Appeal Court gets Drabinsky sentence wrong

Absence of any financial loss at Livent. Who knew?

With the benefit parole, Ontario’s Court of Appeal thinks Garth Drabinsky should only go to jail for about 1 year and 6 months, now that they’ve reduced his original sentence from 7 years to 5 years. The reason? There was an “absence of any evidence of financial loss” cited in the original trial judge’s decision.

The Appeal Court decision sounds a bit perplexing. Livent had just issued a US$125 million bond prior to a material falsification of quarterly financial results, and the original $28 million IPO and subsequent Special Warrant financing definitely involved plenty of money from equity investors (one of whom lost $7 million personally on the Livent bankruptcy). All three offerings were raised following the initiation of the accounting fraud. All three were specifically cited by Justice Benotto in her decision. Livent ultimately went bankrupt.

And yet the Appeal Court doesn’t see evidence of financial loss? What a weak excuse to knock back what were two appropriate sentences for white collar crime. No wonder people try their hands at insider trading or stealing from stock and bond investors: if they plead guilty to insider trading in Kingsway Financial shares, they pay a fine and walk free; convicted of criminal fraud, and the actual jail term might be just 16 months in the case of Myron.

15 years of living the high life in exchange for just over 15 months. I couldn’t have more respect for our judicial system, but this type of attitude from the Bench about white collar crime is distressing.

The Appeal Court went on to observe that they were otherwise good fellows:

“They were not fraudsters in the purest sense. “They were trying to operate a legitimate business of potential benefit to the entire community.”

Got that? Even if you are found to falsify financial statements, your business is still “legitimate”. That judicial perspective might be worse than the sentence reduction itself.

MRM