John Felderhof — the only person to face charges in connection with the Bre-X gold scandal of a decade ago — will hear the verdict Tuesday on illegal insider trading allegations.

Felderhof was the former chief geologist at Bre-X Minerals. He sold $84 million worth of Bre-X stock in 1996, just before the company's supposedly rich gold project in Busang, Indonesia was exposed as a fraud.

John Felderhof is shown at the Sanur Beach Hotel in Sanur, Bali, on Jan. 21, 2007.
(Associated Press/Firdia Lisnawati)

The Ontario Securities Commission has alleged that Felderhof illegally acted on insider information when he sold the shares. The OSC has also accused him of putting his name to news releases the regulator said he should have known were misleading. He has denied all the allegations, saying he was taken in like everyone else.

The Bre-X Minerals fiasco is the most notorious saga in Canadian mining history. The Calgary-based company was a stock market darling from 1995 to 1997.

It claimed it had discovered the world's largest gold deposit in Busang. Investors and analysts couldn't say enough positive things about the company and its find. Bre-X shares soared to more than $200 on the TSX.

But by the spring of 1997, everything began to unravel. New tests carried out by another company showed there was virtually no gold in the Bre-X deposit. The original positive assay results had been "salted" — the samples had been sprinkled with gold from other sources.

Bre-X scandal cost investors billions

Bre-X stock tanked, costing investors in the once high-flying company as much as $6 billion. Other gold companies — especially the junior exploration companies — saw their stock prices plunge, too, as Canada's mining industry suffered a devastating blow to its credibility.

Despite demands for someone to be brought to justice for the fraud, no one was ever charged criminally.

One day after the OSC brought its Securities Act charges against Felderhof, the RCMP said it would be impossible to gather enough evidence to lay criminal charges against anyone.

Bre-X geologist Michael de Guzman died mysteriously in March 1997, after apparently falling from a helicopter into the Indonesian jungle.

Bre-X president David Walsh died in 1998 after suffering a brain aneurysm at his home in the Bahamas.

Among senior executives, that left just Felderhof. 

Felderhof's trial delayed years

His lawyer argued that Felderhof must be acquitted unless it can be proved that he knew that Bre-X's claims of big gold finds "were false or misleading at the time Bre-X issued them."

Felderhof did not make an appearance in February during closing arguments in Ontario Superior Court in Toronto. He did drop in earlier to listen — but not to testify — as the seven-year case made its way through the system.

The case took seven years because of delays and major procedural wrangling during the trial. At one point, the OSC tried to have the judge replaced, alleging he was biased. The OSC lost the argument, but it took 3½ years to get that resolved.

If convicted, Felderhof faces a possible jail sentence. He also faces millions in legal bills he hasn't been able to pay.