Knowledge House appeals rejected by Nova Scotia's highest court

The Nova Scotia Court of Appeal has roundly rejected appeals by the two men convicted ofconspiracy and stock price manipulationin the 2001 collapse of tech company Knowledge House.

Knowledge House was a celebrated business success story right up to its abrupt closure in September 2001, which threw 120 employees out of work.Lenders and shareholders lost millions of dollars.

"The trial judge's determination that Mr. [Daniel] Potter and Mr. [Blois]Colpitts were participants in an agreement to commit an unlawful act was firmly anchored in the law and fact," wrote justices Cindy A. Bourgeois, Elizabeth Van den Eynden and Anne Derrick.

"There was a direct causal relationship between their dishonest acts rigging the market and the risk of financial deprivation to the investing public," they wrote.

After the longest criminal trial in Nova Scotia history, Knowledge House CEO Daniel Potterand lawyer and lead director Blois Colpitts received prison sentences of five and 4 years, respectively, in July 2018.

Prosecutors estimated their stock fraud totalled $86 million.

Potter and Colpitts appealed their convictions on multiple grounds, saying their charter rights were infringed by the delay in laying charges.

They also claimed they were denied their right to be tried within a reasonable time.

The pair's trial required more than 150 court days, 75 witnessesand began in November 2015.

Potter and Colpitts also challenged the trial judge'sadmission of email evidence, his qualification of expert witnessesand the reasonableness of his verdicts.

They claimed Coady had demonstrated bias, misunderstood their defencesand given unduly harsh sentences.

The justices rejected all of the men's objections, often in stark terms.

They confirmed that Potter and Colpitts used "manipulative techniques" to inflate Knowledge House's stock price.

"Mr. Potter and Mr. Colpitts accomplished this by not disclosing material information that would have been important for investors to know (deceit), directly lying to investors (falsehood), and utilizing manipulative strategies in a highly regulated industry (other fraudulent means)," they wrote.

Trial judge showed 'patience, fairness and restraint'

"The record confirms the trial judge tried hard to focus Mr. Colpitts and assist him in putting forward his defence. The record is replete with examples of the trial judge's patience, fairness and restraint," they wrote.

The appeal justices also said the trial was fair.

"The entire record shows a trial judge who diligently applied his best efforts to ensure a very complex prosecution was heard in a manner that respected Mr. Potter's and Mr. Colpitts' charter rights. Their allegations relating to bias are entirely without merit," they wrote.

The justices also confirmed the extended timelines for the investigation and trial were necessary due to the unusual complexity of the case.

Sentences were 'proportionate'

They said the criminal sentences were appropriate to the facts of the case.

"The trial judge undertook a careful balancing of all the factors he was required to consider in crafting proportionate sentences for these offenders," they wrote.