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Drabinsky: Canadian Bacon?

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When Canadian impresario Garth Drabinsky fled the United States to return to his homeland in 1999, he left behind a string of unpaid bills, angry shareholders in his Livent Inc. theatrical production company, threats of punishment by U.S. officials, and a number of lawsuits, including one brought by former Disney exec Michael Ovitz. Ovitz bought the bankruptcy-bound Livent in 1998 without knowing its true situation, he later said, and when he was left in the situation of being on the short end of an entertainment deal—a rarity for him—he sued Drabinsky and Livent co-founder Myron Gottleib for $26.5 million. That's American dollars, not Canadian.

However, when Drabinsky crossed the Canadian the border, it seemed he had escaped the long arm of the law. He has successfully avoided extradition for so long that many people have openly wondered if his luck would ever run out.

It did, on July 4. While Americans were taking the day off to gorge on picnic food, Drabinsky was having no picnic. The Ontario Securities Commission (OSC) filed a statement of allegations that Drabinsky, Gottleib, former Livent vice president Gordon Eckstein, and former director Robert Topol made "misleading or untrue" statements in financial documents for fiscal years 1996 and 1997.

Among the allegations, the OSC charged that the executives kept two sets of books; had the company's software reprogrammed so they could make alterations "in such a manner that there would be no audit trail of the changes made"; disguised loans as sales; and accepted millions of dollars in kickbacks.

In addition to the OSC's action, according to the Toronto Star, the Royal Canadian Mounted Police are currently investigating whether there are grounds for criminal charges.

Drabinsky's lawyer released a statement reiterating his client's denial of all allegations, and then suggested the filing was pointless. "The timing of these OSC proceedings is highly questionable," the statement said. "While we acknowledge their mandate to protect the integrity of Ontario's capital markets, we question how the public interest is served by the OSC prosecuting a man with diminished resources and energy, before the full facts emerge, in order to advance its public relations agenda."

A hearing will be held Sept. 11 to determine the start date for the trial. If convicted, the defendants could be barred from serving as officers or directors of public companies, and from trading securities.

Judging from Drabinsky's other productions—the lavish "Ragtime," "Show Boat," and "Kiss of the Spider Woman"—it seems likely there will be a few theatrical flourishes before the final curtain.

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