Marc 9,2018 (courtesy of CBC.ca)Two key players at Knowledge House have been found guilty of fraud in the collapse of the Halifax e-learning company.
Nova Scotia Supreme Court Justice Kevin Coady rendered his decision Friday morning after a marathon trial that spanned more than 150 court days over two years.
Former CEO Dan Potter and company lawyer Blois Colpitts were found guilty for their roles in a stock-price manipulation that artificially maintained Knowledge House share prices before they imploded in August 2001, triggering the company’s demise.
“This conduct not only put the economic interests of existing and potential [Knowledge House] shareholders at risk, but caused significant economic loss to numerous investors, known and unknown, and financial institutions,” Coady said in a 207-page written decision.
While the judge found Potter and Colpitts guilty on all five counts of fraud, he entered convictions only on the first two counts.
The judge said the conspiracy to maintain share prices spanned 18 months and involved spending more than $11 million to buy 50 per cent of the Knowledge House shares that crossed the Toronto Stock Exchange (TSX).
He said he used different accounts to continually buy the stock to make sure the price didn’t decrease and, in the process, spent millions to keep the stock price rising. He said Clarke also actively discouraged people from selling their stocks.
“This was an incredibly sophisticated fraud,” Martin said. “He spent millions of dollars over the course of 18 months doing what they could to make sure the price of Knowledge House did not fall.”
Martin said the fraud amounted to $31 million in total.