The country’s biggest corporate fraud trial came to an end this morning in the Ontario Superior Court with a verdict that was concise and backed by an 85-page “Reasons for Judgment” document: Madam Justice Mary Lou Benotto found Livent founders Garth Drabinsky, 59, and Myron Gottlieb, 65, guilty on two counts of fraud and one of forgery.
The courtroom was standing-room only for the resolution of a trial that began on May 5, 2008, spanned 62 days, featured 14 witnesses, 200 exhibits, and generated more than 7,000 pages of testimonies and arguments. The direction of Justice Benotto’s judgment quickly became apparent as she began her address. She praised the founders of Livent, a company known for its lavish productions of Phantom of the Opera, Showboat and Ragtime, for their cultural contribution: “…the creative success you achieved through the company was spectacular,” she told the long-term partners. You performed wonders for the entertainment industry, the arts, the tourism industry and anyone who enjoyed live theatre.” But the trial was not about that, she pointed out, a fact not lost on anyone who sat through the trial, a parade of accounting forensics and conspiracy theories. It was about accounting fraud, she said, before finding the two guilty of “deliberate misrepresentation” and “systematic manipulation” dating back to Livent’s founding in 1990; she also found them guilty of forgery for misrepresenting financial statements between 1993, the year Livent went public, to 1998, a fraud estimated to cost investors $500 million.
The long-term partners who built the Cineplex movie chain before their dramatic ouster in 1988 betrayed little emotion as the verdict was read: Drabinsky lowered his head, Gottlieb removed his glasses. In the gallery, their families were visibly upset. Neither Drabinsky nor Gottlieb, who were charged in 2002, testified during the trial. Nor did they comment following the verdict; their lawyers, Eddie Greenspan and his brother, Brian Greenspan, said they will comment after they review the judge’s written decision.
The lawyers will return to court on April 8 to set a date for a sentencing hearing. Each fraud count carries a maximum jail term of 14 years while the maximum prison sentence for the forged document is 10 years.