Conrad Black's former top associate, David Radler, has agreed to pay a US$28.7-million settlement to the U.S. Securities and Exchange Commission, just ahead of Black's trial in Chicago.

The commission's enforcement action is separate from the criminal trial, where Black faces racketeering and fraud charges. Black has also been investigated by the SEC.

The U.S. stocks regulator said Friday that the former deputy chairman and chief operating officer of Hollinger International agreed to pay $23.7 million in "disgorgement and prejudgment interest" along with a $5 million civil penalty.

Under the terms of the settlement, Radler is barred from serving as an officer or director of any publicly traded company.

Black and three others are on trial, accused of defrauding Hollinger International. They all deny the charges.

Jury selection was completed Thursday, the day before Radler's fine was announced, and opening arguments are slated to begin Monday.

Radler is expected to be a star prosecution witness against his former boss.

Steven Skurka, a CTV legal analyst who is in Chicago for the trial, says the prosecution may be trying to demonstrate that an earlier guilty plea does not mean a free ride for Radler.

"I think the prosecution sees the train coming down the track," Skurka said. "The train is Eddie Greenspan and the track that it's heading towards is the witness, Radler. He is a pivotal witness in this case that really will largely decide Conrad Black's fate.

"This notion of a sweetheart deal that Radler is getting is really put to rest," Skurka said.

"I don't think there's any coincidence that the settlement was made on the eve of the trial."

All of the money Radler pays will go to Sun-Times Media Group Inc., which is the new name of Hollinger International.

Radler, the former day-to-day overseer of Black's media empire, neither admitted nor denied the allegations, the commission said in a statement from Washington.

His attorney had no comment on the settlement, which is separate from the criminal proceedings in Chicago, where Radler is expected to testify against Black.

Linda Chatman Thompson, director of the Commission's Division of Enforcement said the "tough sanctions" reflect the SEC's resolve to act forcefully against corporate officers who perpetrate fraud against shareholders.

The SEC alleges Radler and Black, Hollinger International's former CEO, engaged in a fraudulent scheme to divert cash and assets from the company from 1999 through 2003.

The Commission also alleges Radler misappropriated millions of dollars from the Chicago-based company and made numerous misstatements to shareholders.

The Commission's complaint accuses Black and Radler of diverting about $85 million of the proceeds from Hollinger International's sale of newspaper publications through purported "non-competition" payments to themselves, other corporate insiders and Hollinger Inc.

The complaint also alleges that Black and Radler orchestrated the sale of certain of Hollinger International's newspaper publications at below-market prices to another privately-held company owned and controlled by Black and Radler, including the sale of one publication for $1.00.

Radler pleaded guilty to mail fraud in 2005.

He was given a 29-month sentence and fined US$250,000, in exchange for his co-operation with prosecutors. He is expected to testify against Black, in exchange for the reduced sentence.

With a report from Canadian Press