Tax Preparers Perpetrating Fraud Go To Jail

The month of June was a bad one for tax practitioners who have perpetrated fraud. Tax evasion can attract fines of up to 200% of the taxes avoided plus other administrative penalties, including gross negligence (50% of taxes owing) and late filing (up to 10% of unpaid amounts).

On June 1 a chartered accountant from Carignan, Quebec, received 12 months in jail and a fine of close to $416,000 for failing to report a total of $1,648,608 in income from 2005 to 2009 on his personal tax returns. This came from accounting services rendered; funds appropriated from his company, Equinox Gestion Financière, Inc.; and funds embezzled from certain clients, which were supposed to have been paid to CRA for taxes or employee source deductions. The company was also fined $22,194, having falsified its own corporate income tax returns by failing to report $162,876 in 2008 and 2009.

A Markham, Ontario, tax preparer claimed false business losses for 241 clients, which netted $10 million in false federal tax refunds for the clients, and six years in jail for the preparer. A fine of almost $150,000 was slapped on top of that. Lawrence Watts of Fiscal Arbitrators also counselled his clients that Canadians do not have to pay tax on income, and on the techniques for evading tax payments. CRA was quick to point out that “the Canadian courts have repeatedly and consistently rejected arguments” made by “tax protester” schemes.

In Alberta, Rodney Wigmore of The Financial Group International pleaded guilty to personal income tax evasion and GST evasion and received a 24-month sentence of house arrest and a fine of $80,783. He failed to file tax returns for three years (2003, 2004, 2005) and failed to comply with the request to file, when he was fined $8000 in 2008. Once he filed he was audited and in 2010 CRA searched his home and business. CRA discovered that multiple sets of books were being kept, information was falsified and “Mr. Wigmore used his extensive knowledge of accounting and taxation to give the impression that the business was struggling and unprofitable.”

Last month, Fareed and Saheem Raza were each sent to jail for 51 months for preparing fraudulent charitable donation receipts for their clients of F & A Accounting Corporation and Fareed Raza & Co. Inc., using the name of Mehfuz Children Welfare Trust, a registered charity.

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