Media baron 'conned Hollinger in apartment deal'
A property expert told a court that the price media mogul Conrad Black paid for a co-op apartment on New York’s Upper East Side was £2.7m (€4m) below fair market value.
Jonathan Miller, head of a New York property appraisal firm, said there was no way the £1.5m (€2.2m) Black paid Hollinger International Inc for the apartment occupying the whole second floor of its Park Avenue building could be considered fair.
“It’s so far beyond where the market level is that it wouldn’t matter if it was renovated or unrenovated – a $3m (€2.23m) price point isn’t realistic,” Miller told Black’s racketeering and fraud trial in Chicago.
Former Daily Telegraph boss Black, 62, is charged with swindling the big Hollinger International newspaper holding company he headed out of £42m (€62m), largely by pocketing payments from purchasers of Hollinger community newspapers.
But the apartment became the focus yesterday as prosecutors prepared to rest their case – something they said could happen as early as today.
Black is accused of conning Hollinger International through a series of transactions involving the building at 635 Park Avenue, which according to Miller was worth £4.25m (€6.25m) when Black paid £1.5m (€2.2m) for it.
Hollinger International paid £1.5m (€2.2m) for the apartment in 1994 as a place for the Canadian-born press lord to live while visiting New York, about 60 days a year. He also maintained homes in Toronto and London.
Hollinger also paid the maintenance costs of the building while Black lived there, something that fuelled the wrath of the company’s shareholders.
With shareholders increasingly restive, Black agreed to buy the apartment from Hollinger in December 2000, but paying only the same amount that the company had spent to acquire it six years earlier – £1.5m (€2.2m).
Black put up £1,075,000 (€1,583,223)in cash plus an apartment on the building’s first floor that he had bought in 1998 for £250,000, calculating that appreciation had raised the first-floor apartment’s value to £425,000 (€625,977).
Prosecutors say Black should have paid far more for the second-floor apartment and that in not doing so he effectively swindled Hollinger. The company had extended an option to buy the apartment to Black but the document specified that such a sale would have to be at fair market value.
Black’s lawyer Edward Genson maintains that Black pumped £2.15m (€3.17m) of his own money into the apartment, even though the deal Black had with Hollinger specified the company would pay for any improvements.
Genson claimed that adding the £1.5 million Black paid to a claimed £2.15m (€3.17m) in renovations brought the amount the press baron paid close to the £4.25m (€6.26m) that Miller said the apartment was worth on the market.
“He’d have US$7.3 in the apartment, wouldn’t he?” Genson said.
“From a mathematical standpoint,” Miller said.
Black also is accused of spiriting 13 boxes of Hollinger documents out of Hollinger offices in Toronto in defiance of a court order.
Prosecutors later recovered the boxes, which sat on an evidence cart next to the jury box as jurors viewed security camera photos of Black carrying boxes out of the building and loading them into a limousine.
Night shift security man Shahab Mahmood said he saw Black “bringing some boxes to his chauffeur and they were putting them in the limousine”.
“After that, Conrad Black went upstairs and the chauffeur drove away,” Mahmood said.
Monique Delorme, controller of Hollinger Inc, a Toronto-based company that held a controlling interest in Hollinger International, told the court that she had returned to the building from lunch the same day to find employees loading the boxes into a waiting car.
She said she checked and found that no one had obtained permission from inspectors to remove the documents as required under the court order. She said she insisted that the boxes be returned to Hollinger offices.
