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TORONTO (Reuters) - One-time Broadway impresario Garth Drabinsky was convicted of fraud and forgery by a Canadian court on Wednesday, more than a decade after the collapse of high-profile theater producer Livent Inc.
The court found that Drabinsky, who was behind Broadway hits such as "Ragtime" and the revival of "Showboat", and fellow Livent co-founder Myron Gottlieb "systematically manipulated" the books of the Toronto-based company.
"The accounting system was fraudulent. You knew what was happening," Ontario Superior Court Justice Mary Lou Benotto told the two men seated at the front of a packed Toronto courtroom.
In the company's 1990s heyday, "Kiss of the Spider Woman" and other Livent productions were the toast of Broadway, winning more than a dozen Tony awards. Livent also backed the long-running Toronto production of "Phantom of the Opera".
Canadian prosecutors alleged that the two executives directed company accountants to falsify Livent's records to boost its earnings. Drabinsky and Gottlieb were also charged with fraud in the United States in 1999.
The judge said in an 85-page written verdict that she was "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."
"The actions of Mr. Drabinsky and Mr. Gottlieb satisfy all three of the ways a prohibited act can be conducted: they were deceitful, they perpetrated a falsehood and reasonable people would consider them dishonest," the verdict said.
The scheme was discovered in 1998, shortly after U.S. investors, including Hollywood mogul Michael Ovitz, took control of the firm. A short time later Livent was bankrupt.
After the verdict was delivered the courtroom was closed to all but family and close friends, many of whom were seen sobbing and visibly shaken as they left the room.
Brian and Edward Greenspan, lawyers for the two men, refused comment after the decision, noting that they would not make a comment until they read the document.
Drabinsky, who was ushered through a crush of media to a waiting car, also refused comment.
"It's been an 11-year struggle, so it takes a few minutes to get a reaction to it," said David Roebuck, a member of Drabinsky's legal team.
The case returns on April 8 when sentencing begins.
Editing by Peter Galloway