OSC ready to conclude case against Felderhof
Former Bre- X geologist
The Ontario Securities Commission is expected to conclude its case early next week against former Bre- X geologist John Felderhof, nearly five years after the insider trading trial began.
Lead commission prosecutor Frank Marrocco will tell provincial court Judge Peter Hryn if the securities regulator has any more evidence to call, when the long-running trial resumes on Monday.
The commission indicated it was waiting for a ruling by the judge about whether a number of Bre-X related business documents could be presented as evidence for “the truth of their contents.”
Judge Hryn ruled yesterday that most of these documents wouldn’t be admitted as evidence, because they were not necessarily reliable.
“ It is the state which must bear the burden of proof. To admit unreliable evidence as part of the prosecution’s case, which the defendant would then be required to answer, could in that sense unfairly shift the burden of proof,” wrote Judge Hryn in an 83- page ruling.
Nicholas Richter, co- counsel for Felderhof, said yesterday he was pleased with the ruling.
“ The concerns the defence always had, was about the OSC putting documents into evidence without calling the author of the documents” to testify and to be cross-examined, said Mr. Richter. “It has always been a fairness issue.”
Mr. Felderhof was charged in May 1999 with eight counts of insider trading and misleading investors in violation of the Ontario Securities Act. He is alleged to have sold $84 million of Bre- X stock based on insider information that was not disclosed to investors. Bre- X collapsed in the spring of 1997 after the reputed Busang gold find in Indonesia was revealed as a hoax.
The trial began in the fall of 2000 and bogged down as a result of disputes between Mr. Felderhof’s lawyer, Joseph Groia, and lead OSC prosecutor Jay Naster. Only two witnesses testified during 70 days of evidence.
The trial was suspended in April, 2001, when the Ontario Securities Commission filed a legal motion seeking to remove Judge Hryn and argued he displayed a “reasonable apprehension of bias,” in part because he failed to rein in Mr. Groia’s “needling” of the prosecution.
The motion was dismissed by a Superior Court judge and the Ontario Court of Appeal and the trial resumed in the fall of 2004, again before Judge Hryn.
Mr. Naster has since left the Ontario Securities Commission and is a lawyer in private practice. Mr. Groia continues to represent Mr. Felderhof along with Mr. Richter.
There have been more than 50 days of testimony by a number of witnesses, since the trial resumed in a much more lowkey fashion than during its initial stage. Mr. Felderhof also made a couple of surprise appearances to watch the trial earlier this year.
Mr. Richter indicated that if the commission ends its case on Monday, the defence will decide whether to call its own witnesses or seek a “directed verdict” and ask Judge Hryn to immediately dismiss some or all of the charges.
Mr. Felderhof faces a maximum of two years in jail and millions of dollars in fines, since the alleged offences took place under the previous sentencing provisions of the Securities Act.
Canwest News Service