TORONTO (AP) -- The former chief executive of bankrupt Nortel Networks and two former senior executives were found not guilty Monday of falsifying financial reports in what prosecutors said was a scheme to report profits and gain bonuses.
Ontario Superior Court Justice Frank Marrocco dismissed all charges against former chief executive Frank Dunn, chief financial officer Douglas Beatty and corporate controller Michael Gollogly. The verdicts come four years to the day after Nortel sought bankruptcy protection and began liquidating.
Each former executive faced two counts of fraud after being accused of participating in a book-cooking scheme from 2002 to 2003 designed to trigger $12.8 million in bonuses and stocks for themselves. They were fired in 2004 and pleaded not guilty when the case went to trial last year.
Marrocco said the burden of proof was not met and said he was "not satisfied" the financials were misrepresented.
The men hugged and congratulated each other after the verdicts.
The prosecutor declined comment as he left the courtroom, saying he needed to read the ruling.
David Porter, Dunn's lawyer, called it a complete vindication. The defense said there was no evidence that the accused were involved in a conspiracy with countless accredited accountants from Nortel and outside auditors Deloitte & Touche.
Dunn defended Nortel's practices.
"For a very long time, integrity has been the foundation of Nortel Networks' corporate governance and business practices. The documentary evidence and testimony re-affirmed this core value that I witnessed over my 28 years with the company," he said in a statement. "I am looking forward to turning the page on this chapter of my life."
Nortel was once the world's second-largest telecommunications gear maker. During the 1990s telecom and Internet boom, Nortel had more than 95,000 employees.
At one point in 2000, it accounted for one-third of the market value on the entire Toronto Stock Exchange and had a market capitalization of $297 billion.
But Nortel grew too quickly, overpaying for acquisitions with its inflated stock. The company was bleeding revenue as the dot-com bubble burst and spending on network gear vanished.
Nortel's stock has since been delisted and is worthless. The company filed for bankruptcy in 2009 and has since sold its remaining businesses piecemeal to various buyers for more than $7.8 billion, one of largest asset sales in Canadian history.