Former press baron Conrad Black has suffered two setbacks in his ongoing legal battle in the US.

A US judge has ruled that prosecutors will be allowed to put close former colleagues on the stand to recount Lord Black's role in an alleged $80 million (€61 million) fraud.

In general, prosecutors are unable to use hearsay evidence of what a defendant allegedly said at trial. However, US law permits the use of such evidence from "co-conspirators" where it can prove a conspiracy existed.

US district judge Amy St Eve accepted prosecution arguments that such a conspiracy probably operated in Lord Black's Hollinger publishing empire - even though Lord Black is not charged with conspiracy.

The ruling means that former Lord Black aide David Radler, and a number of other company insiders, can be called on to testify against their former boss in the fraud and racketeering trial of Lord Black and three other company executives.

The four men are accused of operating schemes that siphoned millions of dollars from Hollinger International as properties were sold off.

Lord Black and the three other former executives have pleaded not guilty. A fourth, Radler, pleaded guilty to one fraud count in September 2005 and agreed to testify against the others.

Earlier this week, Ravelston Corp, one of Lord Black's holding companies, pleaded guilty in a US district court to one count of fraud and agreed to pay a $7 million fine.

Lord Black was forced out of Ravelston's control in 2005, and the company entered receivership that year under a court-appointed receiver. Despite Lord Black's opposition, the privately-held and bankrupt Ravelston won approval from Canadian courts to plead guilty in the US case, in which Lord Black and three former executives also face prosecution.

The fraud plea accepted on Monday involved the sale of media properties to Forum Communications, a North Dakota newspaper company. Prosecutors said the $14 million sale involved a $400,000 non-compete agreement, part of which was misdirected.

The plea accepted by the federal court in Chicago also called for five years' probation for the company, possible restitution and an agreement to co-operate with the US government in its case against Lord Black and his fellow accused.

Lord Black and Radler were the principal owners of Ravelston, which once controlled Toronto-based holding company Hollinger Inc.

Hollinger, in turn, had a controlling interest in Chicago-based publishing company Hollinger International Inc, which owned, among other titles, the Daily Telegraph.

Jury selection for the trial in Chicago, which is expected to last three months, will begin next Wednesday. - (Reuters)