June 22 (Reuters) - Two former directors and a former chief executive of Canadian cannabis producer CannTrust Holdings Inc have been charged with fraud in connection with an illegal cultivation scandal dating back to 2019, Ontario’s markets regulator said on Tuesday.
The Ontario Securities Commission (OSC) said former CannTrust CEO Peter Aceto, and former directors Mark Litwin and Eric Paul were charged under the Securities Act for failing to disclose two years ago that about half the total growing area at CannTrust’s Pelham, Ontario facility was not licensed by Health Canada.
CannTrust in a statement said no charges have been laid against the company, its subsidiaries or current executives. The company in July 2019 had fired Aceto and forced Paul to resign. Litwin resigned from the board in March this year.
The regulator and the Royal Canadian Mounted Police charged the trio with offences including fraud, insider training, making false or misleading statements. The charges could lead to up to five years of jail time if held up in court.
The trio are scheduled to appear in court on July 26.
CannTrust said it remained focused on resolving civil litigation claims from the scandal, adding that it was in early-stage talks with the OSC about submitting a plan to cure past defaults before applying for a revocation of cease-trade orders.
Health Canada had canceled CannTrust’s cultivation licenses in 2019, months after the news about the illegal activities became public, forcing the company into bankruptcy last year. (Reporting by Rithika Krishna in Bengaluru; Editing by Ramakrishnan M.)