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Ex-Royal Group officials plead not guilty

Six former executives of Royal Group Technologies Ltd. pleaded not guilty yesterday to charges of defrauding the plastics company of a total of $29-million from two separate corporate deals.

The accused stood briefly in an Oshawa courtroom Tuesday morning to enter their pleas, each simply responding "not guilty" after the charges were read aloud.

The RCMP announced charges against the men in 2008, alleging wrongdoing involving a 1997 land deal worth $27.3-million and a 2003 special warrant scheme worth $2-million.

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Royal Group was founded by immigrant tool and die maker Vic De Zen, who built the company into a multibillion-dollar manufacturer of plastic building components. The company was acquired by Georgia Gulf Corp. of Atlanta in 2006, two years before charges were laid against former employees.

Tuesday marked the first day of what is expected to be a lengthy trial in the new Durham Region Courthouse in Oshawa. The trial is scheduled to run until the end of June and then is expected to continue again in January.

The RCMP charges allege Mr. De Zen, former president Douglas Dunsmuir, former chief financial officer Gary Brown, and former vice-president of corporate finance Ron Goegan were involved in an allegedly fraudulent scheme in which a parcel of land was bought by people closely associated with Royal Group and sold to the company at an inflated price.

A second charge laid in the case involves allegations against Mr. De Zen, Mr. Dunsmuir, Mr. Goegan as well as former vice-president Luciano Galasso and former director of accounting Gordon Brocklehurst. They are accused of exercising warrants held by Royal Group to buy shares of another company and keeping the money for their own benefit instead of recording it on the books of Royal Group.

The six men are represented by a phalanx of top defence lawyers who filled all the tables at the front of the courtroom yesterday and spilled into the front row of spectator seating.

The first day of the trial Tuesday dealt primarily with technical matters, including questions about potential conflicts of interest involving participants in the hearing.

Crown attorney Damien Frost said two of the defence lawyers at the trial have previously done work for people who are expected to testify as witnesses. And Judge Richard Blouin, who is presiding over the case, said he discovered when reviewing the witness list that one of anticipated the Crown witnesses is a former friend whom he worked with about 20 years ago.

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Lawyers at the trial said they were not concerned about Judge Blouin's potential conflict. The judge said he would hear further submissions this week on the two lawyers' potential conflicts.

Mr. Frost is expected to make his opening statement in the trial Wednesday. Lawyer Mark Sandler, who is representing Mr. De Zen, said he will also make an opening statement that will broadly cover the defence arguments for all the accused, although other lawyers - including Brian Greenspan, who is representing Mr. Dunsmuir - said they may add additional comments.

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About the Author
Real Estate Reporter

Janet McFarland is the real estate reporter for The Globe and Mail’s Report on Business, with a focus on residential real estate trends. She joined Report on Business in 1995, and has specialized in reporting on corporate governance, executive compensation, pension policy, business law, securities regulation and enforcement of white-collar crime. More

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