Outside the courthouse today, a group of angry fathers were protesting the unfair treatment they feel they have received in family court. A flyer handed out by the group recommended that participants in court actions bring their own recording devices into the courtroom to ensure against perjury by their former spouses. To support their recommendation, the flyer quoted a public speech by Mary Lou Benotto the judge overseeing the criminal fraud trial of Livent founders Garth Drabinsky and Myron Gottlieb claiming, perjury was rampant in family court trials.
Thats an ironic coincidence considering that perjury was a running theme in the tough and often tense first day of defence lawyer Edward Greenspans cross examination of former Livent accountant Chris Craib.
Greenspan didnt mince words about what he thought about Craibs testimony. On at least three occasions the defence lawyer representing Garth Drabinsky accused Craib of concocting testimony, making stuff up, and even being and outright liar.
But before Greenspan could begin what is expected to be a long and gruelling cross-examination, prosecutors had one last document to show Craib. It was a May 19, 1998 memo Craib sent to his boss Gordon Eckstein and copied to Myron Gottlieb warning that accountants representing new Livent investors had requested financial schedules that had been arbitrarily manipulated.
The first schedule concerned ticketing rebates and warned that the version sent to the companys board of directors had been arbitrarily manipulated by moving $500,000 in revenue from the fourth quarter of 1997 to the first quarter of 1998. Another schedule regarding merchandise and concession revenue also contained $350,000 in arbitrary manipulations, the memo stated.
But Craibs most dramatic testimony occurred yesterday when he told the court that he accompanied Gordon Eckstein, Livents former senior vice president of finance, to a meeting with Drabinsky on April 24, 1998 where Drabinsky openly discussed millions of dollars in manipulations to Livents first quarter financial results. Shortly after the meeting, Craib testified that he called Maria Messina, Livents former chief financial officer, and told her about the meeting. That testimony was backed up by Messina in her testimony earlier in the trial. Messina also testified that the disclosure prompted her to finally confront Drabinsky and Gottlieb about the alleged financial irregularities at the company.
But Greenspan insisted that the meeting was fiction, made up by Craib and Messina as part of a plan to blame others for their own participation in the alleged fraud. After all, when Craib met with lawyers representing Livents new management they spent most of their time asking him about that fateful meeting, Greenspan said.
Thats the only time you heard anything out of the mouth of Garth Drabinsky that would support knowledge on his part, Greenspan said.
I dont agree with that, Craib replied.
All they wanted out of you was that Garth Drabinsky had knowledge and thats the story you had, Greenspan said.
No, Craib replied.
Thats the story you concocted with Maria Messina, Greenspan insisted.
No, Craib replied.
Greenspan insisted that both Craib and Messina have played the blame game in their testimony before the U.S. Securities and Exchange Commission as well as before the Institute of Chartered Accountants of Ontario, the professional accounting body that disciplined both Messina and Craib for their role in the Livent scandal.
As a result of disciplinary action taken by the ICAO, Craibs chartered accountants designation was suspended for six months and he had to pay a $1,000 fine. The SEC barred him from acting for any SEC registrant for three years.
“I’m going to suggest to you that the two of you must have talked about the fact that your life as you knew it was over and what was important now was to ensure your survival,” Greenspan said.
“No,” Craib replied.
A question by prosecutor Alex Hrybinsky about the professional and administrative penalties Craib suffered as a result of his actions at Livent prompted one of the most baffling objections of the trial. Prosecutors and defence lawyers have questioned just about every witness about the penalties levied by the SEC and ICAO, but when Hrybinsky tried to ask Craib about those penalties, Greenspan objected on the basis of relevance.
The objection was so out of the blue, Hrybinksy didnt seem to know how to respond for a moment. Benotto overruled the objection and allowed Craib to answer the question.
Ironically, one of Greenspans first questions to Craib concerned the penalties or lack thereof that the accountant faced as a result of his participation in the alleged Livent fraud. You were essentially given a kiss for being involved in a fraud, Greenspan said.
Craib disagreed. At the time, I viewed it as a severe event in my life, he added.
Greenspan also grilled Craib extensively about his relationship with Messina. The two met while working at Deloitte & Touche auditing Livents financial statements. However they became friends and confidants at Livent soon after Craib joined the company and learned about the alleged financial irregularities at the company. That friendship endures today and both Craib and Messina testified that they speak once or twice a week.
During the long and often tense exchange, Craib insisted that he and Messina have not discussed their testimony in the case. However, Craib acknowledged that he attended Messinas birthday party, went to a George Michael concert with her and two other people 10 days after Messina completed her testimony at the trial, and that they recently had brunch at Bar One on Queen Street. Greenspan began to ask Craib about an interior design show he attended with Messina, but dropped it. Now the judge will be left wondering whether the pair of former Livent accountants prefer traditional or art deco designs.
At that brunch, the topic of Messinas testimony did come up, Craib acknowledged. However, the conversation was brief and general since Messinas daughter and another person were also at the brunch. I asked her how was your vacation, he said referring to the fact Messina had used often used her vacation days to testify at Livent related proceedings. She said it was a terrible experience and we acknowledged that it was an event that had occurred.
Did she give you a factual basis for the fact that it was terrible, Greenspan asked.
We have both been through the pre-trial testimony, Craib said. It is not an enjoyable experience.
Defence lawyers suggest that Craib and Messinas close relationship should call their testimony into question. After all, the two have discussed events in the case as well as Messinas investigation into Drabinsky and Gottlieb on behalf of Livents new owners and Stikeman Elliot the law firm representing the owners, which has employed Messina since the collapse of the company into bankruptcy. You are in constant communication [with Messina] to this day and you still communicate about Livent, Greenspan said.
We speak in general terms, Craib replied.
I suggest to you she would share the fruits of her investigation on behalf of Stikeman Elliot and she would ask you to clarify what she had found out, Greenspan added.
Yes, Craib replied.
As a result of that close relationship, Craib lied to the SEC to back up her problematic testimony to the U.S. regulator, Greenspan insisted. Messinas initial testimony before the SEC did not go well. When asked by SEC investigators when she first learned about the alleged fraud at Livent, Messina began to disclose that she first learned of financial irregularities in July 1997 after Livent accountants Grant Malcolm and Diane Winkfein told her about alleged accounts payable items that had not been recorded on Livents books.
Messinas lawyer stopped the interview at that point and Messina did not return until the next day when she clarified that she did not fully learn of the alleged fraud at Livent until Nov. 1997 after an important US$125 million bond issue had been cleared. Had Messina learned [about the alleged fraud] in July 1997, she would have been guilty of complicity in the $125 million bond issue, Greenspan insisted.
Messina has testified that she was merely confused and emotionally overwrought at the initial SEC meeting and was not trying to minimize her knowledge of the alleged fraud at Livent. Ultimately, as part of a plea agreement with U.S. prosecutors, she did ultimately acknowledge her participation in the allegedly fraudulent bond offering.
But defence lawyers have hammered away at the inconsistency, insisting that it not only damages Messinas credibility, but also shows that all of the Livent accountants have conspired to concoct a story that blames Drabinsky and Gottlieb for the alleged fraud.
When Craib first testified before the SEC, he also testified that he learned about the fraud in November testimony that backed up Messinas story, Greenspan insisted.
But Craib told the court that he merely misremembered the date he first learned about the alleged fraud and quickly corrected himself during the same SEC interview when he noticed that the documents he brought to the SEC were dated August not November 1997.
But the fact that their SEC stories match up so perfectly is evidence of something far more sinister, Greenspan said. Im making it clear and Im calling you a liar, he said.
For the next 15 or 20 minutes of questioning, Greenspan continued to grill Craib about whether he spoke to Messina about her SEC testimony. It is not believable that Craib would not talk about such a traumatic event with a person he considers a dear friend, Greenspan insisted. But Craib continued to deny talking to Messina about her testimony or at least said he had no recollection of speaking to her about her SEC testimony. He also added that it was only after the collapse of Livent that their relationship blossomed into a dear friendship.
Craibs continued denials seemed to frustrate Greenspan. Im going to suggest to you that I dont recall is not good enough, this is important stuff, he said. The reason you dont recall is because youll have to admit that you lied to the SEC.
No, Craib replied.
If you dont recall that, then you dont recall anything and you are just making this stuff up as you go along, Greenspan added.
Thats not true, Craib said.
Greenspan asked if Messina ever told her about a direction from the SEC that she not speak about her testimony. Craib said she did not, but he assumed she had one since the SEC warned him not to speak as well.
Then Greenspan asked if Craib and Messina had entered a secret pact to circumvent those directions and speak to one another about their SEC testimony.
I dont know what youre talking about, Craib replied.
Well, I guess if you had a pact, that would be your answer, Greenspan replied.
Greenspan will continue his cross-examination tomorrow.