A former Livent controller testifying in the Canadian theater company’s fraud case recently described the moves said he was “dumbfounded” by the things he was asked to do.

Recently, former Livent accounting controller Tony Fiorino testified at the trial of company co-founders, Garth Drabinsky and Myron Gottlieb, stating that in 1997 and 1998 the two individuals ordered him to make three transfers of various company expenses into fixed asset accounts. The largest transfer was made in 1998 for $10 million. Fiorino testified that his co-worker Grant Malcolm would come up with a detailed list of invoices and Fiorino would then distribute the costs into theatre construction accounts.

The first transfer was made in 1997 for about $2 million; the second, in early 1998 for about $3 million to $4 million approximately. Fiorino could not attest to the exact amount. Both transfers were made to the construction account for the company’s new theatre in New York.

Fiorino stated that he expressed his concerns about the transfers to then senior vice president of finance Gordon Eckstein, saying he was “dumbfounded.” The encounter turned into a heated argument and Eckstein informed Fiorino that it would be up to Drabinsky and Gottlieb to justify the transfers if ever discovered by auditors. According to Fiorino, auditors never uncovered the transfers.

Drabinsky and Gottlieb are accused of fraudulently misstating Livent’s finances between 1993 and 1998. Both have pleaded not guilty and have insinuated that other company employees committed the fraud without their knowledge. Documents recently admitted into evidence show hundreds of items that were transferred into theatre construction accounts as company assets.

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