4 Cape Breton women in $3.6M fraud scheme found guilty

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A Nova Scotia Supreme Court justice says rather than self-described housewives who make cupcakes, four Cape Breton women baked up an elaborate tax fraud scheme.

Justice Robin Gogan found defendants Lydia Saker and daughters Nadia Saker, Angela MacDonald, Georgette Young, and their 10 companies guilty of 20 charges — half of which were related to fraud. The remaining convictions came under the federal Excise Tax Act.

It was all a part of a $3.6-million tax fraud scheme related to GST and HST refunds that the Canada Revenue Agency say escalated in size between January 2011 and July 2015.

“The magnitude of the fiction in this case is breathtaking,” Gogan said. “The hubris of it is shocking. When CRA began to review, and later audit the credit returns, the defendants doubled down on their fraud by supplying fictitious invoices and amending claims in an attempt to hide the massive scale of their fraud.”

The women and their companies claimed $56 million in sales on products such as cookbooks, salad dressings, frozen dinners and children’s fur coats

It appears that the companies inflating sales and operating expenses in order to receive higher GST and HST refunds. 

Gogan said that while Young was the “conductor of the orchestra,” she noted that Saker and her other daughters played along.

The women were paid refunds totalling $276,000, but were denied $3 million after CRA auditors became suspicious.

During closing arguments in July, Young told the judge they were “housewives who make cupcakes, certainly not gangsters or fraudsters,” and that the family was the target of a CRA conspiracy.

Gogan said “I would reject this plea entirely,”

“There were absolutely no cupcakes being made. What was being baked here was a scam of epic portions, made with equal measure of deceit, arrogance, gall and massively misguided creativity.

“It is my hope that the Canadian public will never be subjected to this recipe ever again.”

The case which involved a large volume of electronic and documentary evidence from the Crown. The evidence included material from a civil audit and paperwork compiled by investigators. 

She praised the work of “diligent public servants” for bringing the women’s criminal activity to an end. But noted that the women’s conduct exposed some vulnerabilities within the Canadian tax system. 

‘Can’t fund your life through fraud’

Mark Donohue was one of two prosecutors for the Crown in this case. He said the decision will act as a deterrent for people wanting to commit tax crimes. 

“[It shows] people who might be thinking of doing a similar action that there are repercussions for this,” Donohue said. “That it’s not their money, that it’s taxpayer money, and that you can’t fund your life through fraud, essentially.”

Before leaving the courtroom, Gogan urged the women to consider talking to a lawyer prior to sentencing. Throughout their five-week proceeding, the women were self-represented.

Young told the court that few lawyers in the local area would take their case.

The family did not comment outside the courtroom, but Young did indicate that her family plans to appeal the decision. 

According to Donohue, the Crown will likely be seeking prison time for all four women but he was unclear on exactly what punishments are being sought. 

All four women are expected to return to court for sentencing on May 24. 

This article was originally sourced by www.cbc.ca.