Livent founder Garth Drabinsky, the Broadway producer of such Tony-winning works as Ragtime and Kiss of the Spider Woman, began his hearing with the Ontario Securities Commission earlier this week. He was convicted of fraud in Canada in 2009.
Drabinsky admitted to his role in creating a fraud. He is not challenging those charges but is seeking to overturn the penalties, which include barring him from trading securities and acting as an officer or director of a company, according to The Globe and Mail.
Richard Shekter, Drabinsky's lawyer, pointed out that the former producer has had nearly 20 years of “unblemished conduct” since the 1998 collapse of Livent, explaining, “Mr. Drabinsky did the things that are alleged between 1993 and 1998—between 19 and 24 years ago … Since that time, he has dedicated himself to making things right … He served hard time, which was a sobering experience. He has not only learned his lesson, he has turned it around.”
Pamela Foy, the lawyer for the OSC, said that the penalties in Drabinsky's case are appropriate, and no precedent has been set for the exceptions he is seeking, considering he was the main person who perpetrated the fraud. She also explained that it is “not a true question of livelihood here,” and Drabinsky “is not the victim in this proceeding.”
Foy added, “Mr. Drabinsky has every right to continue to earn a living in the entertainment industry or otherwise. He does not however have a right to continue to participate in the capital markets.”
Several business executives in Canada are expected to testify for Drabinsky, including Richard Stursberg, CEO of Teatro Proscenium Inc., which is producing Drabinsky’s latest theatrical production—the Broadway-bound Sousatzka—which begins previews in Toronto February 25.
Drabinsky’s current situation allows him to work as a creative producer who develops new shows; he works as an employee, rather than as an owner, and earns a salary that is based on profits and royalties, which enter a trust that benefits his family. He is seeking permission to run a family-controlled company.
Drabinsky, whose Broadway Livent-linked shows in the 1990s and 2000s included Ragtime, Parade, Barrymore, Fosse, Seussical, and more, was convicted on two counts of fraud and one count of forgery in 2009. The fraud and forgery convictions against Drabinsky and Livent co-founder Myron Gottlieb (sentenced to seven and six years, respectively) were upheld by the Ontario Court of Appeal in fall 2011. At that time, the court reduced their prison sentences by two years.
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. 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 then-new Ford Center for the Performing Arts on Broadway. Ragtime 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.
Drabinsky, who was granted full parole in 2014, 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.