Tribune report suggests fraud in financing

CHICAGO, July 27 (UPI) -- A court-appointed examiner said financing set up in 2007 as part of Sam Zell's purchase of the Chicago Tribune was likely illegal in part.

Kenneth Klee's partially blacked out report on the financing of the final $3.6 billion of a $8.2 billion deal said the deal was based on managerial reports that were "marred by dishonesty and lack of candor about the role played by Morgan Stanley in connection with Valuation Research Corp.'s solvency opinion and on the question of Tribune's solvency generally."

The bankruptcy court report was partially blacked out to preclude the report interfering with ongoing disputes among creditors, the Chicago Sun-Times reported Tuesday.

The report places no blame on Zell or on the big banks that financed the deal, Bank of America, JPMorgan Chase and Citigroup Inc. Instead, "one or more of Tribune's officers breached their fiduciary duties," the report said.

Klee also avoided naming specific managers who may have exaggerated the company's strength.