According to the indictment, he wasn't charged with securities fraud (§1348) but with mail fraud (§1341), wire fraud (§1343), and honest services fraud (§1346).
As I understand it, Black negotiated a huge management fee authorized by Hollinger's board. The board figured-out they'd made a bad deal. Black got greedier and tried to get the management fee re-characterized as a non-compete to avoid Canadian taxes. The board schemed to get rid of Black and get the fees rescinded. The SEC got involved, the IRS got involved. The Hollinger board members with government savvy (e.g., Henry Kissinger) ran away when the US Attorney (Fitzgerald) got involved. The others cowered and said whatever necessary to keep them from becoming targets of the grand jury investigation. Radler fell into Fitzgerald's arms and sang whatever song kept him out of Lompoc. Black, Kipnis, and Boultbee were convicted on 1 of 11 counts: depriving the company they were running (Hollinger) of its right to honest services (§1346) and using the mail (§1341) and telephone to (§1343) do so.
Honest services is defined in § 1346, which reads in total "For the purposes of this chapter, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services." But the feds have been broadening the case law since the 1940s and use it as a catch all for corruption and fraud cases. It's so broad that every justice from Ginsberg to Scalia just called it unconstitutionally broad. It's broad enough to cover a lot of everyday business deals.
Fitzgerald spent a lot of effort detailing Black's lifestyle and Hollinger's willingness to subsidize it; but Hollinger's board was aware of and approved those subsidies. My feeling is that the jury figured someone who lived Black's lifestyle at the expense of a company was doing something wrong and the only thing in the indictment that fit was the overly-broad honest services fraud: shareholder-supported-lifestyle fraud, the same thing that got one of the Enron guys. Those kinds of arrangements are wrong and inefficient; but probably shouldn't be illegal, lest a whole bunch of other common business practices become scrutinized, regulated, and outlawed.
Black's lawyers have an interesting note about the appeal here: http://www.gibsondunn.com/Publications/Pages/USSupremeCourtT...
As I understand it, Black negotiated a huge management fee authorized by Hollinger's board. The board figured-out they'd made a bad deal. Black got greedier and tried to get the management fee re-characterized as a non-compete to avoid Canadian taxes. The board schemed to get rid of Black and get the fees rescinded. The SEC got involved, the IRS got involved. The Hollinger board members with government savvy (e.g., Henry Kissinger) ran away when the US Attorney (Fitzgerald) got involved. The others cowered and said whatever necessary to keep them from becoming targets of the grand jury investigation. Radler fell into Fitzgerald's arms and sang whatever song kept him out of Lompoc. Black, Kipnis, and Boultbee were convicted on 1 of 11 counts: depriving the company they were running (Hollinger) of its right to honest services (§1346) and using the mail (§1341) and telephone to (§1343) do so.
Honest services is defined in § 1346, which reads in total "For the purposes of this chapter, the term “scheme or artifice to defraud” includes a scheme or artifice to deprive another of the intangible right of honest services." But the feds have been broadening the case law since the 1940s and use it as a catch all for corruption and fraud cases. It's so broad that every justice from Ginsberg to Scalia just called it unconstitutionally broad. It's broad enough to cover a lot of everyday business deals.
Fitzgerald spent a lot of effort detailing Black's lifestyle and Hollinger's willingness to subsidize it; but Hollinger's board was aware of and approved those subsidies. My feeling is that the jury figured someone who lived Black's lifestyle at the expense of a company was doing something wrong and the only thing in the indictment that fit was the overly-broad honest services fraud: shareholder-supported-lifestyle fraud, the same thing that got one of the Enron guys. Those kinds of arrangements are wrong and inefficient; but probably shouldn't be illegal, lest a whole bunch of other common business practices become scrutinized, regulated, and outlawed.