Impresario Drabinsky's appeal denied

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Michelle McQuigge – March 29, 2012

It wasn't the finale Garth Drabinsky would have scripted. The Supreme Court lowered the curtain on his long-running legal drama Thursday, leaving the former head of Livent Inc. to serve out his fraud sentence behind bars.

The man who brought lavish spectacles such as "The Phantom of the Opera" to the public assumed a starring role in a courtroom drama about falsified financial statements that dragged on for 14 years.

He saw his last chance to overturn his conviction dashed when the high court declined to hear his appeal.

An Ontario lower court found Drabinsky and business partner Myron Gottlieb guilty of two counts of fraud in 2009 and sentenced the former impresarios to seven and six years behind bars respectively.

The Ontario Court of Appeal upheld the convictions last September, but shaved two years off each man's sentence.

Drabinsky's lawyer, Edward Greenspan, could not immediately be reached for comment.

Thursday's decision marks the final act of a saga that's dragged on for the 14 years since Livent's collapse.

The company, which was once the toast of Canada's theatrical scene and helped bring blockbuster productions such as "Showboat" to Toronto, filed for bankruptcy in 1998. Livent's demise cost its investors approximately $500 million.

Court found the company had been falsifying financial statements since 1989 in a bid to lower expenses and keep pace with lofty earnings projections.

Leonard Brooks, business ethics professor at the University of Toronto, said observers never expected the case to become such a drawn-out affair, adding the prosecution seemed straightforward at the outset.

Drabinksy's personal knowledge of the law and ability to enlist a top-flight team of defence attorneys helped spin the case out well beyond what is reasonable, he said.

Brooks said the convictions and sentences _ decried in some quarters as lenient _ still represent significant punishments for both Livent partners.

The Supreme Court's announcement solidifies the case as a touchstone for Canada's prosecution of white-collar crimes, he said, adding it may also serve as a blueprint for those who wish to see such matters resolved more quickly in the future.

"This will provide something of a framework for other cases," he said. "That might work to the advantage of society in terms of shortening the exercise, and perhaps some of the reasons for delay in this case might be sorted out."

Drabinsky's and Gottlieb's convictions were obtained in part on the testimony of former Livent employees who either received light sentences or avoided prosecution in exchange for their co-operation. At appeal, defence lawyers argued _ unsuccessfully _ that the witnesses were not credible.

Gottlieb and Drabinsky also contended the fraud was perpetrated by other Livent employees without their knowledge, a claim rejected in last year's Appeal Court ruling.

The men's sentences, however, were reduced when the court took exception to the way it was originally calculated.

In 2009, trial judge Mary Lou Benotto imposed a sentence that took into account the magnitude of the company's collapse.

However, since it was never clear to what extent the fraud was to blame for the company's collapse, the Appeal Court said the losses don't provide an accurate means of assessing the fraud's impact or the severity of the punishment for the people behind it.

"It was wrong to attribute the ultimate failure of Livent to the fraud," the ruling said.

"The causes of Livent's demise were admittedly numerous and complex. The bankruptcy no doubt caused significant losses to creditors, employees and investors. Those losses cannot, in our view, be laid entirely at the feet of Drabinsky and Gottlieb.''

Drabinsky and Gottlieb began serving their prison sentences last September. Both men remain in jail, though Gottlieb is expected to be eligible for day parole this summer while Drabinsky can apply before the end of the year.

Original article on Winnipeg Free Press website