Legal File: Can Black beat 17 charges?

Canadian indictments are usually a page or a few pages long, rarely more. They set out the criminal charges, generally in the wording of the Criminal Code section, with some additional details and particulars of the relevant allegations.

The indictment in the Black case is 80 pages long. It starts with a synopsis of each of the individuals and companies involved, and then carries on in excruciating detail to recite the prosecution’s version of what took place, and justify the criminal charges.

The first set of charges deals with the sales by Hollinger Inc. of the publications, including community newspapers, it owned. The allegation is that in connection with those sales, the four individual accused and their corporate vehicle Ravelston Corporation devised and participated in a scheme to defraud Hollinger International, the public shareholders of Hollinger International and the Canadian tax authorities.

The mechanism was to take a part of the sale price of these assets and, instead of having that money go to Hollinger International or its subsidiary, thus benefiting the public shareholders, the accused diverted a portion of the monies to themselves. The portion diverted was claimed to be the infamous non-compete payments. Because such payments, when legitimate, are not taxable in Canada, the Canadian tax authorities, it is alleged, were also defrauded. Bonus payments were allegedly falsely characterized as non-competition fees as well, to avoid the payment of taxes.

The indictment minutely details each transaction. While the diversion of monies is the essence of the criminality alleged, the actual charges hinge on the use of interstate mails and couriers. In the United States, jurisdiction regarding crime is state and not federal. American federal crime constitutionally requires some federal element—interstate mail or international courier qualify—as means of constitutional justification. Counts 1 through 7 of the indictment refer to seven individual uses of the mail or courier in connection with a fraud.

Counts 8 and 9 are analogous mail or wire fraud charges but deal with different non-competition fee transactions. They involve Hollinger Inc.’s sale of newspapers and related communication properties to CanWest Global Communications. In that sale, approximately $80 million (Cdn.) was allegedly diverted as improper non-competition fees to the accused. Again, the transaction allegedly involves bonuses falsely disguised as non-competition fees. And again the entire transaction is a backdrop to two particular counts involving two particular sets of documents sent by interstate carrier or transmission.

Counts 10, 11 and 12 have been referred to as the “lavish lifestyle” charges. They allege fraudulent overspending by Black at Hollinger Inc.’s expense, all set out in great detail as the backdrop to an allegation in each count of sending a false document related to that overspending through interstate communication. Count 13 alleges dealings in proceeds of crime in relation to the same transactions.

Count 14 alleges an attempt to obstruct justice—Black’s notorious removal of boxes of documents from his Toronto Street offices.

Count 15 bases a “racketeering” charge upon these events. It alleges the group of accused became a criminal enterprise for the purpose of carrying out the previously described offences. It’s a way of repackaging all the allegations as a conspiracy.

Counts 16 and 17 allege that the accused caused false tax returns to be filed by Hollinger International because the returns for 1999 and 2000 failed to include, as they should have, the amounts diverted by the accused.

It is certainly something a Canadian lawyer is not used to, to see such a detailed recounting of prosecutorial theory delivered to the jury, where it can act as a continuous reminder of the allegations. And the defence doesn’t have the advantage of a similar document addressing the allegations.

There is an “other hand,” however, and it is why Canadian prosecutors try to avoid too much detail in their indictments. Every detail that is not proven becomes a point in favour of the defence. A detailed indictment becomes, in effect, a checklist, and if the defence is able to point out inaccuracies or omissions, that is the fertile soil from which reasonable doubts can be sown.

If the evidence reveals the accused characterized bonuses as non-competition fees based upon expert advice from an accountant or other tax adviser, that would be a powerful point in their defence. The defence would gain not only from the evidence in their favour, but from the negative impact scoring such a point would have on the prosecution. There is an important ripple effect here: one small crack in the credibility of the prosecution and its case can lead to more cracks. When the dam gives way, reasonable doubt starts pouring into the jurors’ minds.