Livent co-founder Myron Gottlieb granted day parole

Former theatre mogul Myron Gottlieb has been granted day parole and will be transferred to a halfway house in Toronto.

However, parole board members say they are not satisfied Gottlieb's risk can be managed well enough to grant him full parole.

Board member John Muise cited "deficits" in Gottlieb's attitude toward his involvement in the fraud.

Gottlieb and Garth Drabinsky, the co-founders of now-defunct Livent Inc., were convicted of two counts each of fraud in a scheme that cost investors about $500 million.

Gottlieb says he deeply regrets the fraud and the hurt his actions caused. But he took issue with the board's characterization of his involvement in the fraud, based on the trial judge's findings, insisting he didn't become aware of it until August of 1997.

The fraud was uncovered in 1998.

An Ontario Superior Court judge found the company, once the toast of Canada's theatrical scene and behind such hits as Phantom of the Opera, falsified financial statements over nine years in a bid to lower expenses and keep pace with lofty earnings projections.

Despite being sentenced in 2009, the pair had been on bail pending appeal and didn't start serving their prison time until last September, when the Appeal Court upheld their convictions and reduced their sentences by two years each, leaving Drabinsky with a five-year sentence and Gottlieb with four years.

Gottlieb is at the minimum-security Beaver Creek Institution in Gravenhurst, Ont., where about 200 inmates are housed in residential-style units and where Drabinsky is also reportedly serving his sentence.

Offenders on day parole must return each night to an institution or halfway house.

Gottlieb, while primarily responsible for Livent's finances, received the lesser sentence because the judge believed he was caught in a wide net likely meant for Drabinsky, the man in charge.

Judge Mary Lou Benotto found that Drabinsky and Gottlieb devised a kickback scheme dating back to 1989 that saw assets of Livent and its predecessor company overstated in financial statements. They would arbitrarily move operating expenses from one period to another and apply the expenses of one show to another, she found.

Drabinsky's and Gottlieb's convictions were obtained in part on the testimony of former Livent employees who either received light sentences or avoided prosecution in exchange for their co-operation.

At appeal, defence lawyers arguedunsuccessfullythat the witnesses were not credible.

Gottlieb and Drabinsky also contended the fraud was perpetrated by other Livent employees without their knowledge, a claim rejected in last year's Appeal Court ruling.