Knowledge House investor gets money back, plus $750K in damages

An investor who lost $800,000 when Knowledge House collapsed more than 13 years ago will get his money back.

Craig Dunham will receive that amount as well as an additional $750,000 in damages after a Nova Scotia Court of Appeal decision last week.

On May 14, the court ordered National Bank Financial to pay $3 million in punitive damages to four investors who were caught up in the collapse of Knowledge House Inc.

"Somebody should be made accountable," said Dunham.  "I don't know if that just means somebody losing their jobs or if it's a financial penalty. But, something needs to be done about how they handled this matter."

They chose the bank over the public.- Craig Dunham

Knowledge House Inc. was a hot-ticket item on the Montreal and Toronto Stock Exchanges. Between 1998 and the company's collapse in 2001, shares rose from just a few cents to nine dollars.

After Knowledge House Inc. folded, the National Bank was able to negotiate a secret settlement agreement with the Nova Scotia Securities Commission. The Court of Appeal says during that time, the bank was deceiving investors and the public.  

The court said their decision is a punishment against the Bank for for dragging out trials when it knew one of its employees had admitted to stock manipulation in 2005.

"They deliberately and specifically went against their mandate, to protect their investors. They chose the bank over the public," Dunham said.

The province never acted on Dunham's call for an investigation while the case was still active.

A complaint from another Knowledge House investor was filed more than two years ago with the Nova Scotia Barristers' Society.

In its ruling, the Court of Appeal dismissed all of the bank's arguments and ordered that they cannot be used in any future court actions on this case.