Blogs & Comment

"Trapped" into aiding Livent fraud pt. 3

Going along with the schemes was the only way the engineer could get paid for his legitimate Livent work, the engineer testified. Livent was routinely late in paying its bills, sometimes taking up to a year to pay the fees Kofman had wracked up for his work helping to construct and redevelop theatres in Vancouver, Chicago, New York and North York, Kofman testified. By contrast, invoices that included the allegedly phony “business development work” were paid almost instantaneously — sometimes the cheques were issued even before the invoices were issued. “I felt like I was completely trapped,” he told the court. “We were always in trouble in getting money and fees paid to us.”

In 1993, when Drabinsky and Gottlieb began contemplating taking Livent public, Kofman demanded that the phony billing scheme come to an end. But his fears that participation in the scheme was the only way he was going to get paid appeared to be well founded. After formally breaking ties with King Commodity Services, Livent ignored Kofman’s legitimate bills for nearly eight months, he testified.

Kofman’s financial situation became so dire that he confronted Drabinsky in a car ride the pair took to check out a prospective project in Brantford, Ontario. When Kofman complained about his difficulty getting paid, Drabinsky allegedly shot back that Kofman had already been paid millions of dollars. Kofman was taken aback and maintained that most of that money had actually been funneled back to Livent. The exchange prompted Kofman to write a memo to Drabinsky in March 1994 that included a chart showing that while Livent paid Kofman just over $8.3 million between 1991 and 1994, more than $5.8 million was ultimately re-directed back to Gottlieb and Drabinsky as part of the alleged phony invoice scheme.