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The Fraud Case For (and Against) Myron Gottlieb

An odd thing happened on the first day of testimony at the criminal fraud trial of Livent founders Garth Drabinsky and Myron Gottlieb. As lawyers, reporters, observers and the defendants waited for the judge to enter and start the long-awaited proceedings, Gottlieb walked across the courtroom and began quietly chatting with a woman sitting alone on one of the wooden benches located behind the prosecutors. Their conversation was brief and pleasant, but clearly awkward.
A defendant talking to a courtroom observer may not seem strange. Drabinsky often chatted with a small group of supporters who attended the trial. But this was no ordinary courtroom spectator: she was the wife of Peter Kofman, the structural engineer who helped Livent build its impressive theatres in Toronto, New York and Chicago. He was also the first prosecution witness. Kofman would soon tell the court about two schemes prosecutors allege Drabinsky and Gottlieb used to manipulate Livent?s finances and ultimately defraud investors of nearly $500 million.
Kofman testified that Livent executives used his personal credit card without his permission to buy thousands of dollars in theatre tickets that were ultimately improperly recorded on the companys books. He also testified thaton Gottliebs ordershis company paid the accused millions of dollars for business services that were never performed. With Gottliebs knowledge and acquiescence, Kofman said he recouped those payments by submitting bogus construction invoices to Livent. Those invoices were also improperly booked on Livents books, prosecutors alleged.
It was not the last time that Gottlieb would extend a friendly greeting to former employees and colleagues who were to testify against him. Maria Messina, Livents former chief financial officer, and Gordon Eckstein, the companys senior vice-president of finance and administration, both provided extensive and potentially damning testimony against Gottlieb. Both also received a courteous good morning from Gottlieb when he passed them in the hallway outside the courtroom.
This friendly behavior is very much in character for Gottlieb, says Brian Greenspan, the defence lawyer representing him. The almost universal description of Myron Gottlieb as a gentleman, who was quiet and reserved, approachable and non-confrontational is both consistent and in harmony with the role he played at Livent, Greenspan said in his written final argument for the case filed with the court last week.
Gottliebs graciousness is not that surprising when you consider how closely he worked with many of the prosecution witnesses over the eight years that Livent grew from a small partnership to Canadas largest publicly-traded live theatre company. Maria Messina told the court that she considered Gottlieb her mentor, and cited the opportunity to work and learn from him as one of the main reasons she left her job as the companys auditor at the accounting firm of Deloitte and Touche to join the Livent staff. But friendliness was in short supply in the defences final written argument. The prosecutions reliance on unsavoury, disreputable, self-interested, discredited witnesses has not established with the requisite certainty Mr. Gottliebs awareness and participation in the accounting improprieties, Greenspan said in his final submission.
By contrast, the Crown argues the evidence presented at the trial is overwhelming. In their final summation, filed last month, prosecutors Robert Hubbard, Alex Hyrbinsky and Amanda Rubaszek argue the executives should be convicted of the two counts of fraud and one count of filing false financial documents. Both Drabinsky and Gottlieb had intimate knowledge of just about everything that went on at the company, the prosecutors argue. Both men attended meetings where the accounting manipulations were discussed and both men received memos and reports that meticulously documented the millions of dollars of manipulations the company employed every quarter.
Gottlieb personally signed just about every cheque that was issued by the company, prosecutors maintain. Given their positions at Livent, it is implausible that the accused were unaware of the financial state of the company, the Crown lawyers argue.
Prosecutors produced dozens of reports, memos and executive summaries that allegedly showed how millions of dollars in expenses were improperly rolled to future periods or buried in the companys balance sheet. These manipulations were clearly summarized and highlighted on reports that often contain handwritten notes from either Gottlieb or Drabinsky. They are impossible to miss and would be obvious even to the most indolent CEO, the Crown maintains. It is inconceivable that these major reallocations could have escaped the attention of the senior executives.
But thats just what happened, Brian Greenspan argues in his submission. Gottlieb was out of the loop when it came to the day-to-day details of Livents accounting, says Greenspan, and had no motive to participate in the accounting shenanigans that ultimately destroyed the company. Gottlieb acted with exemplary professionalism and transparency, the defence submission states. The evidence overwhelmingly supports the conclusion that he confined his activities to his areas of expertise and played to his strengths: corporate finance, revenue transactions, cash management, theatre construction projects.
From the very beginning, it was Gordon Eckstein who was the true mastermind behind the Livent accounting fraud and was later aided by Maria Messina and the other company accountants who testified at the trial, the defence argues. Eckstein is a rogue and a liar and his testimony that Gottlieb was aware of the accounting fraud and attended meetings where the manipulations to company financials were openly discussed is wholesale perjury, Greenspan says.
Maria Messinas testimony backed up many of Ecksteins allegations. And while she has painted herself as a whistleblower that ultimately revealed the fraud to new Livent managers, her testimony amounts to little more than the utterances of an opportunist who is a biased and unreliable witness, the defence argues. Over the past decade, Messina has been paid approximately $3 million by Livent and its lawyers for her work advancing the civil and criminal case against Drabinsky and Gottlieb. Despite Messina?s spurious declaration that she stood for truth and integrity, there has seldom been a witness who more clearly qualified for special scrutiny, Greenspan argues. It would be difficult to conceive of a witness in the history of the criminal law in Canada, who has been more handsomely rewarded by a party adverse to the interest of an accused.
Even prosecutors agree that the testimony of Eckstein and Messina should be approached with caution. Both are accomplices to the fraud who have pleaded guilty to criminal and professional charges. Both also pleaded guilty to criminal charges in the United States for which they have yet to be sentenced. Eckstein pleaded guilty to a single charge of fraud in Canada back in 2007 and received a conditional sentence with no jail time. That said, the evidence of both those controversial witnesses has, more often than not, been corroborated by either Livents internal documents or the testimony of other witnesses, the prosecutors argue.
Eckstein made one major charge that could not be backed up by testimony of other witnesses or company documents. Livents former chief accountant told the court that Gottlieb gave him explicit instructions on where to hide the inflated false invoices from Peter Kofman and Execway, another construction supplier who entered into a similar kickback arrangement with Gottlieb and Drabinsky. Sometime in the spring of 1991, Gottlieb gave Eckstein handwritten instructions telling him how much of the false construction invoices to improperly book to the companys fixed assets and pre-production costs, Eckstein alleged. He also testified he was overruled by Gottlieb after suggesting Livent write-down the value of the bogus invoices prior to the companys initial public offering.
Defence lawyers argue that neither Drabinsky nor Gottlieb knew where those bogus invoices were booked and say inconsistencies in Eckstein?s testimony should lead Justice Mary Lou Benottothe judge overseeing the non-jury trialto ignore his evidence entirely. Eckstein could not produce the handwritten instructions and wavered on when Gottlieb gave them to him. He first said he got the notes in 1991, but later changed that to 1992. Eckstein also testified that Kofmans 1992 invoices were booked to construction projects related to the expansion and rejuvenation of Livents theatre in New York. However, that project was not even conceived until 1995, Greenspan points out.
And while Drabinsky and Gottlieb may have participated in some form of kickback scheme with the builders, the defence argues, that is not fraud. Livent was a private company at the time, and the funds funneled through Kofman and Execway did not go to enrich Drabinsky and Gottlieb, but rather went to pay off company-related expenses such as the repayment of loans associated with the takeover of Livent from Cineplex. LIvents bankers might not have liked how those transactions were booked and the taxman might have something to say about it, but neither Gottlieb nor Drabinsky are charged with tax fraud.
Once Drabinsky and Gottlieb used that inflated balance sheet to solicit outside investment, the whole thing became fraud, prosecutors say. The Livent founders knew their balance sheet was inflated and they dont need Ecksteins testimony to prove it, the prosecution argues. The bogus invoices were for construction-related expenses and for the most part were booked as such. Gottlieb and Drabinsky knew those invoices werent construction related, the prosecution says, yet did nothing to ensure they were booked properly. Not only were no steps taken to prevent wrongful allocation, but Gottlieb personally approved cheque requisitions that, on their face, wrongfully allocated these payments, prosecutors argue in their final summation.
Livents balance sheet was not overvalued, because other assets such as the Pantages Theatre in Toronto and the companys ownership rights to The Phantom of the Opera were undervalued on the companys books, the defence argues. Greenspan has also chided the prosecution for not calling any witnesses to testify that they relied on Livent?s balance sheet when they made their investment: The prosecution failed to call a single investor or a single accounting expert to suggest that the balance sheet was a material fact considered in their purchase of [Livent shares] at the time of the IPO. That may be a bit of a stretch. Its a bit like saying that because potential homeowners ask more questions about the bathrooms in the house rather than the foundation, that no one cares about whether the house was built on a solid footing.
Prosecutors also did not address the defence contention that Livent investors were more interested in positive theatre reviews than whether the company posted positive profits. Once again, the prosecution led no expert evidence and the objective facts only support the conclusion that Livents share value was show driven, says Greenspan.
The defence does have a point. The value of Livent shares did in fact go up in 1996 after Ragtime opened to glowing reviews. A year later, the shares drooped after critics panned Candide. Livents shares barely moved after The New York Times ran an article slamming the companys aggressive accounting in early 1998. Nor did the shares budge after the company announced a $30-million loss in the first quarter of 1998 that followed on the heels of a $40-million year-end loss reported just three months earlier, the defence points out.
What drives investors to buy or sell stock at any given time can often confound even the sharpest analyst. Still, it does seem to defy credibility that investors were focused solely on whether Livent productions earned a thumbs-up or thumbs-down from theatre critics. Didnt investors think that positive reviews would eventually translate into higher company profits? If not, it may be the first time in investment history that shareholders didnt care whether the company was profitable or not.
Livent investors werent completely oblivious to the companys accounting or profits. The value of the companys shares plummeted in August 1998 when alleged accounting irregularities where revealed by new Livent managers brought in after Drabinsky and Gottlieb sold a controlling stake in the company to former Hollywood super-agend Michael Ovitz.
It wasnt just Livent investors who didnt seem to be interested in the companys financials or accounting. Gottlieb had only a macro understanding of how Livent operated and was not involved in the day-to-day management of its theatre productions, the defence argues. Gottlieb did not attend important management meetings that dealt with advertising and production and was out of the loop when it came to the alleged accounting manipulations that occurred at the company, Greenspan says. The business and corporate records of Livent provide a clear testament to the contributions which Mr. Gottlieb made to the success and expansion of Livent, he argues. At the same time they provide an equally clear insight into Mr. Gottliebs lack of knowledge and participation in the operation of Livents core businessthe production and marketing of live theatrical performances.
During the trial, the defence even argued that Gottlieb would often literally fall asleep during important meetings. The asleep at the switch defence is not repeated in Greenspans final written summation.
Prosecutors never alleged that accounting manipulations were discussed openly at the advertising or production meetings. The only meetings where the companys true financial picture was ever allegedly discussed were at the quarterly and year-end executive meetings. Defence lawyers argue that Gottlieb only attended the meetings on an as needed basis, and there were at least two quarterly sessions that he did not attend.
It was at those executive meetings that Eckstein would distribute his now notorious executive summariesthe simplified financial statements that clearly laid out the accounting manipulations being considered for the quarter. Those summaries showed the actual millions of dollars in losses Livent produced in just about every financial quarter and highlighted the accounting manipulations needed to produce the profits the company reported to shareholders and regulators. More than a dozen of the summaries were introduced as evidence during the trial, and many of the reports contain Drabinskys handwritten notes.
Those management summaries dont jibe with the defence contention that Eckstein was the lone mastermind of the accounting fraud at the company, prosecutors argue. Drabinskys handwriting on the documents proves that senior Livent managers saw the reports and were active participants in the alleged fraud. Eckstein would not need those simplified financial statements if he were acting alone, prosecutors contend. Eckstein knew exactly what was going on. He was a chartered accountant; he did not need summaries that presented the information in a simplified format, the Crown maintains. Documents such as the executive/management summaries prepared by Eckstein and later [by former Livent Controller Chris] Craib, were specifically for the senior executives, including Drabinsky [and] Gottlieb so that they could quickly and easily see the extent of the manipulations.
The executive summaries are at the heart of the prosecutions case against Gottlieb and Drabinsky, yet there is little discussion of them in the Gottlieb final summation. Rather, defence lawyers argue that the testimony of Eckstein, Messina and Craib, who all told the court that Gottlieb attended senior management meetings where accounting manipulations were openly discussed, cannot be believed and should be rejected outright. The prosecution must rely upon disreputable witnesses whose testimony is suspect and who must be viewed with extreme caution, Greenspan argues. They are the admitted participants in a fraud who had a stake in the prosecution and yet whose guilt was virtually excused by civil indemnity and criminal immunity. 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 prosecutions principal witnesses.
While Livents accountants may have had plenty of motives to lie about who was in actually in charge of the alleged fraud, Gottlieb had no motive to engage in the risky behavior alleged by the prosecutors, the defence says. The prosecutors argument that Drabinsky and Gottlieb falsely inflated the value of the company to ensure they continued receiving a high salary, generous bonus, stock options and perks, like use of the private company jet and luxury car, are not supported by the evidence, Greenspan says.
Gottliebs did not receive a bonus in either 1993 or 1997, and his total compensation of about $900,000 in 1996, $680,000 in 1997 and just over $700,000 in 1998 was about the same paid to executives of similar companies, the defence argues. As for the company jet, there was no evidence presented at trial that Gottlieb ever used it. Furthermore, there is no evidence that Mr. Gottlieb had use of an expensive automobile either leased or owned by Livent, nor is there a single word describing the model year or the type of vehicle which Mr. Gottlieb operated to justify the prosecutions characterization, Greenspan says.
The only time the court heard about Gottliebs driving habits was when Roy Waymont, the president of Execway, testified about his participation in the Livent kickback scheme. Gottliebs chauffer would come to collect the cheques that Waymont wrote for the bogus business services Gottlieb and Drabinsky purportedly provided. Drabinsky also had a chauffeur and logged thousands of miles on the companys private jet.
In addition to the salary, occasional bonus and flight on the company jet, Drabinsky and Gottlieb were granted shares in the companylots and lots of shares. At the time he was ousted from the company by new Livent management, Gottlieb and his family held more than $25 million in Livent stock. Prosecutors argue those sizable holdings gave the executives a staggering motive to use accounting manipulations to keep the value of the shares high. But the fact neither Gottlieb nor Drabinsky sold any of their shares proves they could not have been involved with the alleged fraud, the defence argues. The prosecutions position that Mr. Drabinsky and Mr. Gottlieb had the most to gain and the most to lose as a motivation for fraud, ignores the fact that at no time did Mr. Drabinsky or Mr. Gottlieb do as fraudsmen docash out, says Greenspan.
Thats true. During their entire tenure at Livent, both Drabinsky and Gottlieb only sold Livent stock oncea private sale to a company controlled by noted U.S. investor Thomas H. Lee, who became a major Livent shareholder and eventually joined the companys board of directors. The defence asks another interesting question: With so much of their personal wealth tied up in Livent, why would Drabinsky and Gottlieb sell a controlling stake in the company to former Hollywood mogul Michael Ovitz if they were involved in the alleged fraud? Once Drabinsky and Gottlieb gave up day-to-day management of the company, it would be only a matter of time before new Livent managers uncovered the accounting manipulations riddled through the companys books. It is inconceivable that Mr. Gottlieb, an astute, experienced and sophisticated businessman, would have committed himself to this transaction if he had knowledge of the ongoing accounting improprieties, says Greenspan.
But turning the company over to Ovitz may not necessarily have been as crazy as defence lawyers contend. In April 1998, Drabinsky and Gottlieb announced that Ovitz had purchased a 12 percent stake in the company for US$20 million. As a result, the two executives would be turning day-to-day management of the company over to a team of new executives appointed by Ovitz. In conjunction with the investment, Livent agreed to write off more than $27 million in assets that Ovitz and his team felt were overvalued. Gottlieb and Drabinsky continued to negotiate the deal with Ovitz during the first quarter of 1998 when the company reported a staggering $30 million loss. Could Drabinsky and Gottlieb have figured that those two large accounting baths were enough to wash away most of the allegedly fraudulent manipulations?
There is another possible explanation for why the two accused may not have feared detection of the alleged accounting fraud. They could have been relying on the discretion of Michael Ovitz and his partner in the Livent investment: Roy Furman. Ovitz may have been putting up the lions share of the money for the Livent investment, but the former Hollywood agent and one-time president of the Walt Disney Co. had no plans to move into the head office and take personal control of the theatre company. Ovitz left that up to Furman, a New York-based investment banker he partnered with in the Livent investment, who would eventually became Livents new CEO.
Furman and Drabinsky knew each other well and had a long and collegial relationship. Furmans company was consulted on just about every major deal Drabinsky worked on during his tumultuous time as CEO of Cineplex-Odeon from 1979 until 1989. Roys an effervescent, enthusiastic character, effusive, but also loyal, supportive and always ready with cogent advice, Drabinsky says in his 1995 biography, Closer to the Sun. If Drabinsky and Gottlieb had been aware of the alleged fraudulent manipulations on their books, could they have been counting on Furmans loyal and supportive nature to discretely handle any potentially embarrassing accounting revelations?
And while Michael Ovitz had a reputation as a brilliant but brutal businessman (he used to hand out copies of Sun Tzus The Art of War to employees), Drabinsky had strong and cordial links with him as well. The two men first met in 1987, when Ovitzwho was then the head of Creative Artists Agency (CAA), the most powerful Hollywood talent agencycalled on behalf of his client Robert Redford to ask for a meeting. As a result of a meeting held at Redfords Utah ranch, Drabinsky signed a joint-venture deal with the Oscar-winning actor and founder of the Sundance film festival to co-produce five independent movies. He even bought a chalet from Redford, Drabinsky wrote in his biography.
The Redford film deal died when Drabinsky and Gottlieb were ousted from Cineplex in 1989 after losing the support of one of his largest shareholders: Lew Wasserman, then the head of MCA, a major Hollywood movie studio. There is little doubt that Drabinsky was cheering in 1990 when Wasserman was forced to resign after Ovitz acted as matchmaker for the sale of MCA to a Japanese conglomerate.
Drabinsky and Gottlieb appear to have been counting on the discretion of Furman and Ovitz if any accounting irregularities arose, according to the testimony of Livent junior accountants Grant Malcolm and Diane Winkfein. Shortly after the announcement of the Ovitz transaction, Gottlieb called Malcolm and Winkfein into his office for separate pep talks, the accountants said. Winkfein testified that Gottlieb told her she should not be concerned by the pending arrival of new management since Drabinsky, Gottlieb and Eckstein would remain in charge of the companys financials for the coming second quarter.
Gottlieb went on to tell the accountant that he had served on the board of another companyCorona Corp.that had experienced some type of accounting difficulties. Those problems had been handled in an orderly fashion, and they had taken care of it [with] no damage to the share price, Winkfein told the court. Winkfein testified that when she asked Gottlieb if that meant he wanted her to lie to new management, she testified that Gottlieb simply smirked and looked away ending the conversation.
Gottlieb did not tell the Corona story to Grant Malcolm. However, he did repeat that he Gottlieb and Drabinsky would remain in charge of the companys finances and that they were committed to cleaning up the baggage that Livent carried. Messina also testified that Gottlieb told her they would remain in charge of the second quarter, but later revised her testimony to say she thought he was referring the companys first quarter.
The defence did not really address the Corona story, but slammed the testimony of Malcolm, Winkfein and Messina as preposterous and unbelievable. The fact the stories are so similar proves that Messina fed the false story to the junior accountants, Greenspan argues. Gottlieb would never tell the accountants he was going to remain in charge of the companys finances for the second quarter of 1998 since under the terms of the Ovitz deal the executives could not even conclude the companys first quarter financials without Ovitzs approval. The source of Malcolm and Winkfeins misconception about future quarters could only have come from Messina, Greenspan argues in his final submission.
There is further evidence of cross-contamination of Malcolm and Winkfeins evidence, Greenspan argues, since both refer to the meetings with Gottlieb as a pep talkeven though there was nothing peppy about either of the conversations.
While Drabinsky, Furman and Ovitz enjoyed a long and cordial relationship, they did hire the accounting firm of KPMG to perform a due diligence on Livent prior to the multi-million dollar investment. Despite the fact that a simple slip of the tongue from any one of the Livent accountants could have blown the lid off the alleged fraud, neither Drabinsky nor Gottlieb ever told Maria Messina or the accountants to keep their mouths shut, the defence points out.
The man in charge of the due diligence was Robert Webster, a KPMG accountant who later became Livents executive vice president. It is no coincidence that Webster would head up the internal investigation that found Drabinsky and Gottlieb were aware of and controlled the alleged fraud, the defence argues. Having botched the due diligence investigation, the defence says, Webster was looking to pin the blame on Livents most visible executives: Drabinsky and Gottlieb. From the outset, the (Webster) interviews were contaminated by a lack of objectivity and an almost pathological focus on Mr. Drabinsky and Mr. Gottlieb, Greenspan says in his submission. MESSINAS MACHIAVELLIAN MOVES
The fact that neither Drabinsky nor Gottlieb appear to be concerned about the discovery of any fraud by Ovitz proves that the executives were not aware of any financial irregularities at the company, the defence argues. By contrast, just about every accountant who testified at the trial told the court they were very worried that new management would uncover the alleged widespread fraud. In an effort to protect their jobs, Maria Messina conspired with Gordon Eckstein, Chris Craib and the other Livent accountants to hatch an elaborate scheme to shift the blame for their own wrongdoing and frame the founders for a crime they did not commit, the defence argues.
The plotand heres where things get complicated and more than a little bizarreappears to have begun as early as April 24 1998, less than two weeks after the announcement of the Ovitz transaction. Thats the date that Chris Craib and Gordon Eckstein say they attended an early afternoon meeting with Garth Drabinsky where he openly discussed plans to manipulate the companys upcoming financial results. That meeting never took place, the defence contends, and they have the pictures to prove it.
When Craib first told the story about the meeting to investigators, he said it took place around 2 p.m. that afternoon in Livents downtown Toronto offices. But it could not have taken place at that time, since Drabinsky was not even in the country. He was in Washington, D.C., attending a Democratic Party gala lunch with then U.S. president Bill Clinton. The defence even introduced a photo with Drabinsky, Clinton and Drabinskys girlfriend at the time to prove his attendance.
The defence spent days cross-examining Eckstein, Craib and Messina about the events surrounding the April meeting. Craib insists that he merely got the time of the meeting wrong. And Drabinsky did in fact fly back to Toronto on Livents private jet and was back in the office later that same afternoon.
Craib says he told Messina about the meeting and she mades notes of the conversation a short time later. In the notes, Messina incorrectly states that Gottlieb attended the alleged meeting an error she repeated in early May 1998 when she and Craib wrote a memo urging Drabinsky and Gottlieb to reconsider their plan. While Messina never used the words fraud, accounting irregularities or anything else that would imply criminal behavior in the memo or in subsequent meetings with the executives, she did threaten not to support the companys financial statements to either the auditors or board of directors.
The defence has labeled Messinas notes as well as the memo to Drabinsky and Gottlieb as pure fiction. The ambiguous language in the memo as well inconsistencies between Messina and Craibs stories regarding the alleged April 24th meeting and subsequent events, show the witnesses to be unreliable and expose Messinas sinister and malicious agenda, Greenspan says. It is not an overstatement to describe this memorandum as both self-serving and Machiavellian.
Prosecutors dismiss any inconsistencies as insignificant and note that just because Drabinsky or Gottlieb did not attend one management meeting, does not absolve them of responsibility for alleged fraud discussed at others. Prosecutors also point out that when Messina revealed the fraud to new Livent managers in August 1998, they immediately launched an investigation and attempted to correct the companys financials. Drabinsky and Gottlieb, by contrast, they say, did nothingeven when confronted by a CFO who threatened not to support the companys financials.
If Drabinsky and Gottlieb truly had no idea about the alleged accounting fraud, wouldnt they have been stunned to receive a memo from their CFO referring to a meeting they say never took place where she threatened to not to support the company financials? And what made Messina, Eckstein, Craib and the other Livent accountants believe that new management headed by Roy Furman a longtime Drabinsky friend and confidant would take their side over Drabinsky and Gottlieb?
If those questions give rise to doubts about Drabinsky and Gottliebs guilt, there are others that seem to support their innocence. For instance, if Drabinsky and Gottlieb knew about the alleged fraud, wasnt it an act of insanity to hire Maria Messinatheir former auditoras company CFO, defence lawyers ask. Messina had no history of malfeasance and would have been duty-bound to report any accounting irregularities. Or why would the Livent founders fire Robert Topol, the companys former chief operating officer and a major player in the alleged fraud, after they caught him appropriating company assets? Wasnt there a danger he would rat them out to shareholders, regulators or even the cops?
Prosecutors did not address any of those issues during the trial, or in their final argument. However, there are some simple explanations. The hiring of Messina, for instance, doesnt make much sense until you look at the accounting debacle at Enron and realize that the energy company whose name is now synonymous with fraud recruited heavily from the ranks of their auditing firm Arthur Anderson. New regulations enacted in Canada and the U.S. in the wake of the Enron scandal now force ban companies from hiring their former auditors for at least a year.
As for Topol, it appears that he was fired because even executives accused of fraud dont like to be ripped off. Had Topol blown the whistle he would have almost certainly been on the receiving end of millions of dollars in lawsuits from shareholders, bondholders and even Drabinsky and Gottlieb. And thats only if he could manage to escape criminal or regulatory charges from cops and securities regulators in either Canada or the U.S.
And one truly baffling question remains. If the defence is right, and just about every witness who took the stand in the trial is part of an elaborate conspiracy to frame Gottlieb and Drabinsky, how could Gottlieb be so polite to them? These are the people whose fraudulent manipulations to Livents books not only destroyed Drabinsky and Gottliebs company, but also their reputations and their personal wealth. If Gottlieb is innocent, how could he bear to look them in the eye knowing they were willing to get up on the witness stand and perjure themselves in an attempt to send him to jail? Then again, how could Gottlieb look them in the eye if they are telling the truth?