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Royal Group's Vic De Zen leaves court in Oshawa, April 21, 2010. (J.P. MOCZULSKI/J.P. Moczulski for The Globe and Mail))
Royal Group's Vic De Zen leaves court in Oshawa, April 21, 2010. (J.P. MOCZULSKI/J.P. Moczulski for The Globe and Mail))

Royal Group defendants found not guilty Add to ...

An emotional Vic De Zen cheered and hugged his family and lawyers after an Ontario judge ruled in a long-running trial that the founder of Royal Group Technologies Ltd. was not guilty of fraud.

Mr. Justice Richard Blouin on Friday also acquitted five other former executives of the plastics company who were jointly accused of reaping more than $8-million in profits from two transactions at Royal Group dating back to 1998.

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Judge Blouin waited until the end of a long day of closing arguments to announce that he would not delay the announcement of his verdict, but instead would immediately deliver his ruling that all six men were not guilty.

The judge said that it would be a "travesty of justice" for the accused to have to wait any longer to find out their fate, and that there was "overwhelming evidence" there was no fraud in the case, and no dishonesty, deceit, or concealment of activities by the accused.

"Accordingly I am acquitting all of the accused of all the charges," Judge Blouin told the Oshawa courtroom. His said written reasons for his decision will follow in two weeks.

In an interview, Mr. De Zen said he cried after hearing the verdict. "I'm delighted - I was waiting seven years," he said, referring to the when the investigation began into the case.

Mr. De Zen said it took time for the judge's words to sink in, and then he began hugging everyone in the courtroom. He said he was also happy for the co-accused: "They've done nothing wrong."

His lawyer, Mark Sandler, said he and Mr. De Zen felt vindicated by the decision. "We were confident from the outset that this case was not a fraud," he said.

He said Mr. De Zen had felt it was a "travesty of justice" that he had been accused of harming the company he had built from scratch. "He is so delighted that the court recognized that this wasn't simply a case of [the judge finding]reasonable doubt, but it was a case where he and others had proven their innocence."

Lawyer Brian Greenspan, who represented former Royal Group president Doug Dunsmuir, said his client should never have faced the charges in the first place.

"Mr. Dunsmuir is obviously delighted with what is clearly a decisive and unequivocal vindication," Mr. Greenspan said in an e-mail. "This was a prosecution that should never have been commenced."

The Crown attorneys handling the case, led by Damien Frost, had no comment on the verdict, saying they wanted to wait to see the judge's reasons for his decision.

The verdict will undoubtedly come as a blow for the prosecution and for the special RCMP investigative unit that laid the charges in the case, because Royal Group was a rare fraud trial in Canada involving executives from a publicly traded company.

The RCMP's special securities crimes investigation unit (known as IMET), announced the charges in 2008 on the same day that the RCMP unveiled charges against former executives of Nortel Networks Corp. That case has not yet proceeded to trial.

Mr. De Zen, Mr. Dunsmuir and former chief financial officer Gary Brown were accused of pocketing a $6.5-million profit from the 1998 sale of a parcel of land to Royal Group for $27.4-million, on the same day they purchased it for $20.5-million. Former vice-president of finance Ronald Goegan was accused of assisting them in the transaction.

The Crown also alleged that five former executives - Messrs. De Zen, Dunsmuir and Goegan, along with former director of taxation Luciano Galasso and director of accounting Gordon Brockelhurst - improperly shared $2-million in profits from exercising a warrant held by the company. The Crown alleged the gains should have gone to the company, not to the employees.

The trial began in April and heard testimony from more than 20 Crown witnesses including former independent directors from the Royal Group board such as former Ontario finance minister Greg Sorbara.

Defence lawyers spent hours Friday outlining for the court their reasons why the Crown had failed to demonstrate that the alleged actions constituted fraud, arguing that the property transactions had not been concealed but had been documented internally and had been revealed to a number of people within the company.

Mr. Sandler said the Crown had not proven that the land sold to Royal Group was sold at an improper price, arguing it was sold at fair market value. He also said it was not against the law for Mr. De Zen and others to make a profit on a transaction with the company.

But Mr. Frost said the accused took advantage of their positions and engaged in "profiteering and self-dealing" when they sold land they owned for a profit of $6.5-million.

"They took $6.5-million out of the company's treasury simply to profit themselves, no other reason," he said in an impassioned summary. "They set the price on both sides of the transaction. And what did they pick? They picked to profit themselves."

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