SECURITIES ACT OF 1933

Release No. 7629 / January 13, 1999

SECURITIES EXCHANGE ACT OF 1934

Release No. 40939 / January 13, 1999

ACCOUNTING AND AUDITING ENFORCEMENT

Release No. 1097 / January 13, 1999

ADMINISTRATIVE PROCEEDING

File No. 3-9808

In the Matter of

GORDON C. ECKSTEIN,
Chartered Accountant,
Respondent.

ORDER INSTITUTING
PUBLIC PROCEEDINGS
PURSUANT TO RULE 102(e) OF
THE COMMISSION'S RULES OF
PRACTICE, MAKING FINDINGS AND
IMPOSING REMEDIAL SANCTIONS

I.

The Securities and Exchange Commission (the "Commission") deems it appropriate and in the public interest that a public administrative proceeding be, and it hereby is, instituted pursuant to Rule 102(e)(1) 1 of the Commission's Rules of Practice 2 against Gordon C. Eckstein ("Eckstein").

II.

In anticipation of the institution of this proceeding, Eckstein has submitted an Offer of Settlement ("Offer"), which the Commission has determined to accept. Solely for the purpose of this proceeding and any other proceeding brought by or on behalf of the Commission, or to which the Commission is a party, and without admitting or denying the Commission's findings contained herein, except that Eckstein admits the jurisdiction of the Commission over him and over the subject matter of this proceeding, Eckstein consents to the entry of this Order Instituting Public Proceedings Pursuant to Rule 102(e) of the Commission's Rules of Practice, Making Findings and Imposing Remedial Sanctions ("Order") set forth below. 3

Accordingly, IT IS ORDERED that a proceeding pursuant to Rule 102(e)(1) of the Commission's Rules of Practice be, and hereby is, instituted.

III.

The Commission finds 4 that:

A.THE RESPONDENT

Eckstein, age 46, is a Canadian citizen and Chartered Accountant, and was Livent's Senior Vice President of Finance and Administration from February 1990 until his resignation from the company on July 29, 1998.

B.RELATED ENTITY

Livent Inc. ("Livent" or the "company"), is a Toronto, Ontario company that produces live theatrical entertainment, such as Ragtime, The Phantom of the Opera, Show Boat, Sunset Boulevard and Fosse, and owns and operates theaters in Toronto, Vancouver, Chicago and New York. Livent became a public company in Canada in May 1993, and pursuant to Section 12(g) of the Exchange Act, registered its common stock with the Commission in May 1995. Livent's stock is traded on the NASDAQ national stock market and on the Toronto Stock Exchange. On November 18 and 19, 1998, respectively, Livent declared bankruptcy in the United States and Canada.

C.FACTS

1.Summary

The former senior management of Livent engaged in a multi-faceted and pervasive accounting fraud spanning eight years from 1990 through the first quarter of 1998. Garth Drabinsky ("Drabinsky"), Livent's former Chairman and Chief Executive Officer, and Myron Gottlieb ("Gottlieb"), the company's former President and a director, were the architects of a fraud which included: a multi-million dollar kick-back scheme designed to misappropriate funds for their own use; the improper shifting of preproduction costs, such as advertising for Ragtime, to fixed assets, such as the construction of theaters in Chicago and New York; and the improper recording of revenue for transactions that contained side agreements purposefully concealed from Livent's independent auditors.

Drabinsky and Gottlieb manipulated income and operating cash flows throughout the relevant period with the active participation of Eckstein, Livent's former Senior Vice President of Finance and Administration. While in possession of material nonpublic information concerning the fraudulent conduct at Livent, Eckstein also engaged in insider trading of Livent securities.

Former sSenior management's manipulation of income for eight years caused Livent to file with the Commission materially false and misleading financial statements and disclosures in at least seventeen filings during the company's first three fiscal years as a publicly traded company in the United States, 1995, 1996 and 1997, as well as the first quarter of its fiscal year 1998. These filings included: annual and quarterly reports filed during the time period 1995 through 1998reports; Livent's 1995 registration of 12 million common shares; period 1995 through 1998; a $35 million (US) equity offering of 3.75 million common shares in 1996; and a $125 million (US) debt offering in 1997.

As a result of the scheme, Livent's financial statements for fiscal years 1991 and 1992, prior to Livent becoming a U.S. public company, were materially false and misleading in that Livent overstated pre-tax earnings, or understated pre-tax losses, in each of those years. For fiscal 1991, Livent reported a pre-tax loss of $1.2 million. 5 In fact, Livent's loss in that year was approximately $4.6 million. For fiscal 1992, Livent reported pre-tax earnings of $2.9 million. In fact, the company's true earnings were approximately $100,000.

As a further result of the scheme, Livent reported inflated pre-tax earnings, or understated pre-tax losses, for each of its fiscal years as a U.S. public company, 1995 through 1997. For fiscal 1995, Livent reported pre-tax earnings of $18.2 million. In fact, the company's true earnings were approximately $15 million. For fiscal 1996, Livent reported pre-tax earnings of $14.2 million. In fact, the company incurred a loss of more than $20 million in that year. For fiscal 1997, Livent reported a pre-tax loss of $62.1 million. In fact, the company's true loss in fiscal 1997 was at least $83.6 million.

As a further result of the scheme, Livent reported fixed assets that were fraudulently overstated for fiscal years 1994 through 1997. For fiscal 1994, 1995 and 1996, respectively, Livent reported fixed assets of $78 million, $80.8 million and $133.2 million. In fact, these amounts were overstated by at least $5 million in fiscal 1994 and 1995, and $6 million in 1996. For fiscal 1997, Livent reported $200.8 million in fixed assets, which was materially overstated by at least $23.9 million.

As a further result of the scheme, Livent reported preproduction costs or fixed assets that were fraudulently overstated for fiscal years 1994 through 1997. For fiscal 1994, 1995 and 1996, respectively, Livent reported preproduction costs of $28 million, $55.4 million and $75.6 million. In fact, each of these amounts was overstated by approximately $4 million. In addition, for fiscal 1996, Livent reported fixed assets of $133.2 million, which was overstated by at least $6 million. For fiscal 1997, Livent reported fixed assets of $200.8 million, which was materially overstated by approximately $23.9 million.

2.Drabinsky's and Gottlieb's Fraudulent Kick-Back Schemes

Drabinsky and Gottlieb began their pervasive fraud even before Livent became a U.S. public company in 1995. As early as 1990, and continuing through 1994, Drabinsky and Gottlieb operated blatant kick-back schemes with two Livent vendors designed to siphon millions of dollars from the company directly into their own pockets. Between 1990 and 1994, Drabinsky and Gottlieb personally received at least $7 million through this fraudulent scheme.

As a result of this fraudulent scheme, Livent's financial statements for fiscal years 1991 and 1992 were materially false and misleading in that Livent overstated pre-tax earnings, or understated pre-tax losses, by the amounts of kickbacks paid to Drabinsky and Gottlieb in those years. For fiscal 1991, Livent reported a pre-tax loss of $1.2 million. In fact, Livent's loss in that year was approximately $4.6 million. For fiscal 1992, Livent reported pre-tax earnings of $2.9 million. In fact, the company's true earnings were approximately $100,000. Livent included these false numbers in several filings with the Commission, including the company's May 1995 registration statement to register 12 million common shares, and the company's $35 million U.S. equity offering in February 1996.

Drabinsky and Gottlieb had Eckstein improperly capitalize the payments to the vendors, approximately $4 million, into preproduction costs. As a result, Livent's fiscal 1994, 1995 and 1996 financial statements, which reported preproduction costs of $28 million, $55.4 million and $75.6 million, respectively, were overstated by approximately $4 million in each year.least $5 million in each year. Livent included some or all of these false numbers in numerous filings with the Commission.

3.Livent Fraudulently Manipulates its Books and Records

a.The Accounting Manipulations

Livent's accounting staff used four basic forms of manipulation. First, the staff transferred preproduction costs 6 for shows to fixed asset accounts such as the construction of theaters, 7 in order to delay the amortization of those costs. Second, in a more straightforward manipulation, the accounting staff, at the end of each quarter, simply removed certain expenses and the related liabilities from the general ledger. These items were literally erased from the company's books. Third, the accounting staff transferred costs from one show currently running to another show that had not yet been opened or that had a longer amortization period, again in order to delay the amortization of those costs. Finally, senior management entered into various "revenue-producing" contracts containing purposefully concealed side agreements that, in effect, required Livent to pay back to the counter-party the amount originally advanced. These transactions should have been booked as loans payable rather than as revenue.

b.How the Accounting Fraud Worked

Beginning in late 1993, Livent personnel began manipulating the company's books, records and accounts. Standard operating procedure was as follows: Diane Winkfein ("Winkfein") and Grant Malcolm ("Malcolm"), two senior Livent controllers, regularly produced a general ledger showing financial results for a certain quarter or year end. They provided this information to Eckstein, and later, to another senior controller, Christopher Craib ("Craib"), who then put the information into an easily understood summary format for Livent's executives. Eckstein met regularly with Drabinsky, Gottlieb and Robert Topol ("Topol"), Livent's COO, to review the results.

During these meetings, the group openly discussed the manipulations, and agreed on the approximate nature and quantity of adjustments to be made to the company's books, records and accounts in order to achieve a predetermined financial picture that matched projections Drabinsky, Gottlieb and Topol had provided to analysts. In general, Drabinsky directed that certain adjustments be made and Eckstein made notes of the adjustments. Eckstein then communicated the adjustments to members of the accounting staff and instructed that they effect the adjustments in such a manner as to give the adjustments the appearance of original entries in the accounting system, so that they could not be detected.

c.Eckstein's Conduct in the

Manipulation of Livent's Books, Records and Accounts

1.)Livent Personnel Override the Internal Controls

After meeting with Drabinsky, Gottlieb and Topol, Eckstein met with Winkfein and Malcolm and provided them with the approximate dollar amounts for adjustments that they were required to make to various accounts in the balance sheet and income statement, including expense categories, specific shows and fixed asset accounts. Winkfein, Malcolm and Tony Fiorino ("Fiorino"), Livent's theater controller, then processed the adjustments. 8

To make the adjustments, Malcolm identified individual invoices to alter in order to achieve the overall level of adjustment specified by Eckstein. Then, on an invoice-by-invoice basis, he and Winkfein changed the distribution dates or account codes of the selected invoices, deleted the original entries from the general ledger system, and re-posted the fraudulent information to the general ledger. In a standard accounting system, these adjustments would have been made through journal entries. However, the enormous number of entries, which comprised millions of dollars in invoices, necessary to comply with Drabinsky's directives required a more efficient method of adjustment. Moreover, adjusting journal entries can be "red flags" that leave a paper trail, something Livent did not want to create. Consequently, Eckstein told Malcolm to enlist the assistance of Livent's manager of its information services department ("IS Manager") to write a program that would enable the accounting staff to override the accounting system without a paper or transaction trail. The IS Manager complied. Eckstein told the IS Manager, "Don't embarrass me. Make sure none of this can be found. Make sure none of this can be traced."

2.)Livent Personnel Track The Fraud

The first manipulations occurred in late 1993 when Eckstein told Winkfein and Malcolm to transfer preproduction costs relating to Show Boat to the fixed asset account for the North York Theater in Toronto. Eckstein told Winkfein and Malcolm that Drabinsky had estimated certain costs for analysts and did not want anyone to learn just how much had really been spent on preproduction. In the latter part of 1994, Eckstein told Malcolm to shift advertising costs associated with the Toronto production of Phantom to fixed asset accounts.

Because of the sheer volume in dollars and invoices being transferred within Livent's books and records, it became necessary for senior management to be able to distinguish between the real and phony numbers. At Eckstein's direction, Malcolm maintained computer files of the manipulations to keep track of Livent's true financial position. The records he maintained show details of expense capitalizations, expense rolls and show-to-show transfers from 1995 through the first quarter of 1998. Eckstein insisted that these records be kept, and insisted on showing them to Drabinsky to be certain that Drabinsky knew exactly what manipulations had been implemented.

After the adjustments were processed, Winkfein or Malcolm provided Eckstein and Craib, who joined Livent from Deloitte & Touche ("Deloitte") in June 1997, Touche in June 1997, wwith an adjusted general ledger containing the accounting manipulations. Craib was responsible for calculating the amortization charge for preproduction costs and had responsibility for preparing the quarterly schedules containing a comparison of actual and budgeted results, at Eckstein's direction. These schedules showed items such as the "expense roll" and the "amortization roll," which quantified certain of the accounting irregularities. After a final review by senior management, these bogus numbers were presented to the audit committee, the auditors, investors and eventually filed with the Commission.

Maria Messina ("Messina"), Livent's CFO, who joined Livent from Deloitte in May 1996, began attending the "after," or post-manipulation, meetings with management in October 1997. For these meetings, she prepared a pre- and post-adjustment balance sheet, income statement and statement of changes in financial condition, which she distributed to Drabinsky, Gottlieb, Eckstein and Topol. At this October meeting, all in attendance were provided with Messina's documents, Craib's schedules and individual show expense charts, which reflected improperly transferred amounts in detail. Discussion centered on the magnitude of the proposed manipulations, and the fact that the manipulations would make the fourth quarter results look poor because of the magnitude of amounts transferred to that quarter. Drabinsky stated that he did not care about the rest of the year, and that he had to have a good number for the third quarter since the debt offering was scheduled to conclude in the fourth quarter, and he could not show a loss. In looking at the figures, Drabinsky also asked Gottlieb if he would be able to "spin" the numbers to analysts, and asked how the analysts would react. Gottlieb told Drabinsky that although the level of preproduction expenses was higher than what the analysts expected, he could just blame it all on Ragtime.

At a meeting Eckstein attended with Drabinsky and Craib to discuss the first quarter of 1998, which showed a loss of $23 million, Drabinsky objected to such a loss and directed the staff to find a way to record a profit of $2 million. At a subsequent meeting Eckstein attended with Craib to discuss the quarter, Craib transcribed Eckstein's remarks as follows: "I have to keep all the lies straight. I have to know what lies I'm telling these people 9. I've told so many lies to different people I have to make sure they all make sense."

3.)Livent Personnel Lie to Deloitte

Drabinsky, Gottlieb and Topol instructed Eckstein to conceal accounting irregularities from the audit committee and from the auditors. Eckstein complied. Indeed, Eckstein stated that although independent auditors were a "necessary evil," it was no one's business how they ran their company. As a result, Livent's management representation letters signed by Drabinsky and Gottlieb for 1995, and by Drabinsky and Gottlieb for 1996 and 1997, were materially false and misleading.

4.)New Management Takes Over Livent

The arrival of new management merely emboldened Drabinsky and Gottlieb. The two continued to manipulate the company's financial statements and instructed their staff to generate two versions of financial schedules -- one, designed for Drabinsky and Gottlieb, which included the description of improper cost transfers, and a second, designed for new management, which did not provide the description of improper cost transfers. Drabinsky instructed Eckstein not to give the more illustrative schedules to new management, and he complied.

d.Livent's Conduct in Recording

Fraudulent Revenue Transactions

From 1996 through 1997, Drabinsky and Gottlieb conspired to recognize at least $34 million in revenue by entering into side agreements on five transactions that required Livent to pay back monies it received. Most of these transactions involved the sale of interests in Livent's theatrical productions for specific fees. Without the side agreements, the underlying sales agreements made little economic sense for the other parties, since the fees were nonrefundable and the parties only obtained limited profit participation from the productions. In each case, however, Gottlieb or Topol negotiated side agreements that obligated Livent to repay the fees. Drabinsky, Gottlieb, Eckstein and others concealed these loan arrangements from Livent's audit committee and the auditors. As a result, Livent made materially false and misleading statements concerning these transactions in disclosures contained in filings with the Commission. These transactions violated Canadian GAAP. 10 In total, Livent fraudulently overstated revenues by $16.4 million and $17.6 million, respectively, in its 1996 and 1997 fiscal years.

Drabinsky, Gottlieb, Topol, Eckstein and Messina conspired to conceal the side letters from the auditors and the audit committee. In May or June 1996, Topol, Drabinsky, Eckstein and Messina, among others, attended a meeting in Drabinsky's office when the very first of these transactions was discussed. During the meeting, Messina and Eckstein stated that Deloitte would not permit income recognition from the transaction if it knew of the side letter. Drabinsky responded, "they don't have to see everything," to which Eckstein said, "Okay," Messina said nothing, and Topol said, "Screw you and your auditors, do whatever the hell you want. I don't care what they see or don't see." Thereafter, Drabinsky, Gottlieb, Topol, Eckstein and Messina concealed the side letters on all the transactions from the auditors and the audit committee. As a result of this conduct, Drabinsky, Gottlieb, Topol and Messina signed false and misleading audit representation letters for Livent's 1996 fiscal year audit, and Drabinsky and Gottlieb signed a false and misleading audit representation letter in connection with Livent's 1997 fiscal year audit.

e.Other Fraudulent Conduct by Eckstein

1.)Livent's Fraudulent Ticket Purchases

During the period from September 1997 through December 1997, Livent senior management arranged for two vendors to purchase tickets for Livent's Los Angeles production of Ragtime in order to inflate ticket sales reported to Variety magazine. From September 30, 1997 to December 31, 1997, the first vendor purchased tickets totaling $381,015 (US) from the box office at the Schubert Theater in Los Angeles. These purchases were made using the vendor's personal credit card or the vendor issued checks from one of his companies. Livent then reimbursed the vendor or his companies. In November 1997, Eckstein also enlisted another vendor to purchase tickets to Ragtime L.A. Eckstein instructed this vendor to write checks to the Schubert Theater for tickets. The vendor asked for reimbursement and Eckstein instructed Fiorino to issue a check to the vendor's construction company.

Eckstein directed the Livent accounting staff to improperly capitalize the ticket purchases to Livent's fixed asset accounts. As a result, Livent's fixed asset accounts were false and misleading. Moreover, the box office numbers reported by Livent to Variety were materially false and misleading, designed to convey the false impression that Ragtime was a successful engagement in L.A., when, in fact, it was not.

2.)Insider Trading

Eckstein sold Livent stock while in possession of material, nonpublic information concerning the accounting irregularities described above. On July 16, 1998, Eckstein sold 1000 shares on the Toronto Stock Exchange at $11.25 per share for proceeds of $11,250.

D.LEGAL ANALYSIS

Eckstein Violated Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act,

and Rules 10b-5, 13b2-1 and 13b2-2 promulgated thereunder.

Eckstein knowingly falsified Livent's books, records and accounts. Eckstein knew or had reason to know of Drabinsky and Gottlieb's kick-back schemes. Those schemes had the effect of overstating the company's earnings, preproduction costs and fixed assets in the financial statements filed with the Commission and disseminated to investors.

After meeting with Topol and Gottlieb to agree upon a predetermined quarterly financial picture for Livent, Drabinsky and Eckstein regularly directed that various "adjustments" be made to Livent's financials in order to manage income for each quarter to achieve that predetermined level. Upon Eckstein's instruction, Winkfein and Malcolm regularly processed and directed others to process the adjustments to the books, records and accounts in such a way as to conceal their existence from the auditors and prepared financial statements incorporating these adjustments. Eckstein also directed his staff to keep a second set of records to track Livent's true financial picture.

Eckstein structured transactions with outside parties in order to recognize revenue, while concealing from the auditors the existence of side agreements to the transactions that would make revenue recognition improper. Further, Eckstein asked vendors to purchase tickets for Livent's production of Ragtime L.A. for the purpose of reporting materially false information to industry press. Eckstein also engaged in a variety of schemes, including the manipulation of the company's computerized accounting system and issuance of false management representation letters, designed to deceive Livent's auditors. Eckstein also sold Livent securities while in possession of material, non-public information.

Based on the foregoing, Eckstein willfully violated Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1 and 13b2-2 promulgated thereunder.

As a Chartered Accountant, the Canadian equivalent of a CPA, Eckstein was a professional charged with recognizing and preventing fraudulent accounting. Eckstein not only failed to fulfill his duties, he also intentionally participated in fraudulent conduct. Accordingly, Eckstein engaged in improper professional conduct, within the meaning of Rule 102(e)(1)(ii) of the Commission's Rules of Practice.

IV.

FINDINGS

Based on the foregoing, the Commission finds that Eckstein:

1. Engaged in improper professional conduct, within the meaning of Rule 102(e)(1)(ii) of the Commission's Rules of Practice, by intentional conduct that resulted in violations of applicable professional standards; and

2. Willfully violated Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, within the meaning of Rule 102(e)(1)(iii) of the Commission's Rules of Practice.

V.

Based on the foregoing, the Commission deems it appropriate and in the public interest to accept the Offer submitted by Eckstein and impose the sanctions agreed to therein.

Accordingly, IT IS HEREBY ORDERED that, effective immediately:

A. Eckstein is denied the privilege of appearing or practicing before the Commission as an accountant.

B. After five (5) years from the date of this order, Eckstein may apply to the Commission by submitting an application to the Office of the Chief Accountant which requests that he be permitted to resume appearing or practicing before the Commission as:

1. a preparer or reviewer, or a person responsible for the preparation or review, of financial statements of a public company to be filed with the Commission upon submission of an application satisfactory to the Commission in which Eckstein undertakes that, in his practice before the Commission, his work will be reviewed by the independent audit committee of the company for which he works or in some other manner acceptable to the Commission;

2. an independent accountant upon submission of an application containing a showing satisfactory to the Commission that:

a. Eckstein, or any firm with which he is or becomes associated in any capacity, will join as and will remain a member of the SEC Practice Section of the American Institute of Certified Public Accountants Division for CPA Firms ("SEC Practice Section") or an equivalent Canadian organization that includes or is supplemented by peer review, concurring partner review, continuing professional education and other membership requirements that provide appropriate quality controls over an accounting and auditing practice, as long as he appears or practices before the Commission as an independent accountant;

b. Eckstein or his firm has received an unqualified report relating to his or the firm's most recent peer review conducted in accordance with the guidelines adopted by the SEC Practice Section or an equivalent organization; and

c. Eckstein will comply with all applicable requirements of the SEC Practice Section or equivalent Canadian organization, including all requirements for periodic peer reviews, concurring partner reviews, and continuing professional education, as long as he appears or practices before the Commission as an independent accountant.

3. The Commission's review of a request or application by Eckstein to resume appearing or practicing before the Commission may include consideration of, in addition to the matters referenced above, any other matters relating to Eckstein's character, integrity, professional conduct, or qualifications to appear or practice before the Commission.

VI.

IT IS FURTHER HEREBY ORDERED that Eckstein comply with his undertaking to: on reasonable notice, and without service of a subpoena, cooperate with the Commission and its staff and truthfully disclose all information with respect to his activities and the activities of others about which the Commission or its staff may inquire; accept service, appear and testify in all investigations, administrative and judicial proceedings at which the Commission or its staff makes requests for his testimony except to the extent that the U.S. Department of Justice objects to such testimony, and providing the Commission reimburses his travel, lodging and subsistence expenses at then-prevailing U.S. Government per diem rates for witnesses; make himself available as may be required by the Commission or its staff; produce any documents within his possession, custody or control, domestic or foreign, which are requested by the Commission or its staff; be accompanied at any time he so desires by counsel of his choice; give truthful and accurate information and testimony and not assert any evidentiary or other privilege, other than the attorney-client and work product privileges; and in the event of his failure to testify truthfully or to comply with the above requirements, be subject to contempt proceedings, charges of perjury and/or charges of obstruction of justice.

By the Commission.

Jonathan G. Katz

Secretary


FOOTNOTES

1
Rule 102(e)(1) provides, in pertinent part, that: The Commission may censure a person or deny, temporarily or permanently, the privilege of appearing or practicing before it in any way to any person who is found by the Commission after notice and opportunity for hearing in the matter: ... (ii) To be lacking in character or integrity or to have engaged in unethical or improper professional conduct; or (iii) To have willfully violated ... any provision of the Federal securities laws or the rules and regulations thereunder.

2
17 C.F.R. §§ 201.102(e)(1)

3
Simultaneous with the filing of this Order, the Commission filed a civil injunctive action in the U.S. District Court for the Southern District of New York against Eckstein, seeking a permanent injunction from violations of Section 17(a) of the Securities Act, Sections 10(b) and 13(b)(5) of the Exchange Act, and Rules 10b-5, 13b2-1 and 13b2-2 thereunder, and seeking to permanently bar him from serving as an officer or director of a public company pursuant to Section 20(e) of the Securities Act and Section 21(d)(2) of the Exchange Act. At the same time, Eckstein consented to the entry of a Final Judgment of Permanent Injunction and Other Relief, permanently enjoining him from these violations and permanently barring him from serving as an officer or director of a public company.

4
The findings herein are made pursuant to the Offer and are not binding upon any other person or entity in this or any other proceeding.

5
Canadian dollars will be used in this Order unless otherwise indicated.

6
Preproduction costs are costs incurred and capitalized on a particular production prior to opening. Upon opening, these costs are amortized over a period not to exceed five years.

7
Costs other than preproduction costs were also improperly transferred to fixed asset accounts. For example, day-to-day operating costs, such as salaries for the orchestra and payments to cast pension funds, were capitalized to theater accounts.

8
Since 1994, on a quarterly basis, Eckstein directed Winkfein to improperly move costs from Sunset Boulevard , a severe financial failure, to other shows, such as Ragtime and Show Boat . The total transfer of costs in 1994 was approximately $5 million.

9
new management and due diligence accountants

10
The accounting also violated U.S. GAAP, but for reconciliation to U.S. GAAP, these transactions were reversed out of the financial results for reasons other than the existence of the side agreements.