Livent Founders Sentenced

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.

Eddie Greenspan, Drabinsky’s lawyer, said they will be granted bail Wednesday. Greenspan spoke moments after the bail hearing. He also said they are appealing the conviction and sentence.

Ontario Superior Court Justice Mary Lou Benotto stayed the forgery charges for both men.

The same judge ruled in March that the Tony award-winning producers knowingly submitted financial statements to investors misrepresenting their company’s circumstances.

“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.”

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 $100 million in shareholder value that was lost when the fraud was revealed by the new management team headed by Ovitz.

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.

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.

The men’s defense lawyers had proposed at sentencing hearings in July that as part of their 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.