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Drabinsky, Gottlieb Convicted of Fraud
Justice Mary Lou Benotto of the Ontario Superior Court of Justice also sentenced Drabinsky's longtime business partner Myron Gottlieb to six years in jail, also for fraud.
The former Broadway impresarios were found guilty in March on three counts of fraud and forgery that stemmed from their running of Livent Inc. between 1993 and 1998.
The third court of forgery was stayed by the court. Canadian law allows first-time nonviolent offenders such as Drabinsky and Gottlieb to serve only one-sixth of their jail sentence before they are fast-tracked to parole.
The two men were briefly taken into custody after their sentencing to allow bond to posted before their release. Edward Greenspan, Drabinsky's defense lawyer, offered no comment on whether his client will appeal the sentence. It's expected the Drabinsky and Gottlieb will lodged an appeal, which should take up to two years before either man faces jail time.
In her sentencing on the two fraud counts, Justice Benotto said Drabinsky and Gottlieb "presided over a corporation whose corporate culture was one of dishonesty."
"Those in business must know and the community must know that this will be the court's response to corporate fraud," she added. Drabinsky and Gottlieb, who sat passively during their sentencing, were earlier found guilty of sham invoicing, reducing expenses by shifting costs from one financial quarter to another or from one losing theatrical production to a future show, and inflating ticket sales for theatrical runs, when they ran Livent.
The accounting manipulations at Livent not only boosted the company's share price, but also propelled Drabinsky and Gottlieb to top status as Broadway theater producers during the mid-1990s.
In 1998, as Livent's finances became a house of cards, Drabinsky and Gottlieb sold a controlling stake in the company to former Los Angeles superagent Michael Ovitz, and soon after their accounting irregularities came to light. Livent was eventually forced to file for bankruptcy and sell off its assets.
The Crown had suggested Drabinsky and Gottlieb spend eight to 10 years in jail for their crimes. Their defense lawyers called for a conditional sentence and house arrest. Justice Benotto said she had to balance the contributions to the arts by Drabinsky and Gottlieb with their crimes.
"The contributions Mr. Drabinsky and Mr. Gottlieb made to society must be and are taken into account, but no one is above the law," she said.
"The court has a duty to strongly denounce such conduct," Benotto added.
Drabinsky and Gottlieb in 1998 have fought extradition to the U.S. to answer to 16 counts of criminal and civil fraud charges earlier brought against them south of the border.
The Livent duo also face charges brought in 2001 by the Ontario Securities Commission.
– Nielsen Business Media
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