Garth Drabinsky and his one-time business partner Myron Gottlieb were convicted back in March of defrauding investors and forgery. Reuters reported yesterday that Drabinsky—who has been seen most recently as a judge on a Canadian reality talent competition on Canadian television—was handed a 7-year sentence for his part in the wrongdoing.
Gottlieb received six years. Both sentences are considered 'substantial' by Canadian standards, but about half what they would have received for similar white-collar crimes in the US.
Drabinsky and Gottlieb were hailed as heroes in the 1990's for their success in bringing to the city and theater audiences such hits as 'Phantom of the Opera,' 'Show Boat,' 'Ragtime' and 'Kiss of the Spider Woman.' Their successful efforts extended to Broadway. Livent in its heyday collected more than a dozen Tony awards.
However amidst the success were allegations that Livent was cooking the books. Reuters reported yesterday the two executives were alleged to have directed accountants at their company to falsify Livent's earnings in an effort to make them look more robust, thereby attracting about Can. $500 million worth of investments and loans to the company.
The illegal activity, which had its beginnings in 1994, was uncovered four years later when US investors took control of the firm and discovered the discrepancies. Livent declared bankruptcy a short time later.
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This morning the Globe and Mail reports Madam Justice Mary Lou Benotto of Ontario Superior Court as sentencing the pair for fraudulently manipulating financial statements, saying, "Those in business must know and the community must know, that this will be the court's response to corporate fraud."
There were two companies involved: the manipulation of financial statements was undertaken at Livent, while the two men were found to have defrauded the public while running the private company MyGar Holdings Inc. There, Drabinsky and Gottlieb created a scheme to collect kickbacks from suppliers.
The defendants are out on bail and have appealed.