Curtain rises in OSC’s case against disgraced theatre mogul
Securities regulator seeking sanctions against Drabinsky after fraud conviction
Garth Drabinsky has paid his debt to society and shouldn’t be punished again for his role in the Livent Entertainment fraud scandal, his lawyer said Wednesday as Ontario’s securities regulator began opening submissions in its long-running case against the disgraced theatre mogul.
Drabinsky declined to comment on his way into the hearing room at the Ontario Securities Commission (OSC), which launched its regulatory cases against him and two Livent executives in 2001. Those cases were put on hold while criminal charges against the three worked their way through the courts.
“The gentleman that is sitting in this room today is not the gentleman you heard about in the course of those proceedings,” lawyer Richard Shekter told the OSC’s three-member panel.
“He has acknowledged culpability, he feels terrible about what he did and he has made it his life mission to fix it and to contribute to Canadian society.”
Drabinsky, whose fame grew after producing hits such as The Phantom of the Opera and Show Boat, was found guilty of two counts of fraud in 2009 and sentenced to a five-year prison term for his role in a kickback scheme that cost investors an estimated $500 million.
The OSC seeks to bar Drabinsky, 67, from acting as a director or officer of a public company and acting as or becoming a registrant in Ontario.
Pamela Foy, a senior litigation counsel with the OSC, told the hearing that Drabinsky is “not the victim” and that the purpose of the sanctions are to protect investors and capital markets as well as deter others from committing similar crimes.
She said a ban would not impede Drabinsky’s ability to earn a living because he can work as an employee. Drabinsky is already working on a new musical, Sousatzka, which debuts Saturday in Toronto. His lawyer told the panel he will not be attending the afternoon hearings this week because he has to oversee the production’s dress rehearsals.
“Mr. Drabinsky has every right to continue to earn a living in the entertainment industry or otherwise,” Foy said. “He does not, however, have a right to continue to participate in the capital markets.”
But Shekter told the panel such penalties would be “unmitigated overkill” and Drabinsky should be permitted to trade his own investments and run a family company that would help him minimize taxes and prepare estate planning.
“You don’t have to be a genius to understand that what happened to Mr. Drabinsky is more of a deterrent, both personal and general, than anything this panel can impose,” he said.
Shekter plans on calling seven witnesses to testify on Drabinsky’s behalf, including Geoff Beattie, who previously managed private holding company Woodbridge, Richard Stursberg, former head of English language services at the CBC, and former federal Court of Appeal justice Allen Linden.
Two dozen letters from supporters including Onex Corp. founder Gerald Schwartz and Four Seasons founder Isadore Sharp will also be submitted to the panel, Shekter said.
Two other men were also charged and convicted in the Livent scandal.
Gordon Eckstein, who was VP of finance at the theatre production company, pleaded guilty in 2007 to fraud. He was given a conditional sentence of two years less a day, including a year of house arrest.
Myron Gottlieb, who co-founded Livent along with Drabinsky, was convicted of fraud, sentenced to five years in prison and released on parole in 2012.
Eckstein and Gottlieb were later banned from serving as a director or officer of a public company under settlements reached with the OSC.
Livent Entertainment, which produced shows across North America, the United Kingdom and Australia, sought bankruptcy protection in 1998 and was sold off in 2001. The OSC hearing has set aside six days of hearings in Drabinsky’s case.
“Mr. Drabinsky has every right to continue to earn a living . . . He does not, however, have a right to continue to participate in the capital markets.” PAMELA FOY OSC SENIOR LITIGATION COUNSEL