British Columbia Securities Commission

British Columbia Securities Commission

June 30, 2005 09:30 ET

British Columbia Securities Commission: Company and Chief Executive Committed Fraud and Misrepresentation

VANCOUVER, BRITISH COLUMBIA--(CCNMatthews - June 30, 2005) - The British Columbia Securities Commission has found that the head of a nanotechnology company committed fraud when he issued seven news releases that contained false or misleading information.

Robert Papalia was a director and chairman of Nano World Projects Corp, and from December 2000 its chief executive officer. A commission panel decided that Papalia and Nano World violated securities laws when Papalia, on behalf of the company, issued seven news releases containing false and misleading information between September 2000 and January 2001. Papalia lived in the province during this period.

Nano World's business was the development and commercial exploitation of nanotechnology. The Delaware-incorporated company had a B.C. business and mailing address and maintained a corporate office in Vancouver with support staff. Its shares were quoted on the U.S. Over-the-Counter Bulletin Board until Nano World was delisted in April 2001 for failing to file mandatory reports.

Papalia reviewed and approved the issue of each of the seven news releases and he also directed or was fully involved in all the negotiations referred to in the releases.

The panel found that the news releases contained false statements or omitted important facts about financing deals or financial backing, business partnerships, contract contingencies, or Nano World's poor financial condition. The panel also found that the disclosure or correction of the information "would in each case have removed the rosy glow painted by the related press release and could reasonably be expected to significantly affect the market price or value of the (Nano World) shares."

"Papalia (and through Papalia) Nano World knew, or were wilfully blind or reckless to the fact, that the statements were misrepresentations," said the panel. "Where Papalia has not given direct evidence that he knew that the statements were false or misleading, we infer that he knew, or was wilfully blind or reckless, about the misrepresentations because he was fully involved in the negotiations announced by the press releases."

In 2004, a U.S. Federal District Court in Seattle found that Papalia committed securities fraud by approving the issue of four of the seven Nano World news releases. He was ordered to pay a penalty of $33,000 (U.S.) and prohibited from being a director or officer of certain issuers.

In April 2005, the commission reached a settlement with David Lynn Hunter, a former Nano World director, with respect to an earlier news release. A copy of Hunter's settlement is available on the BCSC website.

The panel will review submissions from the parties before it makes its decision on sanctions.

The B.C. Securities Commission is the independent provincial government agency responsible for regulating trading in securities within the province. You may view the decision on our website by typing in the search box, Robert Papalia or Nano World Projects Corp., or 2005 BCSECCOM 441.

Contact Information

  • British Columbia Securities Commission
    Andrew Poon
    Media Relations
    (604) 899-6880 or (B.C. & Alberta) 1-800-373-6393