Entertainment titans Garth Drabinsky and Myron Gottlieb face likely jail time after they were found guilty of cooking the books at Livent between 1993 and 1998.

Drabinsky looked on impassively Wednesday as Ontario Superior Court Justice Mary Lou Benotto found both men guilty on two charges of fraud in excess of $5,000 and a third charge of uttering a forged document.

In a solemn court setting far removed the Cineplex Odeon theaters they ran during the 1980s and the lavish Broadway productions they mounted during the 1990s, Drabinsky and Gottlieb were convicted of deceiving investors with false accounting and financial statements at the live theater company to boost its earnings and share price.

‘I am satisfied beyond a reasonable doubt that Mr. Drabinsky and Mr. Gottlieb initiated the improper accounting system and knew of its continuation throughout the years 1994 to 1998,’ Justice Bennotto said in the strained silence of the packed Toronto courtroom.

‘They were deceitful, they perpetrated a falsehood and reasonable people would consider them dishonest,’ she concluded.

Drabinsky, who recently produced CBC reality series Triple Sensation and biblical-themed movies, was found to have engaged in false invoicing, reducing expenses by shifting costs from one financial quarter to another or from one losing theatrical production to a future show, and inflating ticket sales for theatrical runs.

‘The financial statements were manipulated. The object was to keep income as close to budget as possible. This was done by moving expenses from one period to another, by amortizing rolls, by applying the expenses of one show to another and by allocating operating costs to fixed asset accounts,’ Justice Benotto concluded in her written judgment.

Lawyers for Drabinsky and Gottlieb failed to convince the judge that the duo were too busy producing Broadway plays to manipulate financial statements, a job they alleged was done by senior executives.

Justice Benotto said the Crown’s star witness, Gordon Eckstein, Livent’s former SVP of finance and administration, was an ‘unsavory witness’ and the ‘perfect fall guy.’ But she said Eckstein was truthful when he testified that Drabinsky and Gottlieb directed their team of accountants, led by Eckstein, on how to misrepresent financial statements and annual reports.

Likewise, Justice Benotto believed former CFO Maria Messina when she put Drabinsky at an October 1997 meeting in which two sets of company books, one real and the other manipulated, were placed on the table and discussed.

Justice Benotto painted a picture of the Livent co-founders desperate for new cash to keep their house of cards from collapsing.

‘To keep [cash] coming in, the income had to be misstated. The money came in and the company grew. The income was manipulated in order to keep the money coming in so the next theater could be built, so the next production could be staged,’ the judgment reads.

Drabinsky and Gottlieb are due back in court on April 8 for pre-sentence motions. Each fraud conviction carries a maximum penalty of 10 years in jail, while the maximum sentence for a count of forgery is 14 years.

Drabinsky’s lead lawyer, Eddie Greenspan, said outside the courtroom that his team would need to review the judgment before deciding on a possible appeal.

Drabinsky’s possible jail-time TV viewing may include a second installment of Triple Sensation, which the CBC already has in the can and scheduled for this summer.