For the third day in a row, defence lawyer Edward Greenspan accused former Livent controller Chris Craib of fabricating his testimony in the criminal fraud trial of Livent founders Garth Drabinsky and Myron Gottlieb.
This is no ordinary reflex reaction when a defence lawyer insists that a witness with incriminating testimony must be lying. Rather, Greenspan is employing a risky strategy that if it works could convince the judge that Drabinsky and Gottlieb are the victims of a complex and diabolical conspiracy that would make Machiavelli or Iago look like bit players in an episode of Gossip Girl. But the strategy also runs the risk of making the judge shake her head in disbelief.
Craib has previously testified that he attended a meeting on April 24, 1998 where Drabinsky and Gordon Eckstein, Livents former vice-president of finance and administration, openly discussed how to allegedly manipulate the companys financial results. Craib even took notes at the meeting.
But Greenspan has another theory that he laid out early in his cross-examination: there never was any meeting. Concerned that new Livent managers would inevitably discover the alleged rampant fraud at Livent, Craib and Maria Messina, Livents former chief financial officer, decided to make up the story about the meeting and falsely implicated Drabinsky and Gottlieb in order to save their jobs.
Its a bold move. And may be a tough sell to the judge overseeing the case. After all, Messina testified that after the meeting she consulted a lawyer and wrote a memo that was presented in court. And while the memo never explicitly mentioned fraud, Messina testified that she confronted Drabinsky and Gottlieb about the alleged plan to manipulate the company’s firs quarter 1998 financials and threatened not to support those manipulated financial results to the companys auditors or board of directors. So far, there has been no evidence presented at the trial to suggest that when Messina took her stand either Drabinsky or Gottlieb asked her: “Meeting? What meeting? What are you talking about?”
However, if the judge buys Greenspans theory then it effectively taints the only three prosecution witnesses who claim to have witnessed Drabinsky and Gottlieb personally direct the alleged fraud that ultimately destroyed the once successful theatre company. After all, if Craib and Messina conspired to create the false story, then neither one of them can be believed. And neither can Gordon Eckstein, since he testified he was at this fictitious meeting as well.
Just the fact that Craib was allowed to take part in the meeting makes no sense, argued Greenspan. Not only does Garth Drabinsky allow you to witness the fraud, but he allows you to take notes, Greenspan said. You attended no such meeting at 2 p.m. on April 24th or at any other time.
It doesnt make sense that Garth Drabinsky would want you at this meeting, does that make sense to you? Greenspan asked.
I dont know, Craib replied.
You have no function at this meeting, Greenspan continued.
Incorrect, Craib said.
Oh, you had a function? You spoke a lot at this meeting? Greenspan asked.
No. I did speak. There were questions about the actual results, Craib said.
Im going to suggest this is a complete fiction, Greenspan retorted.
But Craib has another explanation as to why Eckstein brought him to the meeting. According to a transcript of his RCMP interview conducted in Nov. 1998 and displayed in court earlier today, Craib told the police: Gord said: Im not doing this alone, youre going down with me. Im not gong to take the fall for these guys.
Craib did participate in a meeting in which fraud was discussed, Greenspan suggested. But that meeting occurred the previous day on April 23 and was with Gordon Eckstein and other junior Livent accounting staff. You made no notes on April 24th at this made-up meeting, Greenspan said. Rather, you participated in a meeting with Gord Eckstein on April 23rd … I suggest that’s the truth, and that your story about April 24th is a fabrication from top to bottom.
No, Craib replied.
To back up his accusation, Greenspan pointed to Craibs notes that have been incorrectly dated Friday April 23. The Friday was added at a later date to back up Craibs false testimony, Greenspan said. A copy of the note was displayed on the large flat-screen monitors at the front of the courtroom, but there appeared to be no inconsistency in the written date.
If the notes are actually from the April 24 meeting, Greenspan asked Craib to produce his notes from the April 23 meeting.
I dont know what happened to the notes of April 23rd, Craib replied.
But you said you took them. What did you do with them? Greenspan asked.
I don’t know what happened to notes of the 23rd, Craib said.
The incorrect date is not the only problem with the notes, Greenspan insisted. Craib told lawyers representing new Livent managers in Aug. 1998 that he did not keep any notes of the meeting. Craib told an incredulous Greenspan that he forgot he had taken the notes and only remembered after finding them sometime later in his office.
You would have told them if you had notes, Greenspan said.
If I had remembered I would have told them, Craib replied.
Im going to suggest to you that the last thing you do with those notes is leave them in your office, Greenspan said. They are evidence, proof that Garth Drabinsky directed a fraud.
I did not have that type of foresight that I needed to collect evidence that minute, Craib said.
This was a smoking gun, Greenspan said.
I dont recall thinking anything like that, Craib replied.
And there is another problem with those notes. Many of the alleged manipulations on the notes had already been implemented hours before the meeting between Drabinsky and Eckstein took place. For instance, a notation to adjust the amount of interest Livent was paying was reduced on the companys general ledger sometime between 12:19 p.m. on April 23, when the first executive summary of the companys quarterly results was produced, and 1:17 a.m. on April 24 when a copy of the companys general ledger was printed out.
Eckstein directed an arbitrary reduction in interest expenses that are actually executed at 1:17 a.m. hours before any meeting with Garth Drabinsky, Greenspan said.
I dont know why this adjustment was made, Craib replied.
By April 24 its too late for you to be witnessing Garth Drabinsky directing these charges because its already been done, Greenspan added.
I disagree with that, Craib said.
Also, advertising rebates were improved by about $250,000 during the same period. That number that seems to correspond with a notation for Eckstein to allegedly manipulate those accounts by about US$150,000, Greenspan suggested.
The paper trail I read to you is airtight. I want you to understand that and I want you to explain, Greenspan insisted.
But Craib did have an explanation. The executive summary used in the meeting with Drabinsky and Eckstein was printed at 4:04 p.m. on April 23 and did not reflect the most recent changes to the companys general ledger.
There is another possible explanation. After more than seven years with Livent, did Eckstein make the initial adjustments to the companys books and then present them to Drabinsky as merely possibilities that could be implemented upon his approval? That would fly in the face of Ecksteins testimony that he never implemented any manipulations without the explicit direction from Drabinsky or Gottlieb. But then again, as the defence insists, Eckstein is an irrational liar.
During the April 24 meeting, Drabinsky allegedly said that he wanted $20 million in manipulations that would erase Livents actual $18 million loss for the period and produce a modest $2 million in profit, Craib has said in previous testimony.
The most disturbing manipulation allegedly proposed was a suggestion from Eckstein to move money from deferred revenue into the companys first quarter a clearly fraudulent manoeuvre. However, that manipulation is not reflected in Craibs notes.
Where is it? Greenspan asked.
It was the last item discussed, Craib said.
I dont care if it was the last item discussed, the meeting was still going on. Why isnt it in the notes? Greenspan asked.
Because I just froze when I heard that, Craib replied.
What, like a popsicle? What are you talking about? Like a statue? Greenspan retorted.
I didnt write it down because I knew it was clear fraud, Craib said.
According to you it was all fraud, you should have been an icicle, Greenspan replied. Arbitrary, arbitrary, arbitrary. You must have been freezing.
Over the past 10 years Craib has given very detailed accounts both of the events leading up to and following that all-important meeting. For instance, he had to skip lunch waiting for the meeting to begin. He told investigators with the U.S. Securities and Exchange Committee, the Institute of Chartered Accountants, the RCMP as well as lawyers working for Livents new owners that the meeting began sometime after 2 p.m.
When the meeting was over, he was so disturbed by what he had witnessed he walked around the Yorkville shopping district before he had to rent a car to pick up friends at the airport who were arriving from South Africa. He had to return to the office around 5 p.m. when he realized he had left his house keys in his office. When he arrived, Eckstein phoned him and asked him to bring a document to his office where he say Livent controllers Diane Winkfein and Grant Malcolm were arriving for a meeting. Theres just one problem it couldnt have happened that way.
Or at least the meeting could not have occurred at 2 p.m. Drabinsky wasnt in the office; heck, he wasnt even in the country at 2 p.m., Greenspan insisted. Drabinsky was in Washington attending a Ragtime-themed lunch celebrating the 150th anniversary of the Democratic National Convention at the time, Greenspan said.
Greenspan even has a photo of Drabinsky and his then-girlfriend standing next to Bill Clinton.
The photographer remembers taking a picture of the President with the producer of Ragtime, Greenspan said. Garth Drabinsky is not back in the office until roughly 5:00 if that.
I cannot prove the time, I have no day timer, Craib replied.
All of a sudden you are being challenged with what youve been getting away with for a long time, Greenspan said. This is the first time you realize that your story cant hold together.
Or I have the wrong time, Craib said.
If you pinpoint the meeting at 2 oclock then you are a liar, Greenspan said.
Im not a liar. I can be wrong, Craib replied.
People who are wrong can be liars, Greenspan retorted.
Greenspan continues his cross-examination of Craib on Monday.