A federal judge in New York has ordered Livent Inc. founders Garth Drabinsky and Myron Gottlieb to pay $23.3 million to noteholders who brought a class action suit against the bankrupt theatre production company.
Investors purchased $125 million worth of notes in 1997, but the company subsequently restated key financial information after the sale, according to the suit. Livent went bankrupt the following year.
According to law firm Pomerantz Haudek Block Grossman & Gross LLP, which represented the plaintiffs, Drabinsky and Gottlieb repeatedly invoked the Fifth Amendment when questioned by attorneys.
Judge Victor Marrero said “the evidence presented by Drabinsky and Gottlieb in support of their defense” was “utterly inadequate,” according to a Pomerantz press release.
Livent was once North America’s biggest live theatre producer, with a stable of Tony award-winning hits including “Ragtime” and “Phantom of the Opera.”
Drabinsky left his CEO position in 1998 and was suspended along with Gottlieb after new management discovered accounting errors, prompting investigations by authorities in the U.S. and Canada.
Drabinsky and Gottlieb were indicted for fraud in the U.S. in 1999 and have not traveled to the country since. Canadian authorities charged the two, along with former execs Robert Topol and Gordon Eckstein, in October 2002.
Preliminary hearings are currently underway in Toronto.