Former Livent Leaders Face Sentencing in Fraud Conviction

News   Former Livent Leaders Face Sentencing in Fraud Conviction
 
Garth Drabinsky and Myron Gottlieb, the former leaders of now-defunct Livent, Inc., who were convicted earlier this year of fraud, are to be sentenced in Toronto on Aug. 5.
Garth Drabinsky, creator and producer of
Garth Drabinsky, creator and producer of "Triple Sensation." Photo by Michael Cooper

The prosecution is seeking eight to ten years in prison for the men, whose publicly-traded production company created Tony-winning or -nominated Broadway shows including Ragtime, Kiss of the Spider Woman, Fosse, Parade, Barrymore, Show Boat and more. They were convicted of falsifying accounting statements over the decade-long (1989-98) life of Livent, as they raised $500 million in Canada and the U.S. to support their North American theatre-owning and producing empire.

Last month, it was reported that the men were seeking a community service sentence that would put them on a college lecture circuit (visiting theatre and business schools) to talk about theatrical excellence and "avoidance of unethical conduct."

"If this were the U.S., that suggestion would result in the entire courtroom bursting out with laughter," Jacob Frenkel, an ex-U.S. Securities and Exchange Commission lawyer, told Bloomberg news.

Accounting irregularities at Livent were investigated in the late 1990s, when the company was reaching artistic fruition with the new musical Ragtime, which opened Livent's new Ford Center for the Performing Arts on Broadway (a merging of two vintage Broadway venues). The show would end up winning 1998 Tony Awards for Best Book of a Musical and Best Score, among others. (Fosse, which won a 1999 Tony as Best Musical, was then in the works.) By late 1998, the decade-old company declared bankruptcy and collapsed, and the stock was worthless. Bloomberg reported that the company's peak value was $269 million in 1996.

The Financial Post in Canada reported that legal precedents point to a more likely sentencing of up to a decade in prison for the men. The former business partners are expected to appeal both the verdict and the sentence and be granted bail and temporary freedom, which can happen in white collar cases in Canada, the Financial Post reported.

Drabinsky and Gottlieb are still wanted men in the U.S. In 1999 they were charged with fraud by the U.S. Attorney's Office in the Southern District of New York.

Drabinsky and Gottlieb were arrested by Canadian police in 2002. Their Livent colleagues Robert Topol and Gordon Eckstein were also charged. Topol's charges were stayed by a judge for "unreasonable delay." Eckstein pleaded guilty to one count of fraud, testified against Drabinsky and Gottlieb, and received a two-year "house arrest" sentence that ended in February.

In 1999 Livent's properties were bought by SFX Entertainment, which is now Live Nation.

Drabinsky's Livent, Inc., won Tony Awards for Best Musical (Fosse and Kiss of the Spider Woman) and Best Revival of a Musical (Show Boat), and its productions netted scores of nominations and many wins for artists.

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