Drabinsky gets 7 years

From the Toronto Star Aug 05, 2009 10:56 AM

MADHAVI ACHARYA-TOM YEW
BUSINESS REPORTER

Livent founder Garth Drabinsky has been sentenced to seven years in prison for an accounting fraud that propelled the theatre company onto the global stage before leading to its collapse.

Drabinsky’s business partner and co-defendant Myron Gottlieb was sentenced to six years.

Ontario Superior Court Justice Mary Lou Benotto sentenced the pair in a downtown Toronto courtroom this morning.

Drabinsky and Gottlieb were convicted in March on two counts of fraud and one count of forgery.

Prosecutor Alex Hrybinsky had asked for prison terms of eight to 10 years, noting that neither man has shown remorse.

Drabinsky, 60, and Gottlieb, 65, both claimed to have been framed by employees.

Defence lawyers Edward and Brian Greenspan argued that their clients should be sentenced to two years less a day of house arrest, followed by three years’ probation. They proposed the pair could serve the community by talking to university students about business ethics.

Benotto found that Drabinsky and Gottlieb masterminded a scheme of fraudulent accounting that started in 1989 when the Livent was still private, and used those methods to keep it afloat as a publicly traded company from 1993 to 1998.

They misallocated pre-production costs to fixed assets, and hid expenses by moving them to future quarters and from one show to another, the judge ruled.

The Crown argued that the scheme made the company seem more profitable than it was, and helped attract $500 million in loans and investments. It fell apart when a group of U.S. investors, led by Hollywood mogul Michael Ovitz, took over Livent and uncovered the phoney accounting. The value of Livent’s shares plummeted, and within four months, the firm collapsed.

In asking for a conditional sentence, the defence presented dozens of letters from actors, directors and writers, lauding the impact that Livent — and especially Drabinsky — had on live, Broadway-style theatre in Toronto.

Livent’s roster of blockbusters included Phantom of the Opera, Ragtime, Showboat, and Kiss of the Spider Woman, which won three Tony Awards including best musical. The shows helped create a thriving theatre industry in the city that added millions of dollars to the local economy and attracted worldwide acclaim.

The trial, which started on May 5, 2008, saw 14 witnesses and 237 exhibits, and produced more than 7,000 pages of transcripts.

In 1999, the U.S. Attorney’s Office in Manhattan indicted Drabinsky and Gottlieb on fraud and conspiracy charges, which are still pending.

In 2001, the Ontario Securities Commission filed charges against Drabinsky and other Livent executives. Those proceedings are on hold.

http://www.thestar.com/news/gta/article/676447

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