The SEC’s case, filed in November, alleges that Black and Radler defrauded Hollinger International, which owns the Sun-Times, of more than $85 million.

Black claimed that the SEC complaint wasn’t organized properly and that the allegations didn’t amount to fraud, but Judge Hart disagreed.

Chicago-based Hollinger International once grossed $2.1 billion from hundreds of newspapers worldwide.

In November 2003, Black and Radler quit the company in the face of allegations that they and others took $32 million in unauthorized payments from the company.

Then last summer an independent panel of Hollinger International directors charged that Black was guilty of misappropriating $400 million from Hollinger in management fees, lavish expenses and questionable noncompete payments.

Black has denied the charge.

"The SEC has alleged more than just a state law breach of fiduciary duty,” Judge Hart wrote.

"It has alleged improper deceptions related to each transaction.” The two men could also face criminal charges. The U.S. Department of Justice is investigating them for conspiracy, mail fraud and other charges, according to a court filing.

After Judge Hart’s decision, Timothy Warren, a lawyer in the SEC’s Chicago office, said: "We’re gratified to see it go this way and glad to see the case will be moving forward.”

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