By Andrew Stern
CHICAGO (Reuters) - U.S. judges reviewing formermedia mogul Conrad Black's conviction Wednesday questionedwhether jurors found him guilty of depriving shareholders ofhis "honest services" or of being a thief.
The distinction is crucial to Black's effort to have his2007 guilty verdict on three fraud counts and obstruction ofjustice tossed out based on a Supreme Court ruling that limitedthe scope of the "honest services" law.
"How is this not theft? What is the theory?" asked JudgeRichard Posner of the 7th Circuit Court of Appeals in ablistering question period during oral arguments.
The honest services law has been used by prosecutors ingovernment and corporate fraud cases. But the high courtdeclared it was overused and overbroad.
It sent Black's case back to lower courts to determine ifinstructions to the jury tainted the verdict.
Based on the possibility that he could face a lessersentence, Black, 66, was released in July on $2 million bondfrom a Florida prison.
He had served two years of a 6-1/2-year sentence forswindling shareholders of newspaper holding company HollingerInternational Inc. If some convictions are tossed, Black wouldbe resentenced.
Legal experts said Posner's line of questioning mayindicate he believes two of Black's three fraud convictions forpaying himself for bogus non-compete agreements relied on thehonest services law, while the third involving a smallerpayment did not.
Posner, one of three judges on the panel, also challengedthe government attorney's argument that jurors were given achoice whether to convict Black because he defraudedshareholders or because he violated his fiduciary duty asHollinger's chief executive.
"You didn't tell the jury, 'if you don't think this is atheft, then don't convict,"' Posner said to the prosecutor.
The panel was especially critical of Black's argument thathe was not obstructing justice when he was caught on securitycameras removing boxes of documents and other items from hisToronto offices.
"He could have been convicted of obstruction, even withoutthe honest services fraud," Posner said.
Posner said the panel would consider the case, and a rulingcould come at any time.
The Canadian-born Black is a British peer who once led theworld's third-largest newspaper group with titles includingLondon's Daily Telegraph, Canada's National Post and theChicago Sun-Times.
The court case is #05-cr-00727. (Editing by Xavier Briand)