Allegations that Livents accounting staff conspired to frame Garth Drabinsky and Myron Gottlieb for criminal fraud grew larger yesterday as the defence accused Maria Messina of collusion and fabricating evidence to cover up her own involvement in accounting fraud at the theatre company.
On his fifth day cross-examining Maria Messina, Edward Greenspan the defence lawyer representing Drabinsky accused the former Livent chief financial officer of concocting a story where former Livent accountant Chris Craib told Messina about a meeting held on April 24, 1998 where Drabinsky and Gottlieb allegedly openly discussed manipulations to Livents books. Messina testified that Craib called her late that evening and told her about the fraud and she wrote a memo about the call after consulting with a lawyer. I’m going to suggest to you that Craib banded together with you to create an entire story to put the blame on others,” Greenspan charged. You and Craib decided to put the blame on what was happening in the accounting department on Mr. Gottlieb and Mr. Drabinsky.
As for the notes of the conversation she had with Craib. Greenspan alleged that Messina wrote the memo months later as back up for her concocted story.
That is so nonsensical, sir. It is not correct, Messina replied.
As evidence to support this theory Greenspan cited a flip-flop in Messinas testimony about when she contacted that lawyer. Messina told several investigators that she contacted her lawyer after Craibs late night phone call. However, Messinas calendar shows that the first meeting occurred the day before the Craib call, Greenspan suggested. And at that meeting, Messina made not mention of any ongoing fraud at Livent.
Messina disputed that there was any significant discrepancy in her testimony. She agrees that she did indeed call the lawyer before the Craib call, but that call was over her suspicion that Livent officials were going to continue to allegedly cook the books fears that were confirmed the day after that first meeting. She did not refer to the first meeting in her statements to investigators because the meeting was pretty much a bust. She had intended to disclose the ongoing alleged fraud, but lost her nerve at the last minute when the lawyer told her: Maria Messina a professional chartered accountant and woman of integrity would not let that happen. At that point, she didnt have the heart to disclose to the lawyer that she already had let it happen.
I was humiliated and ashamed and didnt have the guts to tell him I was already associated with the fraud, she told the court.
Greenspan has already disputed that the meeting ever took place and certainly it could not have taken place on April 24th. Former Livent vice president of finance and administration Gordon Eckstein also testified he attended the meeting where alleged accounting manipulations were discussed but could not remember the exact date of the meeting. It couldnt have been on April 24th, Greenspan maintained, since Drabinsky and his girlfriend at the time (or his mistress, as Eckstein testified) were in Washington attending a lunch hosted by then-U.S. President Bill Clinton.
Greenspan has accused Eckstein of being the real mastermind of the fraud and yesterday expanded that to include Messina. After all, Messina did not disclose the fraud to accountants working for KPMG who pored over Livents books during a due diligence examination of the company in the spring of 1998 prior to former Hollywood mogul Michael Ovitz investing in the company, Greenspan said.
“You didn’t go to him and say, ‘Are you nuts?'” Greenspan asked.
“No,” replied Messina.
“You don’t go to him and say, ‘Are you out of your mind? Why didn’t you give us a heads up?'” Greenspan said. “I am going to suggest to you that he would say to you, ‘I don’t know what you are talking about,’ because he didn’t know about the fraud.'”
Thats a complete absurdity, said Messina.
But how to explain all those documents with Drabinsky and Gottliebs handwriting on them showing explicitly the millions of dollars of manipulations to Livents financials? Well, Greenspans got a theory about that too: the notes aren’t really instructions to manipulate the books at all, Greenspan suggested.
For instance, On a draft financial statement for the year-end of 1997, Drabinsky wrote “roll forward” next to entries for Livent’s office expenses and theatre operating expenses. Those notes, the prosecution alleges, are instructions to manipulate those entries. And indeed in the next draft of the financials, entries for more than $4 million in office expenses are slashed, as are expenses of about $775,000 for the Pantages Theatre in Toronto and $870,000 for the Ford Centre in Vancouver. However, in the final version of the financial statements the ones actually presented to investors those numbers are actually higher than in the original draft. Are you suggesting that Garth Drabinsky giving instructions for those expenses to be manipulated and no one is listening to him? Greenspan asked.
Everything changed in the various versions of the financial statements because nothing made sense, Messina replied. She tried to offer to take Greenspan through the entire document and explain each of the manipulations, but Greenspan cut her off.
The case resumes July 7.