The Royal Canadian Mounted Police brought criminal charges against former Nortel NetworksChief Executive Frank Dunn and other onetime executives, accusing the men of fraudulently misstating the telecom equipment maker's results.
Aside from Dunn, who faces seven counts, former Chief Financial Officer Douglas Beatty, and Michael Gollogly, Nortel's former corporate controller, also face charges.
The market enforcement team of the RCMP said the three were also accused of making false entries and omitting materials in Nortel's books.
Police said the charges pertain to the period between the start of 2002 and June 30, 2003.
The charges mark a milestone in the years-long probe, which has been a high profile case in Canada.
The country has long battled a perception that it has a soft stance on corporate crime and rarely lays criminal charges against white-collar offenders.
Meanwhile, U.S. prosecutors and regulators have aggressively targeted large-scale fraud cases like those of Enron, Adelphia Communications and Worldcom.
"Given the historical reticence of Canadian authorities to bring criminal securities fraud charges, and recognizing the high-profile nature of this case, undoubtedly the Crown has considerable confidence in the quality of its evidence and ability to prove all the charges," said Jacob Frenkel, a former U.S. federal prosecutor and a partner at the Maryland law firm of Shulman Rogers.
"This is an opportunity for the Crown to demonstrate its ability to be as effective as American regulators pursuing allegations of public company fraud in the criminal courts," Frenkel said.
In a statement issued shortly after the charges were announced, Nortel, North America's biggest maker of telephone equipment, said it was not the target and that the charged executives were dismissed for cause in 2004.
In October 2007, Nortel paid $35 million to settle civil charges filed by the U.S. Securities and Exchange Commission related to the fraud.
The regulator had alleged Nortel's schemes let it meet "unrealistic" revenue and earnings forecasts it had provided to Wall Street.
The SEC had also charged Dunn and Beatty with directing parts of the fraud.
The accounting scandal that hit Toronto-based Nortel earlier this decade was one of the major hurdles it faced in its turnaround efforts after the tech bubble burst in 2001, and was a big part of the firm's fall from grace as a stock market darling.
It also forced the company to restate its results a number of times, shaking investors' faith in its prospects and triggering a bevy of investigations.
The police said they received co-operation from the U.S. Federal Bureau of Investigation, U.S. and Ontario securities regulators, and Nortel itself.
The investigation has been a lengthy one: the RCMP became involved in the case as early as May 2004 and confirmed a criminal probe three months later.
In February of this year, a media report emerged that the charges against the former executives were imminent.
The RCMP had faced criticism that its investigation was dragging on for years without any charges being laid.
In a statement on Thursday, it acknowledged such probes are lengthy and complex.
Nortel shares were off 38 Canadian cents at C$9.62 in Toronto and about 1 percent in New York.