Cape Breton family members face jail time and fines after being found guilty of tax evasion
SYDNEY, NS — A Cape Breton mother and her three daughters face two to four years in prison and fines of up to $1 million after being convicted of tax evasion.
Federal prosecutors Mark Donohoe and Constantin Draghici-Vasilescu made the recommendations Tuesday during a sentencing hearing before Supreme Court Justice Robin Gogan.
Gogan found the family guilty in February of 10 counts of fraud and 10 counts of filing false GST claims with the Canada Revenue Agency (CRA). Ten other offenses were suspended.
The sentencing hearing is now due to resume on June 10 when the court is expected to hear from Lydia Saker, 77, of Sydney Mines and her daughters: Georgette Young, 50, of North Sydney; Angela Macdonald, 47, of Kentville; and Nadia Saker, 45, of Leitches Creek. The defendants represented themselves during their 24-day trial.
The offenses were committed between January 2011 and July 2015.
The Crown has recommended prison sentences of two to three years for Lydia Saker, Nadia Saker and Angela Macdonald. Additionally, it was recommended that Lydia Saker pay a fine of $335,099; Nadia Saker pays a fine of $493,620 and Macdonald a fine of $961,186.
For Georgette Young, who is believed to be the ringleader of the fraudulent scheme, the Crown has recommended a four-year prison sentence and a fine of $1,997,601.
Crown attorneys filed several hundred pages of case law and other references in support of their position. The family filed a two-page document which will now be referenced in June.
No money recovered
Gogan gave the family additional time to prepare their court submissions, noting that in representing himself, additional time would be beneficial.
During the period covering the offences, the accused filed false GST returns claiming a combined refund of $20,628,805. Of this amount, the CRA paid out $275,960 in refunds and allocated an additional $81,399 as a credit to other amounts owed to the agency, meaning the family and their businesses received $357,359.
Donohoe said Tuesday that no money had been recovered.
“It was a complete fabrication and they all knew what was going on.” — Mark Donohoe, Federal Prosecutor
In a lengthy verdict decision, Gogan said all of the defendants participated in the reimbursement scheme, adding that the only way the scheme would work was for everyone to work together.
“I further find established beyond a reasonable doubt that in each count the named defendants made or acquiesced in making these statements knowing that they would be believed to be true. The evidence confirms this unequivocally in all cases,” Gogan said.
The judge accepted the Crown’s position that Young was the mastermind of the scheme.
“Young was the conductor, but her mother and siblings played along. She was undoubtedly in charge of the operation, controlling the mixing and matching of related companies as needed to achieve the end goal,” the judge said.
Evidence at trial indicated that some of the 10 family businesses did not have bank accounts or had recently opened accounts when it became known that their refund claims were being reviewed by the CRA.
No genuine activity
There was no evidence of contracts with suppliers or customers and there were no employees or manufacturing facilities. The family-run businesses are said to have sold a range of items, including wigs, dressings, children’s clothing and cookbooks.
The transactions were concluded in cash, but there was no documentation to support the volume of business in progress. There were no electronic records. Young turned out to be the accountant for all family businesses.
“In the mountains of financial evidence presented to this court for review, it is difficult to identify a real transaction or genuine business activity,” Gogan said, in his verdict ruling.
In his court presentation, Donohoe said the scheme started with only small amounts being claimed for reimbursement, but quickly multiplied as the family doubled down and began claiming larger amounts.
One of the family businesses submitted a refund of $440,000 for more than $3 million in food sales over four months.
“It was a complete fabrication and they all knew what was going on,” Donohoe said.
“This is a serious case of fraud and not a minor one. If it hadn’t been for the hard work of several officials, more money would have been spent.
“They had plenty of time to stop, but instead they doubled down.”
Young had previously said the family planned to appeal the verdict and still maintained the Crown was wrong to prosecute them.