But a Carlisle Crown Court jury convicted managing director Tim Dutton-Woolley of making false claims. Judge Paul Batty QC said the vehicle was not fit for purpose.
Peter Hopley, a chartered engineer specialising in mechanical design and marine equipment, told the court that there was a high risk of down flooding and sinking and that he had "real concerns" about the stability of the vehicle.
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Judge Batty said: "This vessel was an absolute disgrace. Everyone who saw it, either at close quarters or performing, would probably agree that it was nothing short of a floating coffin."
Phil Ashcroft, Head of Cumbria Trading Standards, said: "There can be no shortcuts where the safety of the public is concerned, especially given that this vehicle's primary purpose was to take fare-paying passengers on Lake Windermere."
Dutton-Woolley was bailed to his home address in Worthing until sentencing on 28 May.
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