Saturday, July 14, 2007
With the conviction of former Hollinger International CEO Lord Conrad Black and three other former executives on three counts of mail fraud -- Lord Black was also convicted of obstruction of justice -- the next issue will be figuring out what the likely sentencing range will be. The defendants were acquitted on the Can-West non-compete transaction and the "perks" counts, along with the RICO and tax charges, so the primary counts of conviction (aside from the obstruction) occurred in 1999 and 2000, before a major amendment in November 2001 to the Federal Sentencing Guidelines provisions for fraud offenses that increased the potential sentences significantly. Under the Guidelines provision, Sec. 2F1.1, in place for the time of the conduct, the base offense level is 6. The gain attributable to the transactions outlined in count one of the indictment alleges a diversion from Hollinger of approximately $32 million, so using that figure yields an increase of 16 levels. The government will probably argue that the specific amounts each defendant received should not be the basis for the calculation because they were all part of a single scheme and therefore are liable for the full amount that Hollinger lost. As Prof. Doug Berman points out on the Sentencing Law & Policy Blog (here), even acquitted conduct can be included in the calculation, so the amount could be much higher because the government alleged before trial that Black and the others realized over $60 million. In addition, Sec. 2F1.1 includes a two-level increase for "more than minimal planning" for the offense, and an additional two levels could be added for abuse of a position of trust or use of a special skill. That would bring the Guidelines calculation to 26, which results in a sentencing range of 63 to 78 months for the defendants.
Lord Black's lawyers have already indicated that they will argue for a loss calculation of a bit less than $3 million for him based on the amount he received from the transactions on which the jury convicted, which would limit the increase to 13 offense levels. The would result in a sentencing range of 46-57 months. Will Lord Black's lawyers also ask the court to take into account the factors that led President Bush to commute the sentence of I. Lewis Libby on his obstruction charge? There are similarities between the two men, no doubt, so don't be surprised to see a Libby argument.
In addition to the calculation outlined above, Lord Black could face additional sentencing enhancements for obstruction of justice, a two-level increase, and leadership role in the offense, which is a four-level enhancement. If both apply, his Guidelines offense level could be as high as 32, which carries a sentencing range of 121 to 151 months, or 33, with a sentence of 135-168 months. In addition, there would likely be a term of supervised release and a fine, along with any forfeiture or restitution the court might order. While Judge Amy St. Eve is not bound by the Sentencing Guidelines, she is a former federal prosecutor, so I suspect she will adhere fairly closely to them.
In looking at the indictment (here), I noted for the first time that it does not contain a conspiracy count, and it's not clear why it is not in there when prosecutors did include a RICO charge, a much more difficult charge to prove. This is the rare corporate crime case in which a conspiracy is not included as a type of unifying charge to frame the prosecution's case. If a conspiracy count had been in the indictment -- and if the jury convicted Black and the others -- then the entire amount of the diversion from Hollinger could have been used in the Guidelines calculation. As it stands, Lord Black and the other three defendants are likely to be sentenced to a term of imprisonment, with Black's punishment at least in the six to eight year range, and the others probably around three to five years at a minimum. (ph)