“Craib and Messina remain close confidants to this day,” the defence argues. They talk on the phone, attend brunches together – the defence fails to mention that the two admitted to attending a George Michael concert earlier this year.

There is no discussion about the executive summaries that Craib produced. The summaries that clearly laid out that Livent was reporting millions in earnings, while “actually” producing millions in losses.

More than five months after it began, prosecutors in the criminal fraud trial of Garth Drabinsky and Myron
Gottlieb completed questioning of their fourteenth and final witness earlier today.

In an abbreviated session, prosecutors questioned forensic investigator Gary Gill about his efforts to
secure and catalogue the thousands of documents seized from the offices of Drabinsky and Gottlieb in the days after the Livent founders were suspended amid allegations that they had overseen a massive fraud at the company.

Gill, a chartered accountant who flew from his home in Sydney, Australia to testify, told the court that even 10 years later he still remembers finding a damning and controversial document in Drabinsky’s office.

In August 1998, Gill was working as a forensic investigator at KPMG’s investigation unit when he was hired by new Livent managers to investigate allegations of accounting manipulations at the theatre company. On Aug. 11, 1998. Gill, John Beer – a former RCMP officer who also worked at KPMG and testified yesterday – and Patrick O’Kelly, a lawyer hired by Livent, searched the offices of Drabinsky and Gottlieb.

While the three men catalogued and removed hundreds of business files from Drabinsky’s office, Gill says he still remembers finding one specific document: a one page summary of “problem” expenses and other items totaling $21.22 million that had been “moved into 1998.” Gill says he discovered the document in one of two brown leather briefcases that were placed near Drabinsky’s desk.

“This is probably the document that sticks uppermost in my mind,” Gill told the court.

When lead crown prosecutor Robert Hubbard asked why he remembered this document specifically Gill replied that the document seemed particularly important.

“We were dealing with allegations of financial statement manipulation, and as an accountant, this particular
document looked to me as something that may be particularly relevant to the investigation,” Gill said.

Yesterday, defence lawyer Edward Greenpan suggested to Beer that it must have been O’Kelly who discovered the document since O’Kelly was sitting at Drabinsky’s desk right next to the briefcases during office search. Who discovered the document is important to the defence since lawyers have all but accused O’Kelly’s law firm, Stikeman Elliott LLP, of participating in an elaborate conspiracy to frame Drabinsky and
Gottlieb.

The document has been the subject of previous testimony by former Livent accountant Chris Craib. He told the court that he helped his former boss, Gordon Eckstein, create the document and witnessed Drabinsky take it out of his briefcase and wave it at Eckstein during an argument between the two men. Defence lawyers will cross-examine Gill tomorrow and are expected to complete their cross-examination of Beer by the end of the week. Beer’s cross examination was interrupted to accommodate Gill’s who needs to return to Australia by Friday.

So far, defence lawyers have given no indication whether they intend to call Drabinsky or Gottlieb to testify on their own behalf or if they will call any witnesses at all.

The trial continues tomorrow.

Peter Kofman, the president of Kofman Engineering, testified way back in May about a bogus invoicing scheme that saw the Livent founders charge Kofman and Execway Group Inc. – another Livent supplier – millions of dollars for work that was never performed. Kofman and Execway then billed Livent for the exact same amounts to recoup the payments. The scheme, prosecutors allege, was a means to circumvent restrictions imposed by their bankers on the amount of money the partners could take out of the start-up business. Today, Roy Wayment, the retired founder of Execway described his participation in the scheme, adding some more interesting details.

Wayment described a phone call he received in 1992 from Gottlieb in which he told him that he felt Drabinsky and Gottlieb deserved a “finders fee” as payment for the volume of work he was assigning to Execway. Wayment, who had built theatres for Cineplex Odeon when the pair were at the movie theatre company, told the court that Livent’s predecessor company – Live Entertainment of Canada Corp. (LECC) – accounted for about 40 per cent of his company’s work at the time.

“Myron felt that because of the amount of work that he and Garth had endorsed for Execway, to do that they were entitled to a finder’s fee,” Wayment said. “That’s basically how the conversation started.”

Wayment said he was surprised by the conversation and told Gottlieb that he felt that he was entitled to his own cash bonus based on the amount of work Execway was doing above and beyond construction.

In the end, Wayment and Gottlieb agreed to pay each other bonuses for the exact same amount, Wayment said. Over a three-month period Wayment said he wrote three cheques to King Commodities – a private company controlled by Gottlieb and Drabinsky. The first two cheques amounted to $53,500 and the third was for $74,900, totalling $181,900—$170,000 plus GST. Wayment then received matching cheques from LECC, he told the court.

“The procedure for the payments was Myron’s chauffeur would take a cheque to my office and my office would give the chauffeur a cheque of equal amount made out to King Commodities,” Wayment told the court.

Prior to the arrangement with King Commodities, Execway also paid Drabinsky and Gottlieb $147,125 in 1991, prosecutors alleged. However, Wayment could not remember the details of that alleged transaction, he told the court. Wayment’s memory of the nearly 20-year-old transaction was not refreshed when crown prosecutor Alex Hrybinsky presented Wayment with cheques and invoices from the Livent founders demanding payment for solicitations that have “assisted you with business development,” and a corresponding invoice from Execway for the exact same amount. The Execway invoice purported to be for work on the Pantages Theatre and North York Centre for the Performing Arts.

Kofman described similar payments during the same period and testified that Drabinsky and Gottlieb never solicited any business on his behalf. Earlier witnesses have testified that Drabinsky and Gottlieb collected $8.1 million through the bogus invoice scheme. At least $6.8 million in LECC payments to Kofman and Execway were then booked to the company’s balance sheet, making the company appear more valuable than it actually was when the company went public in 1993, prosecutors allege.

Wayment also testified about his participation in a ticket-purchasing scheme in 1997 to boost the sagging box office of Livent’s performance of Ragtime in Los Angeles. After visiting another Livent Executive, Wayment said Gordon Eckstein, Livent’s former senior vice president of finance and administration, called him into his office and asked him to buy tickets to the L.A. show.

“It was an accommodation,” Wayment said. “I didn’t think there was anything wrong with what he was asking for.”

There was nothing unusual about the request, Wayment told the court. During his time doing work at Cineplex, he noted that many free tickets were given away – even when the theatres were full. Hrybinsky asked Wayment if he had ever been asked to purchase Livent tickets before.

“No, I had been given lots of comp tickets before, but I hadn’t purchased tickets on behalf of Livent before,” Wayment replied.

Kofman also testified to participating in the ticketing scheme where prosecutors allege the suppliers eventually bought US$1.2 million in tickets to Ragtime, Los Angeles. Just as in the earlier transactions with King Commodities, many of the purchases by Kofman were reimbursed using false invoices that purported to be for work on the company’s theatre projects in New York and Los Angeles. Prosecutors allege that as much as $432,000 in those false invoices were buried in Livent’s fixed assets, once again inflating the value of the company.

Defence lawyers had very few questions for Wayment. Brian Greenspan, the lawyer representing Gottlieb, did not ask any questions about either the King Commodity or the ticket purchasing scheme. The only questions he asked were about statements he gave to the Ontario Securities Commission and the RCMP in 1998 and 1999. In both interviews, Wayment told regulators and investigators that he had told Gottlieb he was going to be interviewed regarding the alleged schemes. Gottlieb allegedly told Wayment: “Just tell the truth.”

There was bad news for Chris Craib, the former Livent controller who came close to breaking down on the witness stand as a result of nearly two-weeks of gruelling interrogation at the hands of the Eddie and Brian Greenspan. Defence lawyers had requested that Craib remain under subpoena until today pending a possible defence motion. Today, they filed that motion and Craib will be required to remain under subpoena for the next month.

In the motion, defence lawyers requested access to the original copy of notes Craib says he made during the now infamous April 24, 1998 management meeting where Drabinsky allegedly openly discussed manipulating the company’s first quarter financial results. The three-page document will be handed over to noted forensic document examiner Brian Lindblom who has permission to conduct “non-destructive” tests on the notes.

The trial now adjourns until Tuesday Oct. 21 when it will hear from the final prosecution witnesses. Both witnesses are investigators from the accounting firm of KPMG who were involved in the original seizure of documents from Livent’s offices in 1998. Their testimony is expected to take no more than four days in total.

But before the court could hear lightning-fast testimony from former Echo Advertising and Marketing Inc. executives Robin Pullen and Len Gill, defence lawyers had to take one last kick at the can with Chris Craib, the former Livent controller, who spent the last two weeks on the witness stand.

And Edward Greenspan, the defence lawyer representing Drabinsky, didn’t miss the opportunity to introduce another theory about that now notorious April 24, 1998 executive meeting where Craib says Drabinsky discussed plans to manipulate the company’s financial results.

Greenspan wrapped up his cross-examination on Tuesday, but was allowed to re-examine Craib on the issue of the notes Craib  said he took at that meeting. Prosecutors only had photocopies of the notes and had to scramble last week to locate the originals that were finally discovered in the files of the U.S. Department of Justice.

Craib testified that he did not even remember having the notes until sometime after being interviewed by Livent lawyers and the U.S. Securities and Exchange Commission. Craib said he could not remember when or even where he had found the notes, which gave Greenspan the opportunity to present the court with his own theory about the notes.

Greenspan suggested to Craib that sometime between his interview with the SEC and the Department of Justice, Craib found a set of notes from a meeting held on April 23 with Gord Ecsktein, Livent’s former vice president of finance and administration, in which directions for accounting manipulations were actually given. He then added the initials “Per GHD/GE” at the top of the notes to make it appear that they were from a meeting between Drabinsky and Eckstein on April 24.

“You presented to the Department of Justice the April 23 notes masquerading as April 24 notes supported by your testimony of a 2 p.m. April 24 meeting that you know is false,” Greenspan said.

“No,” Craib replied.

Craib looked exhausted and beaten as he left the stand after more than six days under intense cross-examination from both Eddie and Brian Greenspan (Brian Greenspan is representing co-defendant Gottlieb.)

And it may not be over for him yet.

Before he could leave the witness stand Eddie Greenspan asked Madam Justice Mary Lou Benotto to keep Craib under court subpoena until the end of next week pending a possible application the defence lawyer may make next week. He would not tell the court the subject of his application.

The experience of Craib and the two Echo Advertising executives who testified next was a study in contrasts. While Craib’s time on the stand was long and brutal, the testimony of Pullen and Gill was short and sweet. Combined, both men spent just over an hour on the stand – and that includes cross-examination.

Pullen, Echo’s former vice-president of administration, testified that for three years running, Livent asked him to cancel advertising invoices issued at the end December and re-issue those invoices in January in the new calendar year.

Eckstein first approached him with the request in late 1994, Pullen told the court. Former Livent controller Grant Malcolm later faxed him a list of invoices to be cancelled and re-issued.

Prosecutor Amanda Rubaszek took Pullen through copies of the invoices that were cancelled in 1994. One batch of invoices, for more than $172,000, covered radio and newspaper advertising in U.S. cities like Cleveland, Detroit, Rochester, N.Y., and Buffalo, N.Y., promoting Show Boat in Toronto.

Other documents displayed in court showed that Echo was asked to cancel and re-issue invoices worth more than $1 million in 1994, and nearly $2.5 million in 1995. By 1995 Livent was not even waiting for the invoices to be issued and was asking Echo to defer billings until at least January, Pullen told the court.

Pullen also testified that he responded to requests from Livent’s auditors to provide billing information. However, the totals Echo provided did not include the invoices that had been moved from the previous years, Pullen told the court. The move was part of a scheme to mislead auditors, Malcolm told the court earlier in the trial.

In a brief cross-examination Greenspan pointed to a handwritten notation on one of those confirmation requests that suggested the auditors had noted the discrepancy. The note, which was not signed, said that the amount was not included the auditor’s reconciliation since the “supplier has sent an amended statement with significantly different amounts per this confirmation.”

The testimony of Pullen’s old boss Gill was even shorter. Gill testified that Livent was a significant Echo client and that he attended “three out of four,” of Livent’s weekly three-hour advertising meetings held at Livent’s office and chaired by Drabinsky. Through that business relationship, Gill developed a friendship with Drabinsky, he told the court.

Gill approved Livent’s request to push invoices into a future period after he received assurances from either Gottlieb or former Livent chief operating officer Robert Topol that Livent would adhere to its contractual agreement to pay its bills within 60 days. “The reason I approved it was because they said it wouldn’t affect our cash flow,” Gill said.

Aside for changing date the invoices were issued, Livent executives never asked him to change the “content or the context” of the invoices, Gill said. “We would not have, and could not have done that. Our system would not allow it,” he told the court.

As time went on, Livent did have difficulty paying its weekly advertising bills, Gill said. On several occasions Gill had to negotiate payment plans with Gottlieb. But in the end, Livent always paid its bills and when it was late, Echo would charge the theatre company interest or other penalties, he said.

Gill told Brian Greenspan that Livent’s request to push its advertising invoices into a different period was not a surprising request. In an RCMP interview in 2001, Gill told police that it was a common practice. “We accommodate clients like this all the time,” Gill said in the transcript.

Despite the abbreviated and almost friendly cross-examination, Gill’s testimony may still cause some trouble at Gottlieb’s next family dinner. Greenspan asked Gill about the time in 1994 when he asked Gill to give his daughter a job. Gottlieb offered to pay half her salary in order to give her something to do before she started her studies at a design school, Greenspan said. “Actually, Myron paid the complete amount of his daughter’s salary, not just half,” he said.

David Roebuck, a lawyer representing Drabinsky, handled what is certainly the shortest cross-examination at the trial. He asked if Drabinsky asked people’s opinions at the meetings. He did, said Gill.

“And you found the meetings stimulating from a creative point of view?” Roebuck asked.

“Sometimes yes, and sometimes no,” Gill replied.

“And you enjoyed being there?” Roebuck continued.

“Sometimes yes, and sometimes no. I wouldn’t have kept going if I didn’t,” Gill said.

The trial resumes next Monday with testimony from Paul Coort, a forensic accountant who works with the RCMP.

Lawyers speculated that Craib could have been caught in transit delays that snared subway passengers in Toronto earlier this morning. But when he didn’t show up by 11:30, there was talk about dispatching a police cruiser to his home to see if he was all right.

An apologetic Craib finally arrived after lunch. He explained that yesterday, he had been confused about the start time for court today after lawyers had suggested moving times to accommodate a medical appointment for one of the prosecutors. That idea was quickly shelved and the judge clearly explained to Craib that the trial would start on time before court disbanded. But it was a direction apparently lost on Craib.

The judge was not pleased and scolded Craib: “Leaving aside the issue as to whether there was scope for misunderstanding, the financial, emotional and other costs of the trial are enormous,”said Madam Justice Mary Lou Benotto. “The size of this courtroom is enormous and we are not able to do anything without your attendance.”

Ironically, Craib’s confusion over start times has been a major focus for defence lawyers. A good part of their cross-examination has been spent grilling Craib about the exact start time of the now infamous April 24, 1998 executive meeting where Craib says he say Drabinsky and Gordon Eckstein, Livent’s former vice-president of finance and administration, openly discussed plans to manipulate the company’s first quarter financial statements.

Craib says the meeting started at 2 p.m. But that’s impossible since, at the time, Drabinsky was flying back from Washington and did not get back into Livent’s office until much later in the afternoon. Craib says he was merely confused about the time, but defence lawyers insist that Craib concocted the meeting as part of a plan he cooked up with his Maria Messina, Livent’s former chief financial officer, to frame Drabinsky and Gottlieb.

As a result of Craib’s tardiness, there was very little time to actually question Craib today. But Brian Greenspan, the defence lawyer representing Gottlieb, still found time to grill Craib about those discrepancies between the audiotape of his interview with Stikeman Elliot lawyers and a transcript of that interview that Greenspan highlighted yesterday; the indemnity agreement he signed with Livent in which he agreed to cooperate with their investigation in return for immunity from prosecution or civil action and an incident where he consulted a lawyer in an attempt to stop Eckstein from harassing him at work.

Before going to the lawyer, Craib and Messina met with Gottlieb to see if he could intercede on his behalf. Greenspan asked Craib why he would turn to the man he believes was responsible for accounting fraud at Livent for help in dealing with Eckstein.

“Let me get this straight,” Greenspan said. “You are cowering in a corner, fearful of all the terrible things that are going to befall you and you go to one of the evil-doers for wise counsel and you go to a lawyer for advice on Gordon Eckstein.”

“Yes,” replied Craib.

Prosecutor Alex Hrybinsky returned to that quote later during his brief re-examination of the witness and asked him if “cowering in the corner” was an accurate depiction of his time at Livent. Craib said it was not. And then, after six days on the witness stand and five days under intense cross-examination, he began to break down.

“There was always this undertow in your life and you just….” Craib’s voice trailed off and he began to choke back tears. “At various stages you have some fortitude and you tried to do something to address it. But ultimately you failed.”

But Craib’s time on the witness stand is still not over. A problem arose last week when prosecutors could not locate the original version of notes Craib says he took during that April 24 meeting. Searches by Stikeman and Craib’s lawyers were unsuccessful. However, the document was finally found in the files of the U.S. Justice Department. The document was actually delivered to the courtroom by Federal Express yesterday and opened in the presence of both prosecutors and defence lawyers.

But with the original document now in evidence, Eddie Greenspan has asked for the chance to ask Craib questions about that document. As a result, Craib will return to the witness box tomorrow morning.

That conspiracy theory took a not entirely unexpected twist earlier today as Brian Greenspan, the defence lawyer representing Gottlieb, accused Livent’s lawyers at Toronto-based law firm Stikeman Elliot LLP of altering evidence to prop up its claims against the Livent founders. And Greenspan has the tapes to prove it.

Transcripts of an extensive interview with Chris Craib about that now-infamous April meeting have been altered to eliminate Craib’s assertion that Gottlieb was not at the meeting, Greenspan told the court. Greenspan played audiotape excerpts of Craib’s interview with Robert Webster, Livent’s executive vice-president, and Stikeman lawyers Patrick O’Kelly and Peter Howard. In the tape, Craib is asked if Gottlieb attended the meeting and he clearly replies: “Myron was not at the meeting.”

But that is not in the interview transcript, Greenspan pointed out. “There are 2,000 questions asked to you and the other members of the finance department but that is the only Q&A not transcribed,” Greenspan said.

Greenspan played another taped excerpt from the interview where Craib is asked about the “Friday-night meeting.” Craib corrects the interviewers and says he believes they are referring to the Friday afternoon meeting with “Garth and Gord.” But in the transcript, “Gord” has not been included, leaving the impression that it was not a meeting limited to two participants, and opening the door to the idea that Gotlieb could have also been in attendance, Greenspan suggested.

“Two times they are trying to put Myron at a meeting that he was not at,” Greenspan said.

“I have no knowledge of this,” Craib replied.

“No knowledge of this? You are part of it. Part of the effort to frame Mr. Gottlieb,” Greenspan shot back.

Greenspan cited a third – and more troubling – example when comparing Craib’s transcript of his interview with Stikeman Elliot with an affidavit filed by Webster in Livent’s lawsuit against Drabinsky and Gottlieb. In the transcript, Craib says that when Drabinsky and Gottlieb began discussing plans to manipulate the company’s first quarter financial statements: “I wasn’t taking notes, I wasn’t doing anything.” However in Webster’s affidavit that phrase is transformed into “I was taking notes.”

“The Webster affidavit is a lie,” Greenspan said.

“I can’t speak to that,” said Craib.

“Stikeman Elliot has changed your evidence. Did they have your permission to change your evidence?” Greenspan asked.

“No. I don’t have any part of this,” Craib replied.

As I said earlier, the allegations are not altogether surprising. Gottlieb originally made them in a $50-million civil suit that named a group of prominent Stikeman lawyers, Michael Ovitz, the accounting firms of Deloitte & Touche and KPMG as well as Craib and Maria Messina, Livent’s former chief financial officer as defendants. In the 2006 lawsuit, Gottlieb accused Stikeman and others of carrying out “a concerted and planned scheme to manipulate documents and information” in an attempt to show that he attended that April 1998 meeting.

In their statement of defence, Stikeman called Gottlieb’s assertions “highly implausible.” They did not address how the errors appeared in either the transcript or the affidavit but argued that the suit should be dismissed since it is impossible to argue that you are the innocent victim of a conspiracy that led to criminal charges until a court finds you not guilty of those charges. A judge agreed and dismissed the suit late last year.

That’s not the only discrepancy between the transcript of Craib’s interview with Webster and the Stikeman lawyers and other evidence regarding that April 24 meeting, Greenspan said. In handwritten notes Messina made about her phone conversation with Craib following the meeting she notes a number of alleged accounting manipulations that were discussed.

One of the manipulations allegedly involved adding $1 million to Livent’s foreign exchange accounts. However, Craib said in his interview that April 24 was too early to be discussing foreign exchange accounts, Greenspan pointed out.

“What you say is a total contradiction with the telephone conversation you had with Maria Messina on April 24,” Greenspan said.

“It’s very complicated, but I did say this in my transcript,” Craib replied.

“It’s very complicated because the notes of April 24 are a complete fiction,” Greenspan fired back. “There were no notes. She was taking notes of a meeting you did not attend.”

Greenspan continued to insist that Craib fabricated his testimony about attending the April 24, 1998 financial manipulation meeting with Drabinsky and Eckstein. After all, why would Craib not correct Messina’s mistaken impression that Gottlieb attended the meeting? Craib previously testified that on May 4, 1998, Messina came into his office, trembling and in obvious physical distress and asked him to type a memo from her handwritten notes where she pleaded with Drabinsky and Gottlieb to “reconsider” their plan to manipulate the company’s financial results.

“First I’m with a woman who is trembling and crying,” Craib replied. ”I’m confused as well and I assumed she talked with Myron because in the first sentence there is a reference to that.”

“So you let her send something that was wrong,” Greenspan replied.

“Mr. Gottlieb was not at the meeting, correct,” Craib said.

The irony is that the first quarter of 1998 was the last quarter that prosecutors allege there was even an attempt to manipulate Livent’s financial statements. And ultimately, Drabinsky never went through with most of the alleged manipulations that were discussed at the meeting. Instead, Ovitz insisted the Livent managers take a $27.5 million write down as part of his deal to buy a controlling stake in the company. The deal was announced shortly after that April 24 meeting.

Afterwards, Gottlieb tried to reassure Messina about new management learning about the alleged manipulations and told her that Drabinsky and Gottlieb would be in charge of the company’s financials for some time after the takeover. Gottlieb allegedly told her that the “second quarter will still be ours,” Messina said. However, in her testimony at the trial, Messina said that she misspoke and said Gottlieb was referring the first quarter.

Messina corrected her story because it was a ridiculous assertion that had been concocted by Craib and Messina to implicate Gottlieb, Greenspan said. “I suggest to you that it was a story that you and Maria Messina were cooking up to cover the wrongdoing you were involved in,” Greenspan said.

“No sir,” Craib said.

And not just any lie, but a carefully crafted pack of lies concocted with Maria Messina, Livent’s former chief financial officer, in an effort to frame Drabinsky and co-defendant Myron Gottlieb, for the alleged massive fraud that ultimately destroyed the theatre company.

For four days, Greenspan peppered Craib with a series of blistering questions about his account of a key April 24, 1998 meeting where the chartered accountant says he witnessed Drabinsky and Gordon Eckstein, Livent’s former vice-president of finance and administration, allegedly openly discussing a plan to manipulate the company’s first quarter financial results. It’s a meeting that Greenspan insists never occurred.

Craib originally told investigators and regulators that the meeting occurred at 2 p.m. But Greenspan contends that Drabinsky could not have attended a meeting at that time since he was in Washington attending a lunch with then-U.S. president Bill Clinton.

On Dec. 19, 2001, Craib sent an e-mail to Messina asking if she had access to any information that would support his testimony that Drabinsky had attended the 2 p.m. meeting. In the e-mail, which Greenspan read aloud in court, Craib asks if there are corporate records showing when Livent’s corporate jet landed; when Drabinsky cleared Canadian customs; or the driving records for [Ian] Sheppard, Drabinsky’s personal chauffer; or receipts from the Highway 407 Express Toll Road. The message shows that Craib was trying to ascertain whether other evidence would contradict his story about the 2 p.m. meeting, Greenspan said.

“I’m going to suggest to you that this e-mail shows one thing: that you were working with Ms. Messina to find out if you will be trapped by objective evidence if you stick with your April 24 story,” Greenspan said. “Isn’t that what this is about?”

“No,” Craib replied.

Craib said he did not recall writing the e-mail, nor did he remember what Messina responded. He wrote the e-mail around the time he was being questioned as part of a civil lawsuit launched by Drabinsky and Gottlieb. Lawyers for the founders had pressed him for details on his recollection of the timing of the meeting.

“You’re asking for evidence to support your story,” Greenspan said.

“I’m asking if I had the time right or wrong,” Craib replied.

Craib insists that he did in fact attend that fateful meeting with Drabinsky and Eckstein, although he concedes that his estimate of the time the meeting started was wrong.

“You have become concerned because you have been caught in a web of your own lies,” Greenspan said.

Flight records of Livent’s corporate jet show Drabinsky left Toronto to fly to Washington at 10:57 a.m. The flight returned at 3:30 p.m. and received telephone clearance from Canadian customs at 3:35 p.m. Drabinsky exited the plane shortly thereafter and left the airport in his limo sometime between 3:45 and 3:50. As a result, Drabinsky would not have been in the Livent’s downtown Toronto offices until at least 4:45 p.m., Greenspan said.

Those records, which prosecutors are not disputing, flies in the face of Craib’s previous testimony about the timing of the meeting, Greenspan said.

“I’m going to suggest to you that makes you a liar about the meeting with Garth Drabinsky,” Greenspan said.

“Or my recollection is confused as to the events,” Craib replied.

“When, when did you have this meeting? At midnight?” Greenspan shot back.

“No, the meeting was not in the dark,” he replied.

“I’m going to suggest to you that the only person who is in the dark is you,” Greenspan shot back.

Tomorrow Craib will face questions from Brian Greenspan, the lawyer representing Myron Gottlieb.

This is no ordinary reflex reaction when a defence lawyer insists that a witness with incriminating testimony must be lying. Rather, Greenspan is employing a risky strategy that – if it works – could convince the judge that Drabinsky and Gottlieb are the victims of a complex and diabolical conspiracy that would make Machiavelli or Iago look like bit players in an episode of Gossip Girl. But the strategy also runs the risk of making the judge shake her head in disbelief.

Craib has previously testified that he attended a meeting on April 24, 1998 where Drabinsky and Gordon Eckstein, Livent’s former vice-president of finance and administration, openly discussed how to allegedly manipulate the company’s financial results. Craib even took notes at the meeting.

But Greenspan has another theory that he laid out early in his cross-examination: there never was any meeting. Concerned that new Livent managers would inevitably discover the alleged rampant fraud at Livent, Craib and Maria Messina, Livent’s former chief financial officer, decided to make up the story about the meeting and falsely implicated Drabinsky and Gottlieb in order to save their jobs.

It’s a bold move. And may be a tough sell to the judge overseeing the case. After all, Messina testified that after the meeting she consulted a lawyer and wrote a memo that was presented in court. And while the memo never explicitly mentioned fraud, Messina testified that she confronted Drabinsky and Gottlieb about the alleged plan to manipulate the company’s firs quarter 1998 financials and threatened not to support those manipulated financial results to the company’s auditors or board of directors. So far, there has been no evidence presented at the trial to suggest that when Messina took her stand either Drabinsky or Gottlieb asked her: “Meeting? What meeting? What are you talking about?”

However, if the judge buys Greenspan’s theory then it effectively taints the only three prosecution witnesses who claim to have witnessed Drabinsky and Gottlieb personally direct the alleged fraud that ultimately destroyed the once successful theatre company. After all, if Craib and Messina conspired to create the false story, then neither one of them can be believed. And neither can Gordon Eckstein, since he testified he was at this “fictitious” meeting as well.

Just the fact that Craib was allowed to take part in the meeting makes no sense, argued Greenspan. “Not only does Garth Drabinsky allow you to witness the fraud, but he allows you to take notes,” Greenspan said. “You attended no such meeting at 2 p.m. on April 24th or at any other time.”

“It doesn’t make sense that Garth Drabinsky would want you at this meeting, does that make sense to you?” Greenspan asked.

“I don’t know,” Craib replied.

“You have no function at this meeting,” Greenspan continued.

“Incorrect,” Craib said.

“Oh, you had a function? You spoke a lot at this meeting?” Greenspan asked.

“No. I did speak. There were questions about the actual results,” Craib said.

“I’m going to suggest this is a complete fiction,” Greenspan retorted.

But Craib has another explanation as to why Eckstein brought him to the meeting. According to a transcript of his RCMP interview conducted in Nov. 1998 and displayed in court earlier today, Craib told the police: “Gord said: ‘I’m not doing this alone, you’re going down with me. I’m not gong to take the fall for these guys.’”

Craib did participate in a meeting in which fraud was discussed, Greenspan suggested. But that meeting occurred the previous day on April 23 and was with Gordon Eckstein and other junior Livent accounting staff. “You made no notes on April 24th at this made-up meeting,” Greenspan said. “Rather, you participated in a meeting with Gord Eckstein on April 23rd … I suggest that’s the truth, and that your story about April 24th is a fabrication from top to bottom.”

“No,” Craib replied.

To back up his accusation, Greenspan pointed to Craib’s notes that have been incorrectly dated Friday April 23. The “Friday” was added at a later date to back up Craib’s false testimony, Greenspan said. A copy of the note was displayed on the large flat-screen monitors at the front of the courtroom, but there appeared to be no inconsistency in the written date.

If the notes are actually from the April 24 meeting, Greenspan asked Craib to produce his notes from the April 23 meeting.

“I don’t know what happened to the notes of April 23rd,” Craib replied.

“But you said you took them. What did you do with them?” Greenspan asked.

“I don’t know what happened to notes of the 23rd,” Craib said.

The incorrect date is not the only problem with the notes, Greenspan insisted. Craib told lawyers representing new Livent managers in Aug. 1998 that he did not keep any notes of the meeting. Craib told an incredulous Greenspan that he forgot he had taken the notes and only remembered after finding them sometime later in his office.

“You would have told them if you had notes,” Greenspan said.

“If I had remembered I would have told them,” Craib replied.

“I’m going to suggest to you that the last thing you do with those notes is leave them in your office,” Greenspan said. “They are evidence, proof that Garth Drabinsky directed a fraud.”

“I did not have that type of foresight that I needed to collect evidence that minute,” Craib said.

“This was a smoking gun,” Greenspan said.

“I don’t recall thinking anything like that,” Craib replied.

And there is another problem with those notes. Many of the alleged manipulations on the notes had already been implemented hours before the meeting between Drabinsky and Eckstein took place. For instance, a notation to adjust the amount of interest Livent was paying was reduced on the company’s general ledger sometime between 12:19 p.m. on April 23, when the first executive summary of the company’s quarterly results was produced, and 1:17 a.m. on April 24 when a copy of the company’s general ledger was printed out.

“Eckstein directed an arbitrary reduction in interest expenses that are actually executed at 1:17 a.m. – hours before any meeting with Garth Drabinsky,” Greenspan said.

“I don’t know why this adjustment was made,” Craib replied.

“By April 24 it’s too late for you to be witnessing Garth Drabinsky directing these charges because it’s already been done,” Greenspan added.

“I disagree with that,” Craib said.

Also, advertising rebates were improved by about $250,000 during the same period. That number that seems to correspond with a notation for Eckstein to allegedly manipulate those accounts by about US$150,000, Greenspan suggested.

“The paper trail I read to you is airtight. I want you to understand that and I want you to explain,” Greenspan insisted.

But Craib did have an explanation. The executive summary used in the meeting with Drabinsky and Eckstein was printed at 4:04 p.m. on April 23 and did not reflect the most recent changes to the company’s general ledger.

There is another possible explanation. After more than seven years with Livent, did Eckstein make the initial adjustments to the company’s books and then present them to Drabinsky as merely possibilities that could be implemented upon his approval? That would fly in the face of Eckstein’s testimony that he never implemented any manipulations without the explicit direction from Drabinsky or Gottlieb. But then again, as the defence insists, Eckstein is an irrational liar.

During the April 24 meeting, Drabinsky allegedly said that he wanted $20 million in manipulations that would erase Livent’s actual $18 million loss for the period and produce a modest $2 million in profit, Craib has said in previous testimony.

The most disturbing manipulation allegedly proposed was a suggestion from Eckstein to move money from deferred revenue into the company’s first quarter – a clearly fraudulent manoeuvre. However, that manipulation is not reflected in Craib’s notes.

“Where is it?” Greenspan asked.

“It was the last item discussed,” Craib said.

“I don’t care if it was the last item discussed, the meeting was still going on. Why isn’t it in the notes?” Greenspan asked.

“Because I just froze when I heard that,” Craib replied.

“What, like a popsicle? What are you talking about? Like a statue?” Greenspan retorted.

“I didn’t write it down because I knew it was clear fraud,” Craib said.

“According to you it was all fraud, you should have been an icicle,” Greenspan replied. “Arbitrary, arbitrary, arbitrary. You must have been freezing.”

Over the past 10 years Craib has given very detailed accounts both of the events leading up to and following that all-important meeting. For instance, he had to skip lunch waiting for the meeting to begin. He told investigators with the U.S. Securities and Exchange Committee, the Institute of Chartered Accountants, the RCMP as well as lawyers working for Livent’s new owners that the meeting began sometime after 2 p.m.

When the meeting was over, he was so disturbed by what he had witnessed he walked around the Yorkville shopping district before he had to rent a car to pick up friends at the airport who were arriving from South Africa. He had to return to the office around 5 p.m. when he realized he had left his house keys in his office. When he arrived, Eckstein phoned him and asked him to bring a document to his office where he say Livent controllers Diane Winkfein and Grant Malcolm were arriving for a meeting. There’s just one problem… it couldn’t have happened that way.

Or at least the meeting could not have occurred at 2 p.m. Drabinsky wasn’t in the office; heck, he wasn’t even in the country at 2 p.m., Greenspan insisted. Drabinsky was in Washington attending a Ragtime-themed lunch celebrating the 150th anniversary of the Democratic National Convention at the time, Greenspan said.

Greenspan even has a photo of Drabinsky and his then-girlfriend standing next to Bill Clinton.

“The photographer remembers taking a picture of the President with the producer of Ragtime,” Greenspan said. “Garth Drabinsky is not back in the office until roughly 5:00 – if that.”

“I cannot prove the time, I have no day timer,” Craib replied.

“All of a sudden you are being challenged with what you’ve been getting away with for a long time,” Greenspan said. “This is the first time you realize that your story can’t hold together.”

“Or I have the wrong time,” Craib said.

“If you pinpoint the meeting at 2 o’clock then you are a liar,” Greenspan said.

“I’m not a liar. I can be wrong,” Craib replied.

“People who are wrong can be liars,” Greenspan retorted.

Greenspan continues his cross-examination of Craib on Monday.

In cross-examination yesterday, Greenspan accused Craib of lying to the U.S. Securities and Exchange Commission (SEC) and conspiring with Maria Messina, Livent’s former chief financial officer, to invent testimony that would reduce her responsibility for the alleged fraud at Livent. Again and again Craib denied discussing Messina’s testimony (which occurred 10 years ago to the day) with her before he was interviewed by U.S. regulators, repeating over and over that he could not recall any specific conversations with Messina about what she told the SEC.

But today, Greenspan confronted Craib with his own words from a transcript of his interview with SEC investigators in which he admitted to speaking with Messina – albeit briefly – about her testimony.

“Is that true,” Greenspan asked.

“Yes,” Craib replied.

“Because if it’s true you spent an awful lot of time lying yesterday,” Greenspan said. “If it’s true then what you said yesterday was a pack of lies.”

“I always testify to my memory and I always testify truthfully,” Craib responded.

According to the SEC transcript, Craib called Messina the day before his SEC testimony to ask her about the first time they both knew about the alleged financial manipulations at Livent. Neither Craib, nor Messina, could remember the exact date and had been trying to reconstruct their memory by examining company documents. They both felt that they learned about the irregularities in Nov. 1997, but that date was contradicted by an Aug. 1, 1997 “executive financial summary” that Craib produced that clearly showed the alleged financial manipulations, he said.

Craib gave the August document to the SEC, but continued to maintain that he felt he did not learn about the irregularities until November. That November date is important because it is also the date Messina told the SEC she learned about the irregularities. It is also after an important US$125 million bond issue Livent sold to investors. Had the SEC suspected Messina knew about the alleged fraud prior to that sale of bonds, she could have faced prosecution for her role in the sale, Greenspan insisted.

“I’m going to suggest to you this was pure collusion,” Greenspan said.

“No sir,” Craib responded.

Destroying Craib’s testimony is of vital importance to the defence lawyers. Craib is a key prosecution witness since he was the chartered accountant who produced many of the important “executive summaries” of the company’s quarterly and year-end financials that clearly showed how Livent’s financial results were being allegedly manipulated. Craib also testified that he attended a management meeting in April 1998 where he witnessed Livent founder Garth Drabinsky openly talking about manipulating the company’s financials. Ultimately, both Messina and Craib did tell U.S. regulators and prosecutors they learned about the irregularities earlier than November. As part of a plea-agreement with U.S. prosecutors, Messina did admit to knowing about the alleged fraud prior to that bond offering.

Even with the clear hit against Craib’s credibility, Greenspan couldn’t help but add a twist of sarcasm.

“This makes you a liar,” he said.

“No, it does not make me a liar,” Craib responded.

“Did someone teach you that when you are in difficulty you say ‘I was truthful then and I’m truthful now?’” Greenspan asked.

“No,” Craib replied.

“Did Maria Messina teach you that?” Greenspan asked.

“No.”

“How am I supposed to believe that? Because you say it?”

“Yes,” Craib said.

Craib said that he had no motive to lie, but Greenspan quickly retorted that he was a defendant in a multi-million civil lawsuit filed by Drabinsky and Gottlieb and so had many motives to lie.

“It’s not a motivation,” Craib replied. “What happened, happened and I can only testify to that.”

And that’s not the only time that Craib “lied,” Greenspan insisted.

During his testimony in a civil action brought by Livent against company founders Garth Drabinsky and Myron Gottlieb, Craib told lawyers that he had mentioned the financial irregularities at Livent in June 1998 to Christine Thomlinson, a lawyer he hired to act in an employment action he had considered filing against his boss, Gordon Eckstein. But there is no mention of financial fraud in Thomlinson’s notes and she testified at the Livent preliminary hearing in 2005 that she did not remember Craib mentioning anything about fraud.

“You say under oath that you discussed financial irregularities with Thomlinson,” Greenspan said. “She says she has no idea what you’re talking about. She says all you talked about was leaving Livent. There was never any talk about financial irregularities…nothing about seeing some meeting and witnessing Garth Drabinsky directing some fraud.”

“If that’s her memory, I accept that,” Craib said.

“It’s not in her memory, it’s not in her notes,” Greenspan continued.

“At the end of the meeting I mentioned it, but it was very short,” Craib said. He went on to explain that while he could not recall the exact words he used with the lawyer, he had told her that he witnessed “something bad” at Livent. “I may not have said enough.”

“You embellished…an event that never happened,” Greenspan said.

“I don’t accept I embellished,” Craib said.

Craib told Thomlinson he was worried he might be fired after his boss Gordon Eckstein, Livent’s former senior vice president of finance and administration, began a campaign of harassment against the accountant. Eckstein had complained about Craib’s work, “slandered” him to other Livent executives, and openly speculated about his sexual orientation. And while Craib’s meeting with Thomlinson was less than two months after he says he witnessed Drabinsky openly discussing manipulating Livent’s financial results, he told the lawyer that – aside from Eckstein – he enjoyed working at Livent.

“Take Gord [Eckstein] out of it and you liked it,” said Greenspan.

“I existed almost in two worlds,” said Craib, who went on to explain that while he continued to be worried about Livent’s accounting irregularities, he did also enjoy many aspects of his job.

“What do you mean you existed in two worlds? Are you another Sybil?” Greenspan said, making reference to the name many in the accounting department – including Craib – used to describe Eckstein’s seemingly split personality.

And there may be more problems to come for Craib. During their examination of Craib, prosecutors produced a copy of a memo Craib wrote shortly after that fateful meeting with Drabinsky in which he discussed alleged accounting manipulations. However, the original version of that memo appears to be missing from the crown’s documents, the court heard in submissions at the end of the day.

Greenspan told the court he wanted to examine the document to see it the date had been altered. The date of the meeting has been one of the most contentious points of the trial. Craib testified that the meeting occurred on Friday April 24—although the memo is dated “Friday April 23.” The defence contends that the meeting could not have occurred since Drabinsky was travelling out of the country until late Friday afternoon. “We need to look at the original to see if it can shed some light on this issue,” Greenspan said.

Brian Greenspan, the lawyer representing Myron Gottlieb, has made his own request for original documents of memos written by Maria Messina. Those memos are also not immediately available and not in the possession of the RCMP, crown prosecutor Robert Hubbard told the court.

The document may be among the files of Les Wittlin, a lawyer who briefly represented all five members of Livent’s finance department who have testified at the trial, before the accountants were ordered by U.S. regulators to obtain separate lawyers. Wittlin has since left the law firm he worked for during the time he represented the accountants and has told the RCMP he is “disinclined” to go through his old files looking for the document. In submissions about the document, Madam Justice Mary Lou Benotto told the crown that perhaps the RCMP could contact Witlin again and explain that he should either go through his files or come to court to explain himself.

When Greenspan was not accusing Craib of lying, he did briefly touch on an intriguing line of questioning that raises the possibility that either Drabinsky or Gottlieb could ultimately take the stand and tell their story.

Greenspan briefly asked Craib about the justifications Eckstein made for some of the alleged “arbitrary” accounting manipulations at Livent. In particular, alleged manipulations involving advertising. Previous witnesses have testified Livent managers routinely ordered millions of dollars in advertising expenses to either be capitalized to fixed assets or moved to future quarters, thus improving the company’s bottom line.

“Gordon Eckstein made specific arguments for advertising,” Greenspan suggested. “Deferring advertising expense to future periods can be justified if you can demonstrate that the advertising benefits future periods.”

“You would have to analyze the circumstances and the company’s accounting policies,” Craib replied.

Greenspan insisted that this was a “technical question” that should be “addressed by accountants and not by business executives.”

“I don’t agree with that,” Craib replied.

“You don’t have any experience as a business executive,” Greenspan said. But Craib responded that he is an executive now. After leaving Livent, Craib became employed as chief financial officer of a private company.

Eckstein testified that he ordered the accounting staff to allegedly manipulate Livent’s books, based on orders from Drabinsky and Gottlieb. And while the defence insists that Eckstein was acting alone, there has not been any direct evidence to suggest Eckstein was telling Drabinsky and Gottlieb that everything he was doing was proper. Does that mean we will eventually see Drabinsky or Gottlieb on the witness stand to tell the judge Eckstein was rationalizing those allegedly fraudulent accounting maneuvers? We’ll have to wait and see.

In the meantime, Craib is expected to remain on the witness stand for some time.

The trial continues tomorrow.

That’s an ironic coincidence considering that perjury was a running theme in the tough and often tense first day of defence lawyer Edward Greenspan’s cross examination of former Livent accountant Chris Craib.

Greenspan didn’t mince words about what he thought about Craib’s testimony. On at least three occasions the defence lawyer representing Garth Drabinsky accused Craib of “concocting” testimony, “making stuff up,” and even being and outright “liar.”

But before Greenspan could begin what is expected to be a long and gruelling cross-examination, prosecutors had one last document to show Craib. It was a May 19, 1998 memo Craib sent to his boss Gordon Eckstein and copied to Myron Gottlieb warning that accountants representing new Livent investors had requested financial schedules that had been “arbitrarily manipulated.”

The first schedule concerned ticketing rebates and warned that the version sent to the company’s board of directors had been “arbitrarily manipulated” by moving $500,000 in revenue from the fourth quarter of 1997 to the first quarter of 1998. Another schedule regarding merchandise and concession revenue also contained $350,000 in arbitrary manipulations, the memo stated.

But Craib’s most dramatic testimony occurred yesterday when he told the court that he accompanied Gordon Eckstein, Livent’s former senior vice president of finance, to a meeting with Drabinsky on April 24, 1998 where Drabinsky openly discussed millions of dollars in manipulations to Livent’s first quarter financial results. Shortly after the meeting, Craib testified that he called Maria Messina, Livent’s former chief financial officer, and told her about the meeting. That testimony was backed up by Messina in her testimony earlier in the trial. Messina also testified that the disclosure prompted her to finally confront Drabinsky and Gottlieb about the alleged financial irregularities at the company.

But Greenspan insisted that the meeting was fiction, made up by Craib and Messina as part of a plan to blame others for their own participation in the alleged fraud. After all, when Craib met with lawyers representing Livent’s new management they spent most of their time asking him about that fateful meeting, Greenspan said.

“That’s the only time you heard anything out of the mouth of Garth Drabinsky that would support knowledge on his part,” Greenspan said.

“I don’t agree with that,” Craib replied.

“All they wanted out of you was that Garth Drabinsky had knowledge and that’s the story you had,” Greenspan said.

“No,” Craib replied.

“That’s the story you concocted with Maria Messina,” Greenspan insisted.

“No,” Craib replied.

Greenspan insisted that both Craib and Messina have played “the blame game” in their testimony before the U.S. Securities and Exchange Commission as well as before the Institute of Chartered Accountants of Ontario, the professional accounting body that disciplined both Messina and Craib for their role in the Livent scandal.

As a result of disciplinary action taken by the ICAO, Craib’s chartered accountant’s designation was suspended for six months and he had to pay a $1,000 fine. The SEC barred him from acting for any SEC registrant for three years.

“I’m going to suggest to you that the two of you must have talked about the fact that your life as you knew it was over and what was important now was to ensure your survival,” Greenspan said.

“No,” Craib replied.

A question by prosecutor Alex Hrybinsky about the professional and administrative penalties Craib suffered as a result of his actions at Livent prompted one of the most baffling objections of the trial. Prosecutors and defence lawyers have questioned just about every witness about the penalties levied by the SEC and ICAO, but when Hrybinsky tried to ask Craib about those penalties, Greenspan objected on the basis of “relevance.”

The objection was so out of the blue, Hrybinksy didn’t seem to know how to respond for a moment. Benotto overruled the objection and allowed Craib to answer the question.

Ironically, one of Greenspan’s first questions to Craib concerned the penalties – or lack thereof – that the accountant faced as a result of his participation in the alleged Livent fraud. “You were essentially given a kiss for being involved in a fraud,” Greenspan said.

Craib disagreed. “At the time, I viewed it as a severe event in my life,” he added.

Greenspan also grilled Craib extensively about his relationship with Messina. The two met while working at Deloitte & Touche auditing Livent’s financial statements. However they became friends and confidants at Livent soon after Craib joined the company and learned about the alleged financial irregularities at the company. That friendship endures today and both Craib and Messina testified that they speak once or twice a week.

During the long and often tense exchange, Craib insisted that he and Messina have not discussed their testimony in the case. However, Craib acknowledged that he attended Messina’s birthday party, went to a George Michael concert with her and two other people 10 days after Messina completed her testimony at the trial, and that they recently had brunch at Bar One on Queen Street. Greenspan began to ask Craib about an interior design show he attended with Messina, but dropped it. Now the judge will be left wondering whether the pair of former Livent accountants prefer traditional or art deco designs.

At that brunch, the topic of Messina’s testimony did come up, Craib acknowledged. However, the conversation was brief and general since Messina’s daughter and another person were also at the brunch. “I asked her ‘how was your vacation,’” he said referring to the fact Messina had used often used her vacation days to testify at Livent related proceedings. “She said it was a terrible experience and we acknowledged that it was an event that had occurred.”

“Did she give you a factual basis for the fact that it was terrible,” Greenspan asked.

“We have both been through the pre-trial testimony,” Craib said. “It is not an enjoyable experience.”

Defence lawyers suggest that Craib and Messina’s close relationship should call their testimony into question. After all, the two have discussed events in the case as well as Messina’s investigation into Drabinsky and Gottlieb on behalf of Livent’s new owners and Stikeman Elliot – the law firm representing the owners, which has employed Messina since the collapse of the company into bankruptcy. “You are in constant communication [with Messina] to this day and you still communicate about Livent,” Greenspan said.

“We speak in general terms,” Craib replied.

“I suggest to you she would share the fruits of her investigation on behalf of Stikeman Elliot and she would ask you to clarify what she had found out,” Greenspan added.

“Yes,” Craib replied.

As a result of that close relationship, Craib “lied” to the SEC to back up her problematic testimony to the U.S. regulator, Greenspan insisted. Messina’s initial testimony before the SEC did not go well. When asked by SEC investigators when she first learned about the alleged fraud at Livent, Messina began to disclose that she first learned of financial irregularities in July 1997 after Livent accountants Grant Malcolm and Diane Winkfein told her about alleged accounts payable items that had not been recorded on Livent’s books.

Messina’s lawyer stopped the interview at that point and Messina did not return until the next day when she clarified that she did not fully learn of the alleged fraud at Livent until Nov. 1997 – after an important US$125 million bond issue had been cleared. “Had Messina learned [about the alleged fraud] in July 1997, she would have been guilty of complicity in the $125 million bond issue,” Greenspan insisted.

Messina has testified that she was merely confused and emotionally overwrought at the initial SEC meeting and was not trying to minimize her knowledge of the alleged fraud at Livent. Ultimately, as part of a plea agreement with U.S. prosecutors, she did ultimately acknowledge her participation in the allegedly fraudulent bond offering.

But defence lawyers have hammered away at the inconsistency, insisting that it not only damages Messina’s credibility, but also shows that all of the Livent accountants have conspired to concoct a story that blames Drabinsky and Gottlieb for the alleged fraud.

When Craib first testified before the SEC, he also testified that he learned about the fraud in November – testimony that backed up Messina’s story, Greenspan insisted.

But Craib told the court that he merely misremembered the date he first learned about the alleged fraud and quickly corrected himself during the same SEC interview when he noticed that the documents he brought to the SEC were dated August – not November – 1997.

But the fact that their SEC stories match up so perfectly is evidence of something far more sinister, Greenspan said. “I’m making it clear and I’m calling you a liar,” he said.

For the next 15 or 20 minutes of questioning, Greenspan continued to grill Craib about whether he spoke to Messina about her SEC testimony. It is not believable that Craib would not talk about such a traumatic event with a person he considers a dear friend, Greenspan insisted. But Craib continued to deny talking to Messina about her testimony – or at least said he had no recollection of speaking to her about her SEC testimony. He also added that it was only after the collapse of Livent that their relationship blossomed into a dear friendship.

Craib’s continued denials seemed to frustrate Greenspan. “I’m going to suggest to you that ‘I don’t recall’ is not good enough, this is important stuff,” he said. “The reason you don’t recall is because you’ll have to admit that you lied to the SEC.”

“No,” Craib replied.

“If you don’t recall that, then you don’t recall anything and you are just making this stuff up as you go along,” Greenspan added.

“That’s not true,” Craib said.

Greenspan asked if Messina ever told her about a direction from the SEC that she not speak about her testimony. Craib said she did not, but he assumed she had one since the SEC warned him not to speak as well.

Then Greenspan asked if Craib and Messina had entered a secret pact to circumvent those directions and speak to one another about their SEC testimony.

“I don’t know what you’re talking about,” Craib replied.

“Well, I guess if you had a pact, that would be your answer,” Greenspan replied.

Greenspan will continue his cross-examination tomorrow.

Craib, with his oval face, intense eyes and slightly receding hairline, bears a striking resemblance to the Oscar-winning actor. But the question prosecutors and defence lawyers may be asking is: which Spacey character comes to mind for Madam Justice Mary Lou Benotto – the judge overseeing the case – when she listens to the chartered accountant’s testimony.

Prosecutors perhaps hope that Craib reminds Benotto of Detective Jack Vincennes – the Los Angeles detective from L.A. Confidential who finally stands up and fights the corruption he finds all around him (We’ll just forget that Spacey winds up – Spoiler Alert – shot dead at the end of that movie.)

The defence, on the other hand, may be hoping that the judge thinks more along the lines of Verbal Kimt, the talkative criminal from The Usual Suspects who invents a fanciful yarn about Keyser Soze, the vicious – and (Another Spoiler Alert) ultimately imaginary – criminal mastermind, in order to save his own skin from the police.

According to Craib’s testimony the alleged masterminds of the alleged fraud at Livent were not imaginary at all – they were Garth Drabinsky and Myron Gottlieb.

Craib’s official job title at Livent was Senior Controller/Corporate Budgeting. That means he was in charge of overseeing the company’s budgets and financial forecasts. Craib attended dozens of meetings with Livent’s managers regarding forecasts and budgets and testified that Drabinsky, Gottlieb and former Livent Chief Operating Officer Robert Topol, all had intimate knowledge of the inner workings of the company.

“Sometimes it was hard for me to keep up,” he told the court.

However, Craib had another job as well: creating the quarterly and year-end executive summaries of the company’s financial performance. The summaries were distributed to Livent’s senior managers and showed tens of millions of dollars in expenses being kept off the theatre company’s books or being improperly buried in the company’s fixed assets. Prosecutors have already introduced copies of those summaries with what they allege is Drabinsky’s handwriting directing alleged manipulations.

Craib also testified that he once brought those summaries to a meeting and watched as Drabinsky allegedly discussed how to manipulate the company’s financial statements.

It was during preparation of those executive financial summaries that he first learned about the alleged fraud at Livent, he told the court. While preparing the summaries for the second quarter of 1997, Craib noticed that the company’s reported financial performance improved significantly from one version of the report to the next.

“The company’s initial version was reporting a very significant loss – approximately $20-million – and in the later iteration, the expenses had been reduced and the company was showing a profit of between $3-$4 million,” he testified.

When Craib confronted his boss Gordon Eckstein, Livent’s former senior vice-president of finance and administration, and asked him why there was such a huge difference, Eckstein mentioned something about “income smoothing” and replied: ‘Welcome to the real world,’” Craib told the court. “He was just very nonchalant.”

For the next three quarters Craib saw the same pattern with the executive summaries. The financial results would start out with massive losses and improve with each new version until the company finally reported a profit.

The summaries clearly showed the company’s actual and mounting losses and detailed “adjustments” such as the now infamous “expense roll” and “amortization roll” that represented tens of millions of dollars in alleged manipulations to Livent’s financial statements.

The summaries were produced at the end of every quarter as well as at the company’s year-end, and distributed to Drabinsky, Gottlieb and Topol.

When Craib began producing the statements he referred to the alleged manipulations as “carry forward” on the reports. However, Craib changed that term to “roll,” a term Craib said was more reflective of what was really happening at the company. “I was concerned that the wording used in the second quarter wasn’t as exact [so as] to tell exactly what was happening here, so I changed it to be more reflective,” he said.

“How is the term “roll” more reflective?” Crown prosecutor Alex Hrybinsky asked.

“It was the term management used,” Craib replied.

Craib testified that he did not attend any executive meetings where the alleged manipulations were discussed in 1997. However, in late Oct. 1997, he delivered copies of the executive summaries to Drabinsky’s office just as a meeting with Eckstein was about to take place. After placing the summaries on Drabinsky’s desk, Drabinsky told him to leave. Before he left the office he heard Drabinsky ask Eckstein: “What does he know about this?” Craib told the court.

“Mr. Eckstein responded, and I can only paraphrase, ‘Do you think I’m the only person who knows down there?’”

The term “down there” was a reference to the finance department one floor below, Craib said.

Later in Feb. 1998, Craib asked Eckstein straight out: “Is this a fraud?” he said.

“[Eckstein] told me to ‘shut the fuck up, you’re not paid to think,’” Craib told the court today.

But Craib was paid to keep track of Livent’s real financial performance as well as the allegedly fraudulent financial figures the company reported to investors and regulators. As part of that, Craib testified that he helped Eckstein prepare a report that detailed some $22 million in alleged manipulations to the company’s quarterly financials.

Sometime in Feb. 1998, Craib attended a meeting with Drabinsky and Eckstein in which that report was discussed, he told the court. The meeting took place in Drabinsky’s office and – for some reason – a fight broke out between the two men. “They were yelling at each other and Gord said ‘I told you this,’ and referred to the document,” he said referring to the report detailing the $22 million in alleged manipulations. “Mr. Drabinsky pulled the document out of his briefcase.”

But Craib’s most damaging – and what is sure to be his most controversial – testimony regarded a management meeting he attended on Friday April 24, 1998. It’s a meeting defence lawyers contend never took place.

Craib testified that he and Eckstein met with Drabinsky late in the afternoon of April 24 with a copy of the executive summary that Craib had produced the previous day. In the first half of the meeting Drabinsky and Eckstein went through the summary in great detail, occasionally asking Craib questions about the report. “Mr. Drabinsky and Mr. Eckstein went through the executive summary in a detailed basis, page-by-page, looking at the results,” he said.

Then the mood of the meeting turned, and Drabinsky and Eckstein began talking about changes and alterations to the company’s financial results.

“They were making changes that were completely arbitrary,” Craib told the court. “They were just pulling numbers out of a hat. Round numbers.”

After the meeting, Craib said that he was sickened by what he saw. “I was in utter shock. I dry-heaved because I finally understood what was occurring in front of me,” he told the court. “I was terrorized by it. I was almost physically ill.”

Craib made notes of what was discussed at the meeting – notes that were presented in court. According to the three pages of notes, Eckstein and Drabinsky allegedly discussed adjustments such as arbitrarily adding $100,000 to Livent’s merchandising revenue and adding another $50,000 to concession revenue.

The handwritten notes are dated Friday April 23rd – not the 24th when Craib testified the meeting took place. “I simply had the wrong date in my head,” Craib testified. “I wrote the right day but erroneously wrote the wrong date.” It may be a simple error, but defence lawyers will likely question Craib extensively about the error.

Later that night, Craib called Maria Messina, Livent’s former chief financial officer, and said “They are doing it again,” he told the court.

Craib had known Messina before joining Livent. Like Messina, Craib had worked as an auditor on Livent’s books while working for Deloitte & Touche.

Defence lawyers have suggested that Drabinsky could not have attended the meeting. He was in New York and Washington that week and Livent’s corporate jet landed late Friday afternoon – too late for Drabinsky to have attended the meeting.

The meeting is also important not only because it is an instance of Craib allegedly witnessing Drabinsky direct the manipulations to Livent’s financial statements, but also because that specific meeting is the catalyst for a series of other events. Messina testified that Craib’s disclosure of the manipulations discussed at the meeting prompted her to reveal the alleged fraud to her lawyer Les Witlin (although she also testified that she did not tell the lawyer about her participation in the fraud). Witlin, in turn, told her to detail her opposition to the manipulations in a memo.

A week later, on May 3rd, Messina did write the memo, Craib testified. It was a Sunday and Messina came into Craib’s office, trembling and obviously in physical distress. She handed Craib some handwritten notes and asked him to type a memo to Drabinsky and Gottlieb urging them to “reconsider” the manipulations to the company’s financial statements.

“She could not type it herself,” Craib told the court. “Her hands were trembling that much.”

The memo appeared to have the desired effect and a short time after the alleged manipulations appeared to stop, Craib testified, and Messina went about attempting to properly record the company’s expenses.

The fateful April 24th meeting was not the only time Craib kept notes of what managers said during meetings. Just a day after Messina wrote her memo to Drabinsky and Gottlieb, Craib attended a meeting with Eckstein and Livent controllers Grant Malcolm and Diane Winkfein.

At the meeting Eckstein said: “I have to keep all the lies straight. I have to know what lies I’m telling these people, I have told so many lies to these people I have to make sure they all make sense.” Prosecutors did not ask Craib to explain the context of the remark or whom Eckstein was referring to when he said “these people.”

When Hrybinsky asked Craib why he did not blow the whistle on the fraud or merely leave the company, the accountant replied: “I had initially tried to block it out, or tried to view myself as not being a participant in what was occurring, or that I was not responsible for what was occurring – it was far above my head.”

Craib is expected to finish his testimony tomorrow. Then he will face questions from defence lawyers.