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Garth Drabinsky and Myron Gottlieb

Livent Inc. co-founders Garth Drabinsky and Myron Gottlieb oversaw "a massive fraud on the public" and their 2009 convictions should not be overturned, Crown attorneys argue in filings with the Ontario Court of Appeal.

The recent court filings outline the case the Crown will make at an appeal hearing beginning Monday in Toronto, when the two former Livent executives will ask the court to overturn their 2009 fraud convictions or reduce their sentences. The hearing is scheduled to last three days.

Madam Justice Mary Lou Benotto of the Ontario Superior Court sentenced Mr. Drabinsky to seven years in prison and Mr. Gottlieb to six years after finding them guilty on two counts of fraud and one count of forgery, saying they systematically manipulated Livent's financial statements between 1993 and 1998 to disguise the true financial state of the company.

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The two men have been out on bail since their convictions, while awaiting their appeal.

The live theatre company, which staged hits such as Phantom of the Opera, collapsed in 1998 after accounting irregularities came to light.

Mr. Drabinsky and Mr. Gottlieb submitted their appeal filings in November, arguing Judge Benotto misunderstood key evidence in her 2009 ruling, including evidence that Mr. Drabinsky could not have attended key meetings where accounting manipulations were allegedly discussed.

A response filed in April by Crown attorneys Paul Lindsay, Alex Hrybinsky and Amanda Rubaszek argues there are no new legal issues to form the basis for an appeal, and the men are simply asking the court to reconsider facts addressed at the trial.

"The issues raised in this appeal are the precise issues that were advanced at trial and dealt with by the trial judge in her reasons," the Crown filing argues. "Despite … protestations to the contrary, this appeal is an attempt to retry the case under the guise of legal error."

Judge Benotto heard 65 days of testimony and reviewed thousands of pages of documents, making it "a classic case" in which the trial judge is in the best position to decide the matter, the Crown said.

The Crown filing said the men are advancing "the same tenuous position that they advanced unsuccessfully at trial: namely that they, two sophisticated and experienced corporate executives … were completely unaware that subordinate employees within their company were committing a massive fraud on the public for more than five years."

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Mr. Drabinsky and Mr. Gottlieb – who are represented by lawyers Edward Greenspan and Brian Greenspan – say the trial judge "reversed the burden of proof" in her ruling and put the onus on the accused to establish reasonable proof they were not guilty. They also argued the judge's written reasons in the convictions were "insufficient" and do not allow for meaningful review.

The men have also appealed their sentences, saying the terms are excessive because the judge placed "undue emphasis" on denunciation and failed to consider "extraordinary" circumstances in the case, such as their good reputations and lack of prior criminal records.

The Crown originally asked for terms of eight to 10 years, but the men asked for conditional sentences of two years less a day, which means they would not serve any time in jail.

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About the Author
Real Estate Reporter

Janet McFarland is the real estate reporter for The Globe and Mail’s Report on Business, with a focus on residential real estate trends. She joined Report on Business in 1995, and has specialized in reporting on corporate governance, executive compensation, pension policy, business law, securities regulation and enforcement of white-collar crime. More

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