Former CannTrust officials acquitted on all charges


Former chief executive Peter Aceto and two former directors acquitted by judge

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Former CannTrust chief executive Peter Aceto and two former directors of the cannabis company have been acquitted of all charges after the quasi-criminal case brought against them took a dramatic turn this week.

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The Ontario Securities Commission moved to have the charges withdrawn Wednesday, a week after a key witness testified on cross-examination that he was mistaken about using the term “unlicensed” to describe non-compliant cannabis growing in parts of one of the company’s main facilities.

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But defence lawyers argued in court Thursday that withdrawal of the charges would leave Aceto and former directors Mark Litwin and Eric Paul open to the possibility of further prosecution, and said that the only course under the law was to enter findings of not guilty.

Justice Victor Giourgas agreed, acquitting all men of all charges.

The OSC’s case hung on the allegation that some of the cannabis growing in CannTrust’s Pelham, Ont., greenhouse was unlicensed, and once that fell away, the regulator conceded in court that there was not a reasonable prospect of conviction on the counts including fraud and insider trading.

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However, the OSC attempted Thursday to have the charges withdrawn, arguing that acquittals could impact future cases brought in the regulator’s civil tribunal.

“The law seems to be against you,” the judge said after reading case law submitted by both sides.

After the acquittals, Aceto’s lawyer Frank Addario attempted to address the impact the case had on his client in the 18 months since charges were laid, and even before that when he was dismissed with cause from CannTrust following a Health Canada inspection of the Pelham facility in 2019 that found five growing rooms to be non-compliant with certain regulations.

Justice Giourgas did not allow him to say much in court, beyond that his client had been embarrassed by the accusations and had been “staring down the possibility of five years jail time” since the charges were laid in June 2021.

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Outside the courtroom, however, Addario said Aceto, a leader in the business community, “suffered great reputational harm,” and that his career trajectory was interrupted.

Addario accused a litany of individuals and institutions of failing to correct the assumption that the grow rooms were unlicensed, a word that appeared in internal emails at the company and even a CannTrust news release about the Health Canada inspection.

“For over two years, Peter Aceto sat by quietly while his earned reputation for honesty was under a cloud of wrongful allegations,” he said.

“No one from CannTrust, its lawyers, special committee of CannTrust, CannTrust board, Health Canada, the Joint Serious Offences Team … or the OSC corrected that mistake.”

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Addario said the defence team found a Nov. 9, 2018 licence that covered the entire Pelham greenhouse in the Niagara region among CannTrust documents seized by the Ontario Securities Commission.

“The evidence shows Canntrust’s Niagara facility was licensed continuously from 2017 through August 2019,” he said.

None of the acquitted men spoke Thursday. But outside the courtroom, Gerald Chan, Paul’s lawyer, said his client is “happy to be vindicated and happy to restore some normalcy in his life.”

He added that the “justice system ultimately worked the way it should.”

Lawyers for Litwin issued a written statement saying their client “looks forward to… erasing the stain caused by this ill-founded prosecution.”

The abrupt end to the marquee case for the OSC was a blow for the regulator, which has struggled to secure convictions in cases adjudicated outside its own civil administrative proceedings. In 2007, the regulator failed to convict John Felderhof, the only person prosecuted in the Bre-X Minerals Ltd. gold fraud that rocked markets, on quasi-insider trading charges.

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