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Founders of Broadway producer Livent lose appeal

Livent Inc. co-founder Gottlieb arrives at to the courtroom in Toronto
Livent Inc. co-founder Gottlieb arrives at to the courtroom in Toronto

TORONTO (Reuters) - An Ontario court has upheld fraud convictions against the two Canadian theater impresarios behind the 1990s Broadway hits "Show Boat" and "Ragtime", but has reduced their prison sentences.

In a decision released Tuesday morning, Ontario Court of Appeal rejected a request for a new trial by Garth Drabinsky and Myron Gottlieb, founders of now defunct theater production company Livent Inc.

But the court reduced Drabinsky's sentence to five years from seven and Gottlieb's to four years from six.

A spokeswoman from Ontario's Ministry of the Attorney General said both men were already in custody as they were required to turn themselves in on Monday night, ahead of the judgment.

In March 2009, they were convicted of fraud and forgery. The forgery conviction was later stayed.

In reducing their sentences, the appeals court said the lower court should have taken into account the fact that there was no evidence of actual financial losses caused by the fraud.

Prosecutors argued the pair had directed accountants to falsify Livent's records and to artificially boost earnings to attract investment.

The lower court found that Drabinsky and Gottlieb had also devised a scheme to book false invoices, inflating the company's assets.

On appeal, defense lawyers Edward Greenspan and Brian Greenspan argued that former employees who testified against Drabinsky and Gottlieb were unreliable, and that government lawyers had not proven the pair knew about the fraud.

Livent, which went public in 1993, was the force behind more than dozen major productions in New York and Toronto, including a Broadway success with a revival of the musical "Show Boat". Livent's shows won a total of 14 Tony awards.

The company went bankrupt in 1998 after the fraud allegations came to light.

With this judgment, Drabinsky and Gottlieb have nearly run out of avenues to escape jail time. Rulings from Ontario's high court can be appealed to the Supreme Court of Canada, but it may not agree to hear the case.

The pair's lawyers said they have not yet decided whether to seek an appeal.

(Reporting by Allison Martell; editing by Peter Galloway)

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