Serial fraudster goes to prison

On Jan. 14, Gary William Mechar of Kamloops, B.C., was sentenced to four years in prison and ordered to pay $276,655 in restitution to two financial institutions.

This was certainly not Mechar’s first day in court. Mechar’s latest activities compliment a long list of fraudulent activities, undertaken using various corporate and personal aliases, as well as the stolen identity of dead children.

Mechar’s current troubles came to a head on Oct. 15, 2012, when he plead guilty in the British Columbia Supreme Court in Kamloops to a multitude of charges including attempting to obtain fraudulent refunds on his 2000 to 2005 personal income tax returns, attempting to defraud two financial institutions of $378,593, and attempting to obtain fraudulent refunds on the 2004 and 2005 personal income tax returns of one of his associates, John Lovric.

The Canada Revenue Agency’s (CRA) investigation revealed that Mechar had sought to obtain $1,016,054 in fraudulent refunds by creating false identities and writing letters under various names to government agencies in order to obtain documents of identity originally issued to children who had passed away at an early age. Mechar used the fraudulent identities to open a number of bank and credit card accounts.

Mechar also attempted to obtain fraudulent tax refunds by claiming that his income was higher than it appeared but that he owed little or no taxes because he had large business losses which offset his earnings, and that his employer, Trucore Associates, had withheld most of his income as taxes. This method of tax fraud attempts to exploit the source deduction system. But Trucore had never remitted any such deductions. Mechar hoped that this would be an issue between Trucore and the CRA, not Mechar. The investigation revealed that Mechar was, in fact, a principal of Trucore.

Mechar seems to have employed a number of tactics over the course of his career. One of his favourites was to initiate litigation immediately after credit card companies or banks ceased to provide services to him or his aliases — and before those companies could initiate legal action against him. He always acted pre-emptively thereby delaying proceedings. He would commence a legal action against the institution but would provide no evidence in support of his claim. He would also request interrogatories from the president or CEO of whatever organization he was then defrauding in order to further delay proceedings.

A very interesting case, Mechar v. Bank of Nova Scotia (2011),  in the British Columbia Supreme Court revealed the extent of Mechar’s activities. The facts of this case were similar to many of Mechar’s other fraud attempts. He defrauded the bank and then sued them frivolously and vexatiously.

The court stated at paragraph 32 of its judgment: “Mr. Mechar, by not disclosing the particulars of his claim in either his pleadings or a response to the demand for particulars, intended to delay the Bank in obtaining judgment against him for the money owing to the Bank.”

Counsel for the Bank of Nova Scotia in this action described Mechar as a “habitual litigant who appears to bring legal actions on the theory that the best defence is a good offence."

Before awarding lump sum costs of $12,000 against Mechar, Justice H.C. Hyslop concluded: “Mr. Mechar attempts to prevent those who have extended credit to him from obtaining judgment by commencing an action against them first or filing a counterclaim. It is apparent that Mr. Mechar, Mr. Lovric, Robert Junior MacDonald if he exists, Tammy Lynn Pitkeathly, and Trucore participate in a round of musical chairs, sometimes in the position of the plaintiff and sometimes in the position of the defendant. Mr. Mechar commences litigation to prevent investigative activities of his and his companies’ activities. All of this activity appears to have no purpose, other than to delay those who are pursuing Mr. Mechar for legitimate purposes."

Greer Jacks is updating jurisprudence in EverGreen Explanatory Notes,  an online research library of assistance to tax and financial professionals in working with their clients.