Well, two years later, a commenter says that the story is true, and he or she has research to back it up:
I was once interested in re-mounting the show and went to the Library For the Performing Arts at Lincoln Center for some research. In the show's files, there is at least one newspaper article announcing that the show would be closing because of box-office shenanigans credited to one of the producing team. Obviously, there was no actual indictment in the paper, and it's at least ten years since I read through the files, but there are NY papers with articles to prove the allegations from the Livingston-Evans website. Incidentally, the producer in question only recently passed away (sometime in 2005, possibly early '06), his Times obit saying that he had gone on to other producing credits (I forget exactly what), but that there had been legal problems surrounding his participation in OH, CAPTAIN!
So we have a more-or-less confirmed version of my favorite kind of theatre story: the crooked Max Bialystock-style producer. And that's why I love the comments section.