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Livent CFO: "The proof is in the documents"

Courtroom 4-10 where the criminal fraud trial of Livent founders Garth Drabinsky and Myron Gottlieb is being held is lined with dozens of binders containing hundreds of documents. There are binders for the prosecution, for the defence, for witnesses as well as for Justice Mary Lou Benotto who is overseeing the case. One of the shelves next to the prosecutors desk literally sags in the middle under the weight of the documents.
During the prosecutions examinations, the lawyers and witnesses flip madly between the colour-coded binders that the crown alleges show how Drabinsky and Gottlieb were the masterminds of Livents massive alleged fraud.
But today, it was Edward Greenspans turn to utilize his own binders. That is the 26 binders packed into bankers boxes and dramatically piled in front of the podium where Greenspan has grilled Maria Messina, Livents former chief financial officer, for the last four days. The binders were turned over to the defence last week as a result of a subpoena demanding Messina (and her employers at Stikeman Elliot and Ernst and Young) turn over any documents relating to recollections of her time at the troubled theatre company.
Greenspan who is representing Livent founder Garth Drabinsky dove into the binders for ammunition to use against Messina and to try to convince the judge that she has used the treasure-trove of Livent documents for memory enhancement to back up the claims that she witnessed Drabinsky and Gottlieb cooking Livents books. “What you have done is written a script,” Greenspan said. “You have spent 10 years poring over the documents.”
Messina told the court previously of a meeting sometime around the third week of October where she saw Drabinsky and Gottlieb and other top Livent officials openly discussing accounting manipulations for the companys third quarter. Messina has testified that she was ordered by former Livent senior accountant Gordon Eckstein to produce an executive summary of two financial statements: one showing profits of more than $14 million for the previous nine months that Livent would ultimately show to its board of directors, regulators and shareholders and a second set of financials that showed the companys actual staggering losses of more than $41 million.
Eckstein told her the document was created specifically ensure that Drabinsky could not turn around and deny knowing about it later, Messina testified. At the meeting, former Livent chief operating officer Robert Topol even said the company should consider ending its practice of manipulating the books and take a large write-off since the fraud was getting out of control, Messina testified.
Its a meeting that never took place, Greenspan charged. Your story is sheer nonsense and fantasy, Greenspan said. You never had such a document. There never was such a meeting.
I attended a meeting with Mr. Drabinsky, Mr. Gottlieb, Mr. Eckstein and Mr. Topol, Messina replied pointing to Drabinsky and Gottlieb. I have absolutely zero doubt in my mind.
The meeting could not have taken place when Messina said it did because the companys financials were sent to Livents board on Nov. 1 and printouts from the companys ledger showed that alleged accounting manipulations were still being inputted as late as Oct. 29. The meeting could not have taken place between Oct. 29 and Oct. 31 because Drabinsky had traveled to Los Angeles during those dates, Greenspan said.
But Messina stood firm. While she cannot put a firm date on the meeting, it could have taken place on Oct. 31 when Drabinsky returned or she may have produced the executive summary earlier than the Oct. 29 while the final manipulations were still being inputted into the companys computerized accounting system, she said.
I didn’t need the details show-by-show. I just needed the lump sum numbers, she said.
Offering Drabinsky’s travel schedule as proof he could not have attended a meeting to allegedly cook Livent’s books is a technique Greenspan also used with Gordon Eckstein. In that exchange, Greenspan submitted Drabinsky’s bills for a private jet as well as a photograph of Drabinsky and his “mistress” with then U.S. President BIll Clinton.
Greenspan went on to accuse Messina of using Livent documents seized by Stikeman and Elliot (the law firm currently suing Drabinsky and Gottlieb) to enhance her memory. One document from those binders showed an analysis of Drabinskys travel dates in October, produced by Messina for Stikeman Elliot, with the handwritten notation that Drabinsky was potentially around for the meeting during two periods in October.
Isnt it a fact that in one of those 26 binders you have something called the Livent Inc. Drabinsky day-timers in preparing your evidence you reviewed Mr. Drabinskys travel diaries, Greenspan charged. I suggest you made up the meeting and pushed the dates back to a time when you knew Mr. Drabinsky was in town.
I testified about that meeting back in 1998 well before I got to Stikeman Elliot, Messina shot back. It has nothing to do with the diaries.
Had she kept her copy of that document, it would be easy to find out when that meeting took place and when Messina had created the financial summaries of the alleged fraud.. But she didnt. Messina testified she discarded it right after the meeting and even went so far as to wipe the file from her computers hard drive.
You had a golden opportunity to walk out and keep these documents to demonstrate a fraud and you destroyed them, Greenspan scoffed. Messina destroyed it because she knew it implicated her in the fraud, she replied. I wish I did keep them, but I didnt, she said. The proof exists in the documents, the manipulations from profit to loss.
Rather than the heroic accountant who blew the whistle on financial irregularities at Livent, Messina was an active participant in the fraud during her time at Livent and is now part of a cabal working against Drabinsky and Gottlieb, Greenspan charged. You are not a witness, you are a paid advocate, he said.
That’s completely ludicrous, Messina said.
Greenspan went back to the boxes of binders one more time to quiz Messina about the termination of Robert Topol in March 1998. Greenspan accused Messina of misleading the court when she did not correct the prosecution when they asked her about Topols resignation. Topol hadnt resigned. He had been fired for selling $140,000 in Livent shares that had been used as security for a personal loan from the company, Greenspan suggested.
Messina replied that there was debate about whether Topol resigned or was fired and what actually led to him abruptly leaving the company. There seems to be something more there, she said. We may never know what really happened.
You prepared a binder on Robert Topol, Greenspan said as he slammed the thick binder on top of the bankers boxes. You knew he had been fired. But it fits your story if Topol resigns rather than be fired because it is totally illogical for Drabinsky and Gottlieb if they are the fraudsters you say they are to fire their number three man. Its the dumbest thing in the world for people involved in a massive fraud.
Greenspan is expected to finish his cross examination of Messina tomorrow.