Securities Commission reopens case against Livent executives
Livent co-founder Garth Drabinsky is shown in Toronto on March 25, 2009. (Chris Young / THE CANADIAN PRESS)
Linda Nguyen, The Canadian Press
Published Friday, February 22, 2013 7:35AM EST
TORONTO -- The Ontario Securities Commission is reopening its regulatory case against three former executives of the now-defunct Livent Inc.
The commission said Thursday it is re-examining whether Livent founders Garth Drabinsky and Myron Gottlieb, along with ex-vice president of finance Gordon Eckstein, contravened the securities act and the "public interest" when they manipulated the books at the theatre production company.
The trio originally faced OSC charges in 2001, which were set aside indefinitely due to their criminal trials.
In 2007, Eckstein pleaded guilty to fraud and was given a conditional sentence for his role in the book-cooking scheme. Two years later, Drabinsky and Gottlieb were convicted of two counts of fraud.
The court ruled that the partners orchestrated a scheme involving the falsification of Livent's financial statements to lower its expenses and make the company look like it was meeting high earnings projections.
The case was one of the most complex white-collar criminal proceedings in Canadian corporate history.
Drabinsky, a former Order of Canada recipient, was sentenced to five years in prison and Gottlieb got four years.
The longtime friends and business partners were both released on parole in 2012.
In a notice, the OSC says it will use the criminal convictions as a basis for the securities allegations. The case will be heard by the commission on March 19 in Toronto.
The commission can prohibit the men from trading securities, serving as a director or officer in a public company, working in the investment industry and order them to pay the costs of the OSC investigation.
At its height, Livent was behind such blockbuster theatrical hits like the "Phantom of the Opera" and "Ragtime."
The demise of the publicly-traded company in 1998 ultimately lost investors an estimated $500 million.