Kofman began working with Drabinsky and Gottlieb when he joined Cineplex Odeon as an engineer working on the company’s redevelopment of movie theatres in Canada and abroad. When Drabinsky and Gottlieb were forced out of that company, Kofman followed them and began working on their rehabilitation of the Pantages theatre in downtown Toronto. At the time of the phony-billing scheme, Livent was Kofman’s single largest customer and ultimately became his only client, Kofman told the Ontario Superior Court.
While he could not recall how the idea originally came up, Kofman testified that Livent founders Myron Gottlieb and Garth Drabinsky told him he would have to pay the men personally for “business development” work that was never actually performed. Kofman, in turn would bill Live Entertainment Corporation of Canada a predecessor to Livent for that allegedly bogus work as well as any other legitimate engineering work Kofman performed. In his opening statement last week, chief Livent prosecutor Robert Hubbard alleged that the phony invoice scheme was an attempt to circumvent bank covenants that limited the amount of money Drabinsky and Gottlieb could take out of the company.
The scheme of charging Kofman for business development work was ironic since Drabinsky and Gottlieb often complained about any work Kofman did for his other clients, he said. “If there was a bone of contention it was that they (Drabinsky and Gottlieb) did not want us to do work for anyone else,” Kofman testified.
The arrangement changed in 1990 when Gottlieb told Kofman that the payments would no longer go to Drabinsky and Gottlieb personally, but would be funneled through a company called King Commodity Service a company in which Gottlieb was president. Kofman signed an agreement with Gottlieb agreeing to hire King as its fiscal agent for a fee of $2 million a year. Kofman continued to pay King’s bills which, in turn, were always reimbursed by Livent. However, to this day Kofman told the court he has no idea what King Commodity Services did and maintains that the company never did any actual work for this company.