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"Actual" doesn't Actually Mean "Actual," Argues Livent Defence

David Roebuck had an unenviable task today as he kicked off the final defence oral argument in the criminal fraud trial of Garth Drabinsky and Myron Gottlieb. The quiet and methodical lawyer whoalong with Edward Greenspanis defending Drabinsky, had to convince Justice Mary Lou Benotto to ignore the reams of documents prosecutors say prove Drabinsky and Gottlieb not only knew about the massive fraud at the theatre company, but were active participants in that fraud. To help with that task, Roebuck brought a magnifying glass.
The magnifying glass was a replacement for reading glasses that Roebuck had misplaced, but it could have been a signal to courtroom observers about the level of detail he would delve into over the coming hours. That detail was so great, at least one defence lawyer appeared to briefly fall asleep during the lengthy presentation and even the judge appeared restless. At one point, Benotto was shuffling papers on her desk for so long that Roebuck stopped to ask if there was something he could help the judge find.
Unlike the brief and simple oral arguments made by prosecutors yesterday, Roebuck argued that the evidence in this case is far from simple and not as it may appear at first glance. The documents in this case arise from a very complex factual matrix, he told the court. It is our position that these documents do not speak for themselves.
In trying to prove their case, prosecutors relied on the six members of Livents accounting staff to explain what the documents meant. However, those witnesses were little more than biased accomplices in the fraud who engaged in what the defence says is perjury to put forward the most nefarious interpretation of the documents, Roebuck said. In terms of trustworthiness, this is a very unique group of six, he said. The trustworthiness of these witnesses asked to give testimony is seriously under attack.
Many of the documents contain what those witnesses said were Drabinskys own handwriting, but that doesnt prove anything, argued Roebuck. After all, the crown did not call a handwriting expert to verify that the handwriting was, in fact, Drabinskys. Roebuck also reminded the judge that one witness even mistakenly identified Drabinskys handwriting on one document when in fact it was the handwriting of an RCMP officer. In my submission, the evidence of handwriting could not be weaker, said Roebuck.
And what Drabinsky wrote on those documentswhat Drabinsky allegedly wrote on those documentsdoes not necessarily indicate that the he knew there was fraud at Livent, said Roebuck. Many notations are very brief and need context, Roebuck told the court. Context could be given by individuals who knew the backgroundnot by admitted accomplices.
Throughout the trial, prosecutors have suggested that phrases in Livents internal financial statements suggested massive fraud. But phrases such as roll forward, expense roll, show-to-show transfer, move to fixed assets are either legitimate accounting terms or too ambiguous to be indicative of fraud, said Roebuck. “No expert witness was called to suggest some universal meaning, and even among Crown witnesses there was a lack of consistency attributable to the meaning of any terminology,” said Roebuck.
Even the words reported” and “actual were apparently too ambiguous to raise any red flags with Drabinsky and Gottlieb. According to the defence, the term actual doesnt actually mean actual. As in those now notorious quarterly and year-end management financial summaries that seemed to clearly state that Livent was going to report millions in profits when it was actually losing tens of millions nearly every quarter. There are many reasons why there could be discrepancies between actual and reported. In my submission it does not necessarily connote fraud, said Roebuck.
Even the judge seemed a little stunned by that argument. The only questions Justice Benotto asked during Roebucks entire day-long presentation was: So is it your submission that when the report says ‘net reported income’ and ‘net actual income’ those phrases are ambiguous?
Yes, replied Roebuck.
Besides, Drabinsky did not have enough time to keep close track of his companys accounting, Roebuck added. He was travelling extensively overseeing the creation of new Broadway shows, as well as tracking the progress of other shows travelling throughout North America, Roebuck argued. “It’s all very well for the Crown to imply that despite all these functions [Drabinsky] could still monitor the accounting affairs but that is simply too much for one individual, Roebuck said. He didnt have the training, he didnt have the time.”
Many of the documents prosecutors say show Drabinsky and Gottlieb were active participants in the alleged fraud can be ignored, argued Roebuck. Many of the documents related to financial projections or budgets and had nothing to do with the allegedly false financial statements that would eventually be submitted to investors and regulators. The documents that do relate to the companys financial statements were often created early in the weeks-long and complex process Livent went through to create its final financial numbers and there is no proof that many of those alleged manipulations actually resulted in fraud on the companys books, he said.
Defence lawyers Edward and Brian Greenspan will continue the defence argument tomorrow.