The curtain has fallen on the second act in the long courtroom drama involving theatre impresarios Garth Drabinsky and Myron Gottlieb. Now it remains to be seen whether there will be an encore.
The former business partners, who produced major musicals throughout North America in the 1990s and cultivated friendships with celebrities and businessmen, are now playing a far less glamorous role following a court ruling Tuesday upholding their 2009 fraud convictions. Just days after Mr. Drabinsky appeared at the Toronto International Film Festival to launch his latest film, he and Mr. Gottlieb have been ordered to begin serving prison sentences.
While the Ontario Court of Appeal did shave two years off each of their terms – reducing Mr. Drabinsky's sentence to five years and Mr. Gottlieb's to four – Tuesday's ruling means the two men are now in custody in Toronto after spending the past two years free on bail while awaiting an appeal decision.
The trial of the Livent Inc. founders has been a focal point for Canada's business and entertainment communities, where both men were stars in the 1990s, running what was then North America's largest live theatre company. Livent became publicly traded on the Toronto Stock Exchange in 1993, but collapsed in 1998 after new investors said they had found evidence the company's financial statements had been manipulated.
The men were convicted in 2009 of misstating Livent's financial position when the company went public in 1993, and of systematically misstating Livent's financial results in every quarter from 1993 to 1998 to inflate the company's profits and disguise losses.
No accounting fraud case in Canada has involved people with the public profile of Mr. Drabinsky, who was most recently artistic director of the BlackCreek Music Festival in Toronto this summer. His film Barrymore, starring Christopher Plummer, debuted at TIFF on Saturday.
The appeal court heard this spring that Mr. Gottlieb, who was Livent's financing expert, has become "unemployable" and has not worked in years.
Both men, however, have received strong support from a host of friends. At their original sentencing in 2009, they produced dozens of letters of support from prominent entertainment and business people, including Mr. Plummer, writer E.L. Doctorow and Four Seasons Hotels founder Isadore Sharp.
Tuesday's ruling marks the second courtroom loss for the duo, whose legal options are narrowing sharply. Their lawyers said they will review the ruling to decide whether there are grounds to try to appeal the case to the Supreme Court of Canada, which is the final option remaining.
The country's top court only hears cases involving errors of law, and rejects the majority of requests it receives for appeals.
The prominent legal team of brothers Edward Greenspan and Brian Greenspan, who represented Mr. Drabinsky and Mr. Gottlieb, respectively, both said Tuesday they need time to digest the 69-page appeal court decision before they can make a recommendation to their clients about whether there are reasonable grounds to attempt a Supreme Court appeal.
Brian Greenspan said Mr. Gottlieb was calm when he phoned him Tuesday in jail to deliver the appeal court's verdict.
"He's a person who is calm and analytical, and wants to gather information before he makes a decision," Mr. Greenspan said.
If they do seek leave to appeal, the men can apply to be released on bail during the appeal application process.
Tuesday's ruling said the original trial judge – Madam Justice Mary Lou Benotto of the Ontario Superior Court – properly understood the evidence at the trial and reached reasonable conclusions in the case. Indeed, it noted the evidence "was overwhelming," particularly in the absence of any contradictory evidence from the accused, who did not testify at their trial.
The appeal court reduced their original sentences by two years each, however, because it said Judge Benotto should have considered the fact there was no evidence about the dollar amounts lost by investors as a result of the fraud.