Engineer tells court of Livent kickbacks

Mon May 12, 2008 9:44pm EDT
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By Etan Vlessing

TORONTO (Hollywood Reporter) - The first prosecution witness in the Livent fraud trial, independent Toronto engineer Peter Kofman, testified Monday that he took part in a false invoicing scheme hatched by former Broadway impresarios Garth Drabinsky and Myron Gottlieb.

Kofman told Ontario Superior Court Justice Mary Lou Benotto that, starting in 1990, Gottlieb and Drabinsky billed his company, Kofman Engineering Services, for services that were never performed, and that he was then reimbursed for money that he paid out to the Livent duo and later to one of their companies, King Commodity.

Kofman said he never fully understood the alleged kickback scheme, but felt compelled to participate to get back money he was owed for retrofitting or refurbishing theaters.

"I felt like I was completely trapped," Kofman told the court. "I felt completely beholden to cooperate to do what I had to do to support my projects and to feed my people," he added.

The prosecution alleges that the sham invoicing scheme aimed to artificially inflate the asset value of Live Entertainment Canada before it went public in 1993 as Livent Inc.

Drabinsky and Gottlieb are on trial for allegedly bilking Livent investors of hundreds of millions of dollars through massive accounting fraud.

Kofman's evidence is considered key to the prosecution's chronological presentation because it details accounting fraud that dates back to 1990, three years before Livent went public, and which snowballed until Michael Ovitz and his management team acquired the company in 1998.

Reuters/Hollywood Reporter