On Jan. 13, 2011, the United States Attorney's Office for the Northern District of Illinois dismissed all charges against Mark Kipnis, former general counsel of media conglomerate Hollinger International (Hollinger). Kipnis had been charged, in a 2005 indictment, with participating in a $60 million fraud, directed by Lord Conrad Black, the chairman and a controlling shareholder, of Hollinger. Sadly, this complete vindication of Kipnis came at an enormous personal cost over the course of eight years. During that period of time, he was either under investigation, indictment or convicted of a fraud which, even according to prosecutors, enriched Black and others but not Kipnis.
In June 2003, in response to allegations of fiduciary duty violations, the Board of Directors of Hollinger formed a Special Committee to investigate and issue a report about those violations. Kipnis cooperated with the Special Committee, meeting with members of the committee on several occasions, sometimes without counsel. More than a year later, in August 2004, the Special Committee issued a 513-page report, concluding that Hollinger's former CEO Conrad M. Black and its former COO F. David Radler transferred more than $400 million to themselves and their affiliates. The report did not allege that any portion of that $400 million was diverted to Kipnis.
Following the issuance of the report by the Special Committee, the United States Attorney's Office commenced a grand jury investigation. Once again, Kipnis cooperated, this time with prosecutors. Despite that cooperation, and despite the complete absence of evidence that he received any diverted funds, in Nov. 2005, Kipnis was indicted, along with Black, Radler and others in connection with an alleged scheme to divert more than $60 million from Hollinger International. According to the indictment, Kipnis' illegal activity consisted of documenting and closing the purchases and sales of newspapers by Hollinger and its subsidiaries which enabled Black and others to divert proceeds from Hollinger. He was also charged with a failure to disclose all material facts to Hollinger's Audit Committee. Although the charged scheme involved a substantial sum, it was a fraction of the amount that the Special Committee concluded had been diverted from Hollinger. Consistent with the findings of the Special Committee, however, the indictment did not allege that Kipnis received any portion of the diverted funds.
On July 13, 2007, after extensive pretrial proceedings, approximately four months of trial and two weeks of jury deliberations, a jury acquitted the four defendants of most of the charges in the indictment. During that trial, government witnesses described Kipnis as open, honest and trustworthy. The district court set aside the conviction on one of Kipnis' three counts, finding that no rational jury could have found that he had intent to defraud with respect to to certain payments made to Black and others. The counts that remained arose out of payments diverted to Black, Radler and others totaling $5.5 million.
On Dec. 10, 2007, United States District Judge Amy St. Eve sentenced Kipnis. In a highly unusual sentence for a defendant convicted of participating in a multi-million dollar fraud, after a lengthy jury trial, Judge St. Eve refused to impose a term of imprisonment despite the prosecutor's request for a 12-year term of imprisonment. Recognizing that Kipnis had not received any funds that had been diverted from Hollinger, and expressing sympathy for him, Judge St. Eve noted that Kipnis was "clearly the least culpable person in the scheme."
Kipnis and his co-defendants appealed their convictions to the 7th Circuit Court of Appeals. That court affirmed the convictions in June 2008. The Supreme Court agreed to review the proceedings and, in June 2010, reversed the convictions. Kipnis' case was sent back to the trial court.
By the time the Supreme Court reversed the conviction, the criminal case had taken an enormous personal and financial toll on Kipnis and his family. Kipnis lost his job with Hollinger, lost his law license, unsuccessfully tried to support his family through a sign company and came close to losing his home. While on supervised release, Kipnis had to seek permission from the court to travel to Omaha, Nebraska to watch his son, a key player on Arizona State University's baseball team, play in the NCAA College World Series. Although he passed an examination to become a real estate salesperson, he was unable to obtain a license because he was under supervision by probation officers.
On Jan. 13, 2011, the United States Attorney's Office announced that it would dismiss the last two charges against Kipnis. Finally, after eight years of investigations and criminal proceedings, Kipnis had a clean record, he was no longer charged with any criminal violations, he was not under investigation. Although completely exonerated, Kipnis had been punished, in fact had completed his sentence, before his ultimate vindication.