Nortel Fraud Trial To Begin For Former Execs

Opening arguments are expected Monday in the trial of former executives at insolvent Nortel Networks Corp. who are accused of defrauding investors ahead of one of the biggest corporate collapses in Canadian history.

Former CEO Frank Dunn, 57, was charged in 2008 — just as the company imploded — with fraud affecting the public securities markets, as well as with falsification of accounts and documents and involvement in issuing a false prospectus.

Former Nortel chief financial officer Douglas Beatty, 56, and former corporate controller Michael Gollogly, 52, face similar counts.

The Ontario Superior Court trial, expected to last more than six months, will be presided over by Justice Frank Marrocco.

The court will hear arguments that the men, dismissed from the company in 2004, fraudulently misstated financial results in order to get bonuses they were promised if the company returned to profitability.

Nortel went on to restate its financial reports four times over as many years as regulators and investigators began looking at the company's financial statements.

Criminal fraud trial of three ex-Nortel executives begins

One of the most spectacular flameouts in corporate history will be on the docket this week when pre-trial motions begin into criminal charges against former executives at Nortel Networks Corp.

Justice Frank Marrocco is scheduled to preside Thursday over motions, including those by the defence, in an open-court hearing at the Superior Court of Justice of Ontario. A trial before the justice is to begin in Toronto on Jan.16.

The RCMP charges allege that the defendants, including ex-Nortel chief executive Frank Dunn, engineered an elaborate accounting fraud to mask falling Nortel sales after the technology stock bubble popped in the spring of 2000.

Prosecutors say the scheme cost the Toronto company’s shareholders billions and contributed to the demise of the once-high flying Bell Canada equipment arm, with Nortel now being wound up under creditor protection.

“It’s the biggest (financial scandal) in Canada, one of the biggest in the world,” Rotman School of Management financial analysis professor Ramy Elitzur told the Star in 2008.