Black tells U.S. apartment proceeds are his

Press baron covered full cost: Lawyers U.S. accused of ignoring facts in seizure

When the U. S. government seized $ 8.9 million ( U. S.) from the proceeds of the sale of Conrad Black’s Park Avenue apartment last month, the beleaguered press baron says, investigators overlooked a critical fact: Black’s company had agreed to cover the cost of repairing the apartment from its “ pre- World War I condition.”

According to an agreement between Black and Hollinger International Inc. subsidiary American Publishing Co., the company had agreed to pay the full price for the apartment, cover closing costs, and fix, decorate and furnish it.

“ The second- floor apartment was in a pre- World War I condition and required total reconstruction,” Black’s lawyers say in court papers filed in Chicago.

Black in 1996 paid a construction firm $ 2.3 million to refurbish the apartment and since he used his own money, the payment “ was, effectively, a loan of that amount to the company,” the documents say.

That’s a key fact that was left out of the government’s charge against Black when it seized $ 8.9 million of the $ 10.5 million Black made from the apartment sale, his lawyers contend.

AHollinger International subsidiary bought the apartment at 635 Park Ave. in December 1994 for $3 million, allowed Black to live there, and gave him an option to buy it at fair market value, the government said in an affidavit supporting the seizure.

Black exercised that option in December 2000. At the time, the government said, he fraudulently misrepresented to the company that it was still worth $3 million, adding that a fair market value would have been $ 5.4 million.

However, Black’s lawyers now say that his underwriting of the renovation casts “an entirely different light” on the transaction in 2000.

“ Conrad Black paid $ 2.8 million ( improvements), plus $ 2.125 million ( cash), plus $850,000 ( first- floor apartment) — a total of $ 5.8 million — for the second- floor apartment. This is $ 400,000 more than the ‘ fair market value’ of the apartment as of 2000, as alleged in the (government’s) affidavit,” Black’s court filing says. The government has also accused Black of fraud related to a first- floor apartment at the same New York address that was transferred to Hollinger in 2000 as part of the purchase of the second- floor unit. The government says the fair market value of the first-floor apartment in December 2000 was $ 700,000 to $ 800,000, less than the $ 850,000 sales price.

“ On March 1, 2004, Hollinger International sold the same first- floor apartment for $2,350,000,” Black’s lawyers note.