Blogs & Comment

"Trapped" into aiding Livent fraud pt. 4

Kofman found himself ensnared in Livent’s so-called bogus billing schemes again in 1997 when the theatre company allegedly charged thousands of dollars of theatre tickets to Kofman’s American Express credit card without his knowledge. Kofman testified that he found out about the charges when he tried to use his credit card and was told that it was over the limit. Livent had access to his credit card information since it often arranged travel for him as part of his duties with Livent, Kofman testified.

Kofman eventually agreed to buy the tickets and even make numerous other purchases when Livent tangled “the little carrot” of reimbursement in front of him, he said. Kofman didn’t pay much attention to the ticket purchases since he was working full time in New York and was under incredible pressure to ensure that the rehabilitation of Livent’s theatres in that city remained on schedule.

He soon came to regret the decision when Livent refused to reimburse him for thousands of dollars resulting from the exchange difference between the Canadian and American currency. That refusal led to a heated exchange with Livent’s former senior vice-president of finance, Gordon Eckstein, Kofman testified. “That was the straw that broke the camel’s back. I exploded,” he told the court. “Gordon [Eckstein] refused to reimburse me. He said my accountant was an idiot and actually accused me of trying to do something untoward!”

Within a year of the last ticket purchase, Drabinsky and Gottlieb sold a controlling stake in the company to Hollywood powerbroker Michael Ovitz who pushed the men out after uncovering the alleged fraud. Soon thereafter Kofman attended a meeting with the duo at Gottlieb’s house where the pair tried to assure him he had done nothing wrong and that all the money that had been funneled through Kofmans company had ultimately gone into Livents theatre projects.

But those so-called phony invoices did come back to haunt Kofman. Once Drabinsky and Gottlieb left the company Kofman was frozen out of any additional work on Livent’s theatres. Soon after the company collapsed into bankruptcy and Kofman became just another one of the companys unsecured creditors. And it would only get worse. As details of the alleged accounting fraud emerged, Kofman found himself being named as a participant in the alleged elaborate plot to defraud shareholders. Those allegations made it impossible for him and many of his senior staff to find work. It would take another three years for Kofman to extricate himself from the Livent quagmire, he testified. “I can’t bear to think about how much all of this cost me.”

Kofman will face cross examination from Drabinsky and Gottlieb’s lawyers: Eddie Greenspan and his brother Brian on Tuesday.