Rod Barr conceals biggest fraud in Canadian history


In 1968, Mel Brooks wrote and directed the sometimes outrageous film, The Producers.  In this film, which Brooks reprised in a 2001 Broadway musical of the same name, the protagonist, Max Bialystock, created a scheme through which he was able to convince a coterie of unsuspecting individuals to invest in his deliberately ill-fated Broadway ventures. He did so on the strength of his self-styled reputation as the “King of Broadway”. He enlisted the support of his star-struck accountant, the nebbish Leo Blum, whose function was to, among other things, doctor the books of account of the productions. Regrettably for Bialystock and Blum, the play which they first produced—and which they hoped would sputter out on or shortly after opening night—became a resounding success. Their scheme failed miserably, resulting in their prosecution, conviction for fraud and ultimate incarceration.

So is the story of Livent and a cast of characters in 1989 including Garth Drabinsky and his long-time trusted colleague and soon-to-be co-conspirator and fellow inmate, Myron Gottlieb.

The details

Gottlieb and Drabinsky created MyGar in September 1989. Shortly thereafter, MyGar purchased all the assets and assumed certain of the liabilities of the live entertainment division of Cineplex, including the production Phantom of the Opera (“Phantom”) and the Pantages Theatre in downtown Toronto (“Pantages”). The acquisition was initially financed by a $60 million two-year credit facility which Drabinsky and Gottlieb obtained from and guaranteed to the Royal Bank of Canada (“RBC”). In addition, Gottlieb and Drabinsky were “credited” with capital contributions totaling some $7.8 million (presumably financed through their severance package from Cineplex). The entire operation was carried on through LECC, as the nominee corporation for MyGar. All the assets utilized in the Drabinsky-Gottlieb ventures were, as will be described later, “owned” by that corporation, the beneficial ownership of which remained, at least notionally, with Gottlieb and Drabinsky.

The parties readily acknowledge that Livent was rife with fraud, which burrowed deep into the operation, involved senior management and extended well into most, if not all, levels of the accounting staff of the Company. During the trial, I heard that in addition to Drabinsky and Gottlieb, the knowing and willing participants in various aspects of the frauds included Robert Topol (Chief Operating Officer), Maria Messina (former Deloitte partner and Chief Financial Officer), Gord Eckstein (Senior Vice President of Finance), Jerald Banks (Livent’s General Counsel), Dan Brambilla (Director and Executive Vice President), and Bill Connor (Senior Vice President North American Touring).

Through a joint venture development company (“Newco”), the air rights existing above the Pantages Theater and the lands contiguous to the Pantages for purposes of the erection of a condominium-hotel tower and a new theater (collectively referred to as the “Air Rights”). The total consideration for the transfer of the Air Rights was $7.4 million. The letter of intent also contained a put in favor of Dundee, which allowed Dundee to exit the deal, among other reasons, if construction had not commenced by December 31, 1999 (“Put”).

The fraud was everywhere, enter Rod Barr. And I quote from Justice Gans, the conduct of the auditor’s “ left me breathless.”

-         Finally, Rod Barr was asked to perform an independent review of the audit files to ensure compliance with the Deloitte manual, which he did and which was signed off on as at July 15, 1997.

Rod Barr was then forced to retire.

 

Incredibly Rod Barr is hired as president of the Institute of Chartered Accountants who investigate the Livent auditors for negligent conduct. Mr. Barr was not subject to charges even though he signed off on the statements.

The biggest fraud in Canadian history and Rod Barr is rewarded.

85 million judgement by Gans, and the Livent auditors appeal? In fact they claim to stand by their work. While Rod Barr waits in the weeds and collects his salary.

The Ontario Ombudsman or the Attorney General should investigate the hiring of Rod Barr.

 

 

Comments

Post a Comment

Popular posts from this blog

When is a fraud a fraud? The Marshall Sone expulsion

Marshall Bryan Sone: Summary, as Published in CheckMark Marshall Bryan Sone , of North York, was found guilty of a charge under Rule 201.1 of failing to maintain the good reputation of the profession and its ability to serve the public interest, arising out of his criminal conviction for fraud. While a trustee in bankruptcy of monies for the benefit of creditors of the bankruptcy estates administered by him, Mr. Sone, with intent to defraud and in contravention of his trust, converted monies to a use not authorized by the trust, contrary to the Criminal Code. He was fined $15,000 and expelled from the Institute. Mr. Sone’s appeal of the discipline committee’s decision and order was dismissed by the appeal committee. CHARGE(S) LAID re Marshall Bryan Sone The Professional Conduct Committee hereby makes the following charges against Marshall Sone, CA, a member of the Institute: 1 THAT, the said Marshall Sone, on or about May 25, 1998, failed to conduct ...
Read more

CRA investigations result in 53.5 years of jail sentences

Tax fraud and evasion represent the most flagrant instances of non-compliance with tax statutes. During 2012-2013, 71 income tax and GST/HST investigations were referred to the Public Prosecution Service of Canada (PPSC) for prosecution, compared to 120 cases in the previous year. As a result of referrals to the PPSC (current and previous years), 128 cases resulted in convictions for tax evasion or fraud in 2012-2013. The courts imposed $9.95 million in fines and 53.5 years of jail sentences. These convictions related to revenue loss of $32.6 million. The CRA obtained convictions in 96% of cases prosecuted. In addition, the Ministère du Revenu du Québec, acting on our behalf, referred 27 GST investigation cases for prosecution and, based on these and previous year referrals, Quebec courts convicted individuals and businesses in 58 cases, and imposed $3.1 million in fines. Quebec GST convictions related to revenue loss of $4.4 million. Court convictions are publicized in local,...
Read more

Penalty for Tax Evasion in Canada

Penalty for Tax Evasion in Canada Most people file their annual return honestly and only take deductions and credits made available by the Income Tax Act. Unfortunately, some individuals and businesses evade taxes, and there are legal consequences for such actions. Anurag Gupta, a Toronto business and tax lawyer with the law firm of Anurag Gupta Professional Corporation, says that evaders may face criminal penalties including jail time and fines up to "200 percent of the amount" that the offender may have been trying to avoid. Ignoring the Law Tax evasion occurs when an individual or business ignores tax laws to avoid paying taxes. The Canada Revenue Agency explains that evaders may report less income than they actually earn or state that their deduction amounts are higher than allowed. If a person earns income not documented by an employer, such as cash or self-employment income, and does not report that income to the CRA on his return, he is committing tax ev...
Read more