2 former Broadway producers sentenced to several years in prison in Canada for fraud

2 former Broadway producers sentenced to prison

TORONTO — Two co-founders of a Broadway theater company that produced 1990s hits such as “Ragtime” and “Show Boat” were sentenced to prison terms of six and seven years each Wednesday for accounting fraud.

Livent co-founders Garth Drabinsky, 63, and Myron Gottlieb, 66, were convicted in March of two counts of fraud and one count of forgery each.

Drabinsky was sentenced to seven years on one fraud charge and four on another, to be served concurrently. Gottlieb was given six years for one fraud charge and four on another, also to be served concurrently.

Ontario Superior Court Justice Mary Lou Benotto said the Tony award-winning producers knowingly submitted financial statements to investors misrepresenting their company’s circumstances and said it wasn’t a one-time impulsive act.

“Mr. Drabinsky and Mr. Gottlieb presided over a corporation whose corporate culture was one of dishonesty,” the judge said Wednesday.

“The court has a duty to strongly denounce such conduct,” Benotto said. “Those in business must know and the community must know that this will be the court’s response to corporate fraud.”

Eddie and Brian Greenspan, the lawyers for the two men, said they would be released on 350,000 Canadian (US$327,000) bond each later Wednesday once the paperwork was complete, probably around 2 p.m. EDT (1800 GMT). The lawyers, who are brothers, said they were appealing the men’s convictions and sentences and said their clients will remain on bail pending those appeals.

They declined to react to the sentences, which were far stiffer than those proposed by the defense during sentencing hearings in July.

The Greenspans had suggested that as part of a possible conditional sentences of home arrest they would each do a “speaking tour” at schools across country.

Under the defense proposal, Drabinsky would have given “inspirational speeches” on the topic of “inspiring young people to invest in their life capital in the pursuit of their dreams and aspirations in the field of performing arts.” Gottlieb would have provided lectures to business schools. The topics would have included professional and business integrity.

Benotto rejected that and said that no one is above the law and no one gets to write their own rules.

The Toronto-based company filed for bankruptcy protection in 1998 after the fraud was revealed when former Walt Disney Co. President Michael Ovitz invested in Livent.

Authorities said the cooked books helped build millions of dollars in shareholder value that was lost when the fraud was revealed by the new management team headed by Ovitz.

Livent was once the largest live theater company in North America. It once owned or controlled theaters in New York, Chicago, Toronto and Vancouver and its Broadway productions have won 14 Tony Awards and have been nominated for dozens more.

Drabinsky and Gottlieb were fired and Livent filed for bankruptcy protection. The two were indicted in the U.S. in 1999 on charges that they had misappropriated millions of dollars from U.S. investors. In 2002, Canadian authorities charged the two, alleging investors and lending institutions were duped into providing more than $500 million Canadian to Livent.

Drabinsky and Gottlieb still face charges in the United States but Eddie Greenspan said they cannot be extradited to the United States to face them because they’ve been found guilty on the same charges in Canada.

Benotto stayed the forgery charges for both men because the same facts that gave rise to the fraud counts were the foundation of the forgery count.

The prosecution expressed incredulity last month at the defense suggestion that a sentence of house arrest and speaking tours were sufficient punishment for the two.

The defense lawyers said the appeal could take up to a year. As part of their bail, Drabinsky and Gottlieb must report by telephone once a month and in the alternate months they must report in person at a police station.

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