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Livent CFO: Victim or master manipulator?

Jean-Paul Sartre once said: “Hell is other people.” For Maria Messina, hell might just be other people’s alleged frauds. She said so on the stand. “For me it was a personal hell,” she told the court in describing a particularly brutal interrogation by investigators for the U.S. Securities and Exchange Commission. However, if today is any indication, Messina will probably look back on those SEC lawyers with fondness when compared to the brutal cross examination she is starting to experience at the hands of Edward Greenspan — the lawyer representing Garth Drabinsky.

Messina may seem like a victim of the alleged Livent fraud who lost her job, was convicted of a felony in the U.S., disciplined by the Ontario accountants institute and has had to spend the last 10 years testifying in various Livent actions. But according to Greenspan, Messina is actually a lying, manipulative opportunist who has made a career out of legal persecution of Drabinsky and Gottlieb — and gotten rich doing it.

At least one part of that accusation is not in dispute. Since the collapse of Livent, Messina has earned about $325,000 a year as a consultant on the Livent case for Ernst & Young, the accounting firm overseeing the bankruptcy liquidation of Livent’s assets, and the Toronto law firm of Stikeman Elliot. Stikeman is currently representing Livent in a $100 million Livent lawsuit against Drabinsky and Gottlieb and a second $400 million suit against former Livent auditors (and Messina employer) Deloitte and Touche.

In a sarcasm-laden voice, Greenspan accused Messina of making millions trying to convict the Livent founders. “For lawsuits and testifying against Garth Drabinsky and Myron Gottlieb you got nearly $3 million,” Greenspan said. “You are in the Stikeman Elliot witness-protection program. The highest-paid witness in the country, three million dollars for a former CFO who pleaded guilty to a criminal charge.”

“I am not in the witness-protection plan,” Messina replied. “Oh, we’ll see what you are in,” Mr. Greenspan retorted. Her work on the Livent case even got her an office with a north-facing view in Stikeman’s Commerce Court office in downtown Toronto, Greenspan added.

In 1996 Messina left her job as an auditor at Deloitte and Touche overseeing Livent’s books to join Livent. She testified that she discovered the fraud a year later. After several unsuccessful attempts to stop the fraud from the inside, Messina testified that in August 1998 she told the new U.S. managers of Livent about the alleged financial wrongdoing at the company. Drabinsky and Gottlieb were ousted from Livent and the company collapsed a few months later. Both Drabinsky and Gottlieb have pleaded not guilty.

Greenspan’s cross-examination of Messina was delayed by more than a week after David Roebuck, Drabinsky’s lawyer in civil actions served a subpoena on Messina demanding every document in her possession relating to her recollection of her time at Livent. The subpoena had to be reworked since most of those documents were actually in the hands of Ernst and Young. In the end more than 26 binders of documents were turned over to defence lawyers. Those binders — packed into six banker boxes — were dramatically stacked up in front of the podium where Greenspan stood during his interrogation of Messina.

And those binders didn’t even include the lengthy statements Messina has given to the SEC, U.S. prosecutors, the Ontario Securities Commission, the RCMP, the Institute of Chartered Accountants of Ontario, as well as transcripts of her testimony in civil lawsuits and during the lengthy preliminary hearing into the Livent case. All told, Messina has testified in various venues for more than 130 hours resulting in 4,704 pages of documents, Greenspan told the court.

The cross examination is expected to last several days as Greenspan highlights differences in testimony Messina has given over the past decade. In one lengthy episode Greenspan focused on testimony Messina gave to SEC investigators in September 1998, less than two months after she finally disclosed to new Livent managers that Drabinsky and Gottlieb had allegedly been cooking the theatre company’s books for years. “You were a bald-faced liar with the SEC!” Greenspan shouted at the witness.

In the interview Messina told SEC lawyers that she first learned of the alleged Livent fraud during a discussion with former Livent accountants Grant Malcolm and Diane Winkfein in June or July 1997. At that meeting, the accountants told Messina that $5 to $7 million in liabilities had not been properly recorded in Livent’s books. After a short break in the SEC interview, Messina came back and told investigators that was not correct and asked that the interview be terminated. It did not resume until the next day when Messina said that she did not actually learn about the fraud until much later.

That original account given to the SEC contrasts with Messina’s earlier testimony to Livent prosecutors, Greenspan charged. In her testimony Messina said she learned of the fraud in July 1997 when former Livent accountant Gordon Eckstein went on vacation and she saw a draft of Livent’s second quarter financial statements showing a staggering $15 to $20 million loss. But financial statements Livent filed with regulators, showed not a huge loss, but a modest profit. When Messina asked Winkfein what had happened, Winkfein replied that she does what Eckstein tells her.

Messina tried to explain that she was in a fragile state during her meeting with the SEC and that she had a difficult time segregating what she knew then with what she knew at the time. That meeting with Winkfein and Malcolm that she spoke of with the SEC was not when she discovered evidence of the fraud, but rather was a general discussion she had with the accountants about Livent’s penchant for aggressive accounting. That meeting didn’t set off any warning flags, because — at the time — she had no reason to suspect Livent’s executives of any wrongdoing. “You’ve had 10 years to consider the debacle at the SEC and that is the best could come up with,” Greenspan scoffed.

“I didn’t have to figure it out, I knew exactly what had happened at Livent,” Messina replied.

That was one of the few complete answers Messina managed to utter on the stand. Many of Messina’s attempts to answer Greenspan’s questions were either interrupted or shouted down by the lawyer. At one point, Greenspan even turned his back on the witness when she was trying to speak. “Can I finish my answer… This is very important for me,” a clearly frustrated Messina asked. “This is very important for the liberty of Mr. Gottlieb and Mr. Drabinsky,” Greenspan retorted. “Let me ask the questions. You will have ample time to deal with it.”

Greenspan went on to suggest that perhaps Messina’s lawyers had conducted secret meetings with the SEC after the interview was halted. Messina nixed that suggestion when she told the court that no such meeting could have taken place since she was with her lawyers until late in the evening and joined them early the next morning.

Greenspan later highlighted the differences between testimony she gave at her plea agreement before Judge — and now U.S. Attorney General — Michael Mukasey and pleadings made by her lawyer before a disciplinary panel of the Institute of Chartered Accountants of Ontario (ICAO). Messina told the U.S. judge that she had not been threatened into making her plea. However, her lawyer later told a disciplinary panel of the ICAO that the plea had been “extorted” as part of a plea bargain. There was no contradiction in the answers, replied Messina. She was guilty of the crime she was charged with, but she was told by U.S. prosecutors that if she did not plead guilty she would be charged alongside Drabinsky and Gottlieb.

But those different answers shows how manipulative Messina actually is, charged Greenspan. “You conned everyone,” he said. “You conned the lawyers, you conned the judge in the U.S. You got your lawyer in Canada to say it was extorted. You manipulated everyone.”

“Absolutely not,” Messina replied.