldCom Inc. and Tyco International Ltd. who have seen their reputations and personal fortunes shredded by criminal investigations and, in some cases, convictions.
"This indictment will prove to be the biggest challenge of his life," said Richard Breeden, former chairman of the U.S. Securities and Exchange Commission who, as an adviser to Hollinger's board of directors, was instrumental in ejecting Lord Black as chairman two years ago.
"He faces a very difficult process. It's clear from the scope of the charges that the U.S. Attorney intends to put its full weight behind this case."
Lord Black's first challenge will be to stay in Canada. Until he and Lady Black began attending social events in September, the couple had secluded themselves behind the security gates that surround his sprawling home in Toronto's Bridle Path neighbourhood. Lord Black inherited the 4½-hectare estate from his father in the 1970s, and associates say Lord Black has buried himself in a large library of historical, military and political books to research, among other things, a possible book about former U.S. president Richard Nixon.
His family retreat, however, could be threatened by yesterday's indictment. The Department of Justice said it has issued warrants for Lord Black's arrest, a process that could culminate in U.S. officials seeking to extradite him. Legal experts say Lord Black has limited legal rights to fight any extradition because he gave up his citizenship in 2001 to accept a seat in Britain's House of Lords. He currently is a resident in Canada.
If he is convicted by a U.S. court, legal experts said, he would have to go through a cumbersome process of obtaining a special permit to visit Canada.
Yesterday's indictment will also place further stress on Lord Black's financial situation. Last year, he borrowed $32.3-million from Quest Capital at an unusually high interest rate of 13 per cent. Lord Black raised money to pay off some of his debts this summer when his sold his London townhouse for about $26-million to a former Mexican beauty queen.
He was poised to pocket $8.9-million (U.S.) last month after the sale of his Park Avenue co-op apartment, but FBI agents seized the proceeds after alleging his profit from the transaction resulted from wire fraud. Lord Black continues to own an oceanfront home in Palm Beach, Fla., which has been valued at more than $30-million, but obtaining proceeds from a sale may not be possible. Canadian federal tax authorities placed a lien on the property in 2004 and Mr. Fitzgerald said yesterday he has moved to seize it.
Lord Black lost any meaningful financial claim to his private holding company, Ravelston Corp., when it filed for bankruptcy protection in the spring.
The reversals leave Lord Black with one major asset, his family home in Toronto.
Yesterday's indictment opens up a new and costly legal battleground for Lord Black, who is already defending himself against a number of civil lawsuits and securities investigations in Canada and the United States. He has surrounded himself with a large team of top Canadian and U.S. lawyers that are estimated to cost a total of more than $1-million in monthly fees. Unless he is able to raise proceeds from the sale of some of his properties, it may be difficult for Lord Black to cover legal costs that are expected to mount for at least the next few years.
"It's very sad to see all this happen," Mr. Breeden said. "The talents of the people involved in Hollinger could have been devoted to generating wealth in this company. . . ."