June 24, 2010 / 3:19 PM / 9 years ago

UPDATE 1-Ex-media baron Black's fraud conviction set aside

* Ruling also involved two other former executives

* Black is serving prison term since March 2008

By James Vicini

WASHINGTON, June 24 (Reuters) - The U.S. Supreme Court set aside on Thursday the convictions of former media baron Conrad Black and two ex-colleagues for defrauding shareholders of one-time newspaper publishing giant Hollinger International Inc.

The justices sent the case back to a U.S. appeals court in Chicago for further proceedings. The Canadian-born Black, who had been a member of Britain’s House of Lords, has been in a U.S. prison since March 2008, when he began serving a 6-1/2-year sentence for fraud and obstruction of justice.

Besides Black, who was Hollinger’s former chairman and chief executive, the ruling also involved John Boultbee, the one-time executive vice president and chief financial officer, and Mark Kipnis, the former corporate counsel and secretary.

A jury in Chicago found the three executives guilty of fraud involving payments of $5.5 million they received from a Hollinger subsidiary. Hollinger was once the world’s third-largest publisher of English-language newspapers.

A U.S. court of appeals upheld the convictions, but the Supreme Court set aside that ruling.

At issue in the case is a 28-word law that the U.S. Congress adopted in 1988 that makes it illegal for public officials and executives to commit fraud by depriving those they work for of the right to “honest services.”

The ruling in the Black case was narrow, unlike the one by the Supreme Court in the case of former Enron Corp executive Jeffrey Skilling dealing with the same law.

In the Black ruling, Justice Ruth Bader Ginsburg said for the unanimous court that the defendants had properly objected to the jury instructions at trial and can challenge those instructions on appeal.

The appeals court had previously ruled the defendants had forfeited their objection to the jury instructions.

Ginsburg said it will be up to the lower courts to determine whether the error in the jury instructions about the honest services law was harmless or not.

Black unsuccessfully had sought a pardon before President George W. Bush left office in January 2009.

The Supreme Court case is Black v. United States, No. 08-876. (Editing by Gerald E. McCormick and Matthew Lewis)

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