TORONTO - Theatre moguls Garth Drabinsky and Myron Gottlieb were fully aware of the large-scale fraud committed at Livent Inc., Ontario's top court heard Wednesday.

"If you're management, you have to approve these things at the end of the day," Crown attorney Alex Hrybinsky argued on the final day of the pair's appeal hearing. "This was a company that two individuals, sophisticated business people, ran. The two owners participated fully in all aspects of the operations."

The theatre heavyweights, whose company was behind such Canadian and Broadway theatre hits as "The Phantom of the Opera," were each convicted of two counts of fraud in 2009. Drabinsky was sentenced to seven years behind bars, while Gottlieb got six.

They argue that their accounting staff perpetrated the fraud without their knowledge and Gottlieb is seeking a new trial while Drabinsky's is asking for and outright acquittal.

The Ontario Court of Appeal reserved its judgment Wednesday.

Judge Mary Lou Benotto convicted Gottlieb and Drabinsky, finding that the pair manipulated the income reported on the financial statements of their company Livent Inc. over nine years, before it went bankrupt in 1998.

The pair has already stayed out of prison since being convicted, due to speedy paperwork by their lawyers, brothers Edward and Brian Greenspan. Each was granted $350,000 bail, pending the appeal.

Brian Greenspan argued Wednesday that Benotto used faulty logic to convict Drabinsky and Gottlieb, and was merely speculating when she decided they must have known about the fraud.

"She rejects our argument on the grounds of speculation, not common sense," he told the court.

While the exact dollar value of the fraud is not known, the investments made in the public company were more than $500 million.

Benotto found that Drabinsky and Gottlieb devised a kickback scheme dating back to 1989 that saw assets of Livent and its predecessor company overstated in financial statements.

Benotto found that the pair would arbitrarily move operating expenses from one period to another and apply the expenses of one show to another.

"There's no doubt that Drabinsky was driving hard to get the income up and the expenses down, because this thing was a money-eating machine," Justice David Doherty said Wednesday.

Doherty noted that the documents themselves, however, do not prove that fraud occurred. That conclusion relies on the testimony of Crown witnesses, whom the Livent co-founders say lack credibility.