Drabinsky and Gottlieb fraud convictions upheld

The Court of Appeal for Ontario has denied the appeals of theatre moguls Garth Drabinsky and Myron Gottlieb of their 2009 fraud convictions.

However, the court reduced the prison sentences for both men by two years.

That means that Drabinsky now faces five years behind bars, while Gottlieb faces a four-year prison term.

Both men were required to spend Monday night behind bars in advance of Tuesday's decision. They will remain in custody unless they elect to appeal to the Supreme Court of Canada.

Drabinsky and Gottlieb, who produced such 1990s theatre hits as Phantom of the Opera, Showboat and Ragtime through their company, Livent Inc., were convicted in March 2009 on two counts of fraud and one count of forgery, but the forgery convictions were subsequently stayed.

Livent sought bankruptcy protection in 1998, a few months after new management took charge of the company and began making allegations of financial irregularities. 

Drabinksy and Gottlieb had argued that Livent accounting staff perpetrated the fraud without their knowledge.

Edward Greenspan, who is Drabinsky's lawyer, said it was too early to determine if they would appeal to the country's top court. 

"We're reviewing the judgment with a view towards determining whether we will ask the Supreme Court of Canada to grant leave to appeal to that court," Greenspan said. "We obviously won't be in a position to make a decision about that until we've had a good opportunity to discuss it with our client, who is now in jail."

In their ruling, the three-judge appeal court panel said the trial judge, Justice Mary Lou Benotto, erred by failing to take into account the absence of any evidence of the actual financial loss caused by the fraud.

"While financial loss is not an essential element of the crime of fraud, it is a significant consideration on sentence. While the absence of proof of actual financial loss could not justify a sentence outside of the substantial penitentiary range, it does justify sentences that are somewhat lower within that range than those imposed by the trial judge," they stated in their ruling.