Ex-Broadway producers plead not guilty

Drabinsky, Gottlieb's fraud trial under way in Toronto

TORONTO -- Former Broadway producers Garth Drabinsky and Myron Gottlieb each pleaded not guilty to two counts of fraud and one count of forgery as their criminal trial got under way Monday.

Crown prosecutor Robert Hubbard accused the duo of defrauding investors of $500 million by tampering with financial statements to boost the company's asset value and share price.

"The accused participated in and directed large-scale fraud for five years" until the dramatic collapse of Livent in 1998, Hubbard told Ontario Superior Court Justice Mary Lou Benotto.

Hubbard said the orchestrated fraud at Livent took many forms, from false invoicing, inflating ticket sales or reducing expenses of losing shows by rolling them forward to upcoming productions.

The Livent duo also are alleged to have kept two sets of books: a real one that tracked actual company expenses and a phony one for investors, board members and auditors.

The trial, expected to last six months, will hear from seven star witnesses, including former Livent senior vp finance and administration Gordon Eckstein and former CFO Maria Messina.

Hubbard said that Drabinsky and Gottlieb's fraudulent scheme came to light in August 1998 when forensic accountants hired by new Livent owner Michael Ovitz were told of the accounting irregularities by senior company employees.

The Livent trial will resume next Monday with the first witness, Peter Kofman, a Canadian engineer who is expected to testify that he submitted false invoices to Gottlieb and Drabinsky to inflate the company's earnings.