Skip to main content

Livent Inc. co-founder Myron Gottlieb knew nothing about a long-running accounting fraud at the theatre company and had no motive to participate in the manipulations, his lawyer argues in closing submissions filed in court this week.

The court filing alleges the real architect of the fraud at Livent was former senior vice-president of finance Gordon Eckstein, who worked with other members of Livent's accounting staff to cook the books and hide the fraud from Mr. Gottlieb and company co-founder Garth Drabinsky.

"The prosecution's reliance on unsavoury, disreputable, self-interested, discredited witnesses has not established with the requisite certainty Mr. Gottlieb's awareness and participation in the accounting improprieties," lawyer Brian Greenspan says in his closing submissions.

Mr. Gottlieb and Mr. Drabinsky are charged with fraud and forgery in connection with the misstatement of Livent's financial statements between 1993 and 1998. Both men have pleaded not guilty.

Their six-month trial completed hearing testimony in early November. Mr. Greenspan filed a written version of his closing submissions and will appear next week to present the arguments orally.

Mr. Drabinsky's legal team is expected to file its closing submissions next week.

In his closing arguments, Mr. Greenspan said Mr. Gottlieb made numerous decisions that would make no sense if he knew of the fraud.

For example, Mr. Greenspan said it would be irrational for Livent's founders to strike a deal to sell a controlling stake in the company to a group led by U.S. businessman Michael Ovitz, because the fraud would surely be detected by the new owners. Similarly, he said the two men wouldn't have agreed to provisions that allowed them to sell only 100,000 of their shares in the first year after closing if they had known everything could blow up once the fraud was detected.

"Had Mr. Gottlieb known there were financial improprieties, it would have been absurd for him to virtually eliminate his opportunity to monetize his investment," Mr. Greenspan said.

He said Mr. Gottlieb's shares were worth $25.5-million in June, 1998, after the deal closed, and he never sold any of them before Livent collapsed later that year.

Mr. Greenspan added Mr. Gottlieb made no reference to fraud in two private memos he wrote to Mr. Drabinsky, including one in 1998 expressing worries about the Ovitz deal.

"These comprehensive, clearly stated and thoughtful memoranda are not only consistent with innocence but speak eloquently to Mr. Gottlieb's lack of knowledge of any wrongdoing at Livent," Mr. Greenspan said.

He added there's no evidence Mr. Gottlieb ever told anyone to keep quiet or hide evidence from auditors.

Mr. Greenspan's closing submission also criticizes key Crown witnesses at the trial and outlines many inconsistencies in their testimony.

He said Mr. Eckstein - labelled "a rogue and a liar" - pleaded guilty to fraud and received a conditional sentence of two years less a day. Former chief financial officer Maria Messina was also a participant in the fraud, he alleges, as were several accounting controllers who testified at the trial that they made false entries in Livent's general ledger.

"It is difficult to conceive of a greater incentive to falsely attribute responsibility to Mr. Gottlieb than the motive to shift blame, which was shared by all of the prosecution's principal witnesses," he said.