Livent was North America's biggest theatre company — until its founders faked the books

Livent was founded in 1989 by Garth Drabinsky and Myron Gottlieb, the former chairman and vice chairman of Cineplex Odeon. Over a decade, it became the largest live theatre company in North America and the first publicly traded company dedicated to live theatre. Its productions included Phantom of the Opera, Show Boat, Kiss of the Spider Woman, Ragtime, and Fosse — some of the most successful shows in Broadway history.

The success was built on fraud. Between 1993 and 1998, Drabinsky and Gottlieb systematically doctored Livent's financial statements to hide enormous losses. They personally misappropriated $4.6 million in company funds. In August 1998, Livent announced "accounting irregularities" and released revised earnings. The stock price collapsed from Can$10.15 to 50 cents. When the company filed for bankruptcy protection in November 1998, it claimed $334 million in debt.

In 2009, Drabinsky and Gottlieb were found guilty of fraud and forgery in Ontario Superior Court. Drabinsky was sentenced to 7 years, Gottlieb to 6 years. On appeal, Drabinsky's sentence was reduced to 5 years. In 2014, Livent's receiver obtained a judgment of C$84.75 million against Deloitte & Touche for failing to detect the fraud, later reduced to C$40.4 million by the Supreme Court of Canada. Drabinsky was permanently banned from being a director of any public company in Ontario.