Tax Evasion: Toronto Man Swindles International Investors

Marco Iampieri B.A., JD, M.B.A

Throughout the calendar years 2012 - 2015, a Toronto man named Perry Fousteris and representatives of Fousteris’ corporation defrauded international investors by encouraging international investors to purchase shares of corporation’s owned by Fousteris. This fraud attracted the attention of the CRA, as well as penalties, interest and jail time.  Here is what happened:

Fousteris dishonestly explained to the international investors that their shares increased in value throughout the period of ownership and encouraged the international investors to sell their shares. All profits or the increase in value in the shares owned by international investors were fictitious. Fousteris personally appropriated $1,081,284 from the corporation’s bank accounts and did not report this income under the Income Tax Act. Fousteris evaded $275,066 in federal income tax.

Tax evasion is a serious crime that has far-reaching financial impacts on Canadian society. When tax evasion is committed, the tax-base is eroded, which financially impact those at the margins of our society and all taxpayers. Further, the respective federal and provincial governments must increase their debt burden, which is ultimately borne by Canadian taxpayers.

Tax evasion may be prosecuted under the Income Tax Act and the Excise Tax Act with financial penalties ranging from 50% to 200% of the taxes evaded, and up to five years in prison. Further, if prosecuted under the Criminal Code, the individual may be charged with fraud under section 380 of the Criminal Code, which carries a maximum incarceration term of 14 years.

Fousteris was conditionally sentenced to a period of two years imprisonment less a day and fined a total of $206,300. Additionally, Fousteris may encounter civil suits on behalf of the swindled international investors, which may attract punitive and compensatory damages.

Key Takeway: For advisors or individuals who encounter a new investment professional, ensure that they are duly qualified to provide investment advice and that they are registered under the Canadian Securities Administrators’ National Registry. You can check their registration by using the Canadian Securities Administrators’ National Registration Search.  

For potential fraudsters:  Don’t forget that amongst your future troubles, are expensive and unpleasant consequences from the CRA. You’ll need to spend even more on accounting and legal help.

Additional educational resources: Don’t miss this opportunity to take Canada’s most up-to-date and comprehensive Advanced T1 Tax Update Course for Professional Tax Accounting firms and their new and returning staff who will file 2021 T1 Returns. This is Canada’s #1 tax training program for busy practice owners who need to recruit and train staff in time for this tax season.