Efforts by Livent founder Myron Gottlieb to pin the blame for a massive accounting fraud at the company on an elaborate conspiracy by lawyers, accountants and former company employees was dealt a legal blow earlier this week. For the second time, an Ontario court has dismissed a lawsuit filed by Gottlieb accusing a prominent Toronto law firm, accounting company and others of framing him for accounting crimes he claims he did not commit.
A panel of Ontario Court of Appeal judges upheld an earlier dismissal of Gottliebs lawsuit in a brief, but unanimous, oral decision delivered on Monday. It is difficult to see how such a claim could be dealt with prior to the determination of the criminal proceedings, Justice Robert Sharpe wrote on behalf of the three-member panel which also included Justices Robert Blair and Paul Rouleau. It would be impossible to know what, if any, damages the appellant had suffered until he has been acquitted or convicted. .
Gottlieb and Drabinsky have been charged with two counts of fraud and one count of uttering forged documents relating to a massive alleged accounting fraud that occurred at the theatre company. During the lengthy criminal trial that wrapped up earlier this month, Drabinsky and Gottlieb claimed a cabal of lawyers, accountants, former Livent accounting employees and investors framed them. A verdict is expected in the coming months.
In his lawsuit, Gottlieb sought more than $60 million from Stikeman Elliot, the law firm currently representing the now-bankrupt live theatre company; KPMG, the accounting firm that conducted the initial investigation into the alleged accounting fraud; Michael Ovitz, the former Hollywood mogul who bought a controlling stake in the company and eventually forced the two executives out, as well as a handful of former Livent employees who have now testified in the criminal trial. In the suit, Gottlieb claimed that Stikeman “carried out a concerted and planned scheme to manipulate documents and information” to wrongfully demonstrate Gottlieb attended a Livent management meeting in April 1998 where company executives openly discussed plans to manipulate the companys financial results.
Stikeman Elliot called Gottliebs accusations highly implausible, and argued they cant be sued for framing him for a crime before he is actually acquitted of that crime. An Ontario judge agreed and dismissed the suit in November 2007. The court eventually ordered Gottlieb to pay $30,000 in costs to Stikeman. With the dismissal of the case by the Ontario Court of Appeal added another $19,000 in costs to that claim, said Ben Zarnett, the veteran Toronto litigator who represented Stikeman in the case. The judge basically said this was a malicious prosecution case and you cant sue for that unless you are acquitted of those charges, he told Canadian Businessmagazine.
Calls to Gottliebs lawyer in the case, Melvyn Solomon, were not returned.
Claims made by Gottlieb in the civil case were repeated during the recent Livent criminal trial that wrapped up earlier this month. Eddie and Brian Greenspan, the lawyers representing Drabinsky and Gottlieb in the criminal trial, repeatedly accused Stikeman Elliot lawyers of manipulating information, suborning perjury, tampering with evidence and planting incriminating documents in an effort to shore up charges of accounting fraud against their clients.
In one dramatic courtroom confrontation, Brian Greenspan compared a transcript of an interview of former Livent controller Chris Craib conducted by Stikeman Elliot lawyers with an audio recording of the same interview. In the audio recording, Craib tells the lawyers that Gottlieb did not attend a controversial April 1998 management meeting where accounting manipulations were allegedly discussed. The answer was not transcribed leaving the impression that Gottlieb was at the meeting, Greenspan said.
Drabinsky and Gottlieb will return to court on Feb. 2 to hear when Justice Mary Lou Benotto will deliver her verdict in the criminal case.