LORD BLACK of Crossharbour, the tycoon who once owned The Daily Telegraph, was yesterday indicted for eight charges of fraud by Chicago prosecutors with offences that carry a 40-year jail sentence.

The charges relate to the way that Lord Black, 61, ran Hollinger International, the public company that formerly owned the Telegraph, and accuse him and key associates of fradulently diverting $83.8 million of shareholders’ money into their own pockets.

Lord Black is also accused of wasting company money, by using Hollinger International money to refurbish a company apartment in New York, using a company jet for a holiday in the Polynesian Bora Bora, and paying $42,000 to host a party for his wife, Barbara Amiel.

Late last night, Lord Black protested his innocence in a statement made by his lawyer, Edward Greenspan.

"Conrad Black asserts his innocence without qualification with respect to each and every one of the charges set forth in the indictment," said Mr Greenspan. "It will be shown that he has, at all times, acted within the law. He is confident, if given a full and fair opportunity to defend himself, he will be found innocent."

Patrick Fitzgerald, the United States Attorney leading the case, said: "Insiders at Hollinger all the way to the top of the corporate ladder whose job it was to safeguard the shareholders made it their jobs to steal and conceal."

Mr Fitzgerald announced the charges with Robert Grant, special agent-in-charge of the Chicago office of the FBI. Mr Grant said: "The frauds alleged in the indictment were blatant and pervasive: they extended from back rooms to the board room, and from Park Avenue to the South Pacific. Our job is to protect investors from Wall Street to LaSalle Street and in other global financial markets."

Lord Black’s indictment in Chicago marks a new low for a media baron who until two years ago could still count himself as a member of the world’s elite. He bought The Daily Telegraph in 1985, and built up a newspaper group that at its height spanned Canada, the United States, and Australia — and took up British citizenship, ensuring that he could get a seat in the House of Lords.

However, two years ago, he was ousted from his position as chief executive at Hollinger International, as fellow board members alleged that he had received cash to which he was not authorised. Lord Black lost control of the company, and an internal probe, which later became a criminal inquiry, followed.

The Daily Telegraph — his prize asset — was sold to Sir David and Sir Fredrick Barclay just over a year ago. Lord Black abandoned London, selling his Kensington home, and has spent most of his time in Toronto.

The Chicago indictment accuses Lord Black of being part of a scheme to misappropriate company money through "non-compete payments". Hollinger International sold a series of newspapers in the US and Canada in 1999 and 2000, and the men allegedly took $32 million in cash for themselves.

Lord Black and three other former Hollinger executives were accused of participating in a scheme to "defraud . . . public shareholders of money, property and their intangible right to honest services". The peer’s lifelong associate, David Radler, has already pleaded guilty to these charges.

The indictment also alleges that Lord Black and colleagues took $51.8 million in unauthorised non-compete fees after the sale of his interest in Canada’s National Post and a string of local newspapers.

But the most colourful part covers the perks that Lord Black enjoyed at Hollinger International’s expense. Principal among these is an apartment overlooking New York’s Park Avenue, acquired by the company in 1994 for $3 million. Lord Black was given given use of the second-floor apartment plus an option to buy it at a fair market value. That option included a clause under which Hollinger would spend $400,000 to refurbish it.

In 1996, however, Black drew up plans to spend $2 million on a revamp that would "decorate the apartment in lavish fashions". When shareholders complained, it was agreed that he would pay for the work. But, according to the indictment, the peer later agreed with an unnamed Hollinger executive that the company would foot the cost. In 1998, Lord Black bought the ground-floor apartment and over the next two years Hollinger spent more than $1.5 million renovating it and, according to the indictment, it was used to house Black’s "servants".

Lord Black is also accused of fraudulently getting Hollinger to pay for his use of the corporate jet to fly him and his wife on a private holiday to the Polynesian resort of Bora Bora in 2001. The indictment claims that the trip cost "tens of thousands of dollars" yet there was "little, if any business purpose". When the company’s accountants sought to get him to pay, Lord Black is said to have e-mailed: "Needless to say, no such outcome is acceptable."