R. v. Kueviakoe - using the criminal courts to go after charity fraud

December 08, 2015 | By: .(JavaScript must be enabled to view this email address) Mark Blumberg
Topics: News, What's New from the Charities Directorate of CRA, Canadian Charity Law, Ethics and Canadian Charities, Avoiding 'Charity' Scams

In R. v. Kueviakoe, 2015 ONCJ 681 (CanLII) Ekue Kueviakoe was charged with numerous offences contrary to the Income Tax Act (Canada) because he prepared many false income tax returns.  He was fined at a rate of 100% of the tax avoided on all those income tax returns and sentenced to a one year conditional sentence ie. house arrest.  He will have to pay over $70,000 in fines.   The Judge took into account a myriad of factors in determining the sentence including sick members of his family, his loss of a stable job resulting from the fraud etc.  The Judge noted that in terms of the taxpayers "The Canada Revenue Agency reassessed each of those people such that they are responsible for paying their portion of those taxes.  The Canada Revenue Agency has therefore already been reimbursed.  The individual taxpayers might also have been assessed administrative penalties for their part in this."  

The Judge had some comments on those taxpayers who participated: "I do not view them as victims.  I am satisfied that each of them knew or ought to have known that what they and Mr. Kueviakoe were doing was fraudulent. At the very least, the circumstances here clearly fell into the category of “where something seems too good to be true, it probably is”."  

Here are some excerpts from the case:

THE OFFENCES    

[60]            Section 239.(1)(a)  of the Income Tax Act makes it an offence for anyone to make, or participate in, assent to or acquiesce in the making of, false or deceptive statements in an income tax return.

[61]             Section 239.(1.1) (a) makes it an offence for a person to obtain or claim a refund or credit under the Income Tax Act to which the person or any other person is not entitled or to obtain or claim a refund or credit in an amount that is greater than the amount to which the person or other person is entitled by making, or participating in, assenting to or acquiescing in the making of, a false or deceptive statement in a return, certificate, statement or answer filed or made under the Act.

[62]            Mr. Kueviakoe was employed fulltime by Bell Canada.

[63]            He also began a side business of preparing tax returns for others, and providing tax refunds and payday loans.

[64]            His clients were often coworkers or others who heard of him by word of mouth.  The word that was heard was that Mr. Kueviakoe could obtain tax refunds that no other tax preparer could.

[65]            He accomplished this by providing his clients with fraudulent receipts for charitable donations and by claiming employment expenses that his clients were not entitled to.

[66]            The guilty pleas acknowledged false claims in 45 Income Tax Returns filed on behalf of more than 20 clients for the taxation years 2004 through 2009.  These false claims cost the federal government approximately $70,365.55 in taxes.[20]

[67]            Mr. Kueviakoe further admitted that he submitted many more tax returns on behalf of clients during the relevant period.[21]

[68]            Each taxpayer paid Mr. Kueviakoe a fee for these services.

VICTIM IMPACT

[69]            I intend to discuss firstly the impact that these offences had both on the Canada Revenue Agency (and by extension all Canadians).

[70]            The actions of Mr. Kueviakoe resulted in the non-payment of more than $70,000 in taxes by the various clients.

[71]            The Canada Revenue Agency reassessed each of those people such that they are responsible for paying their portion of those taxes.  The Canada Revenue Agency has therefore already been reimbursed.

[72]            The individual taxpayers might also have been assessed administrative penalties for their part in this.  If so, one might argue that they too may have been victimized by Mr. Kueviakoe.

[73]            I do not view them as victims.  I am satisfied that each of them knew or ought to have known that what they and Mr. Kueviakoe were doing was fraudulent. At the very least, the circumstances here clearly fell into the category of “where something seems too good to be true, it probably is”.

[74]            In that regard there was no breach of trust between Mr. Kueviakoe and the individual taxpayers.

[75]            I note that the income tax system in Canada relies to a large extent on the honesty of the individual taxpayers (or their representatives, such as Mr. Kueviakoe) in reporting correct information in their tax returns but I find that there was no breach of trust by Mr. Kueviakoe with the Canada Revenue Agency such as to bring these offences within s. 718.2(a)(iii) of the Criminal Code.

BACKGROUND OF MR. KUEVIAKOE

[76]            I received the following information about Mr. Kueviakoe from his counsel. Some of it is confirmed in the reference letters filed on behalf of Mr. Kueviakoe.

[77]            Mr. Kueviakoe is now 43 years old.

[78]            He is married and has three children, aged 7, 12 and 16.  The middle child has sickle cell disease and receives monthly treatment at the Hospital for Sick Children. His wife is being treated for breast cancer and is now working from home.

[79]            Mr. Kueviakoe completed high school and began university before fleeing from Togo to Canada.

[80]            He worked for Bell Canada from 1992 until he entered his guilty plea in this case.  He was then fired.

[81]            He had tried to start various businesses before going into the business of tax preparation, tax refunds and payday loans.

[82]            He is not working now.

[83]            His residence is jointly owned with his wife and subject to a mortgage.  They have few assets between them.

[84]            He is actively involved in his church, giving generously of his time and his money.

[85]            He had no criminal record prior to this.

ANALYSIS

[86]            Mr. Kueviakoe has committed very serious offences.

[87]            He perpetuated a significant fraud against the Canada Revenue Agency and by extension the taxpayers of Canada.  The monetary loss flowing directly from that exceeded $70,000.

[88]            He did this on a continuous basis over a prolonged period of time.

[89]            There are a number of good things that can be said on behalf of Mr. Kueviakoe but virtually all of them come with significant qualifications attached to them.

[90]            He had no prior criminal record.  This however can be said of many    fraudsters.  Their good reputation is often key to them being able to perpetuate their frauds.

[91]            He has been very active in his church.  This is partly offset by the fact that he appears to have possibly abused his relationship with the church in order to provide his clients with fraudulent receipts for charitable donations.

[92]            He did plead guilty.  I take that to be an acknowledgement of guilt and an expression of remorse.  Any mitigation of sentence flowing from that however is lessened by the fact that he entered guilty pleas only after all of the witnesses had appeared in court at least once and after some of them had appeared again and given evidence clearly implicating him in these offences.  He then brought the sincerity of any acknowledgement of guilt and expression of remorse further into question with his frivolous Charter application.

[93]            He has lost his legitimate job as a result of these offences.  It will be difficult if not impossible for him to find other employment offering the same level of income and benefits.  

[94]            In addition he has lost standing in the community.

[95]            He and his wife have been, and can expect to continue to be, subjected to very close scrutiny by the Canada Revenue Agency with respect to their personal income tax returns.

[96]            Denunciation and general deterrence are the primary principles of sentencing that are applicable in this case.  It is necessary to deliver a clear message to anyone who is thinking of committing a crime like these that we, as a society, will not tolerate that.

[97]            I cannot however lose sight of the principles of rehabilitation and restorative justice.

[98]            We do not know how much Mr. Kueviakoe received in fees for preparing the fraudulent tax returns.  I am certain that these fees will be more than offset by the fines that I will be imposing here.  These fines can and should serve as a deterrent to Mr. Kueviakoe and to like-minded individuals and not be looked upon as simply a licence fee for committing such offences.

[99]            I again note that the Supreme Court of Canada and the Ontario Court of Appeal have expressly said that a conditional sentence is "a punitive sanction capable of achieving the objectives of denunciation and deterrence"[22] although it is not as effective as a sentence of real imprisonment.

[100]         Finally, I point out that, were I sending Mr. Kueviakoe to jail, I would sentence him to imprisonment for less time than I am imposing here.

[101]         I am satisfied that the combination of significant fines and a conditional sentence of imprisonment is consistent with the fundamental purpose and principles of sentencing set out in sections 718 to 718.2.

SENTENCE

[102]         For all of the above reasons, I sentence Mr. Kueviakoe to concurrent    conditional sentences of imprisonment for one year, to be served in the community.  In addition, I impose a fine of 100 % for each count for a total of $70,365.55. A count by count breakdown of the fines is provided in Appendix A, attached to these reasons.

[103]         The terms of the conditional sentences of imprisonment will require that Mr. Kueviakoe:

1. keep the peace and be of good behaviour;

2. appear before the court when required to do so by the court;

3. report in person to a supervisor within two working days and thereafter report when required by the supervisor and in the manner directed by the      supervisor;

4. notify the supervisor in advance of any change of name or address, and promptly notify the supervisor of any change of employment or occupation;

5. remain within the Province of Ontario unless written permission to go outside the Province is obtained from the court or the supervisor;

6. cooperate with his supervisor.  He must sign any releases necessary to permit the supervisor to monitor his compliance and he must provide proof of compliance with any condition of this order to his supervisor on request;

7. live at 2258 Grouse Lane, Oakville, Ontario, or a place approved of by the supervisor and not change that address without obtaining the consent of the supervisor in advance;

8. a home confinement condition will be in effect for the first 8 months of the sentence

9. during that time he will remain in his residence at all times except

(a) between 1 pm and 5 pm on Saturdays in order to acquire the necessities of life,

(b) for any medical emergency involving him or any member of his immediate family (spouse, child, parent, sibling),

(c) for going directly to and from or being at school, employment, court attendance, religious services and legal or medical or dental appointments, or looking for work,

(d) he will confirm his schedule in advance with his supervisor setting out the times for these activities

(e) with the prior written approval of the supervisor.  The written permission of the supervisor is to be carried with him during these times.

10. During the period of home confinement, he must present himself at his doorway upon the request of his supervisor or a peace officer for the purpose of verifying his compliance with his home confinement condition.

11. For the duration of the conditional sentence, he will not seek, obtain or continue any employment that involves preparing income tax returns or advising anyone with respect to the preparation of income tax returns, or become a volunteer in any church in a capacity that involves being in a position of trust or authority with respect to issuing or handling receipts for charitable donations.

[104]         I am giving Mr. Kueviakoe two years in which to pay the fines.

Do you require legal advice with respect to Canadian or Ontario non-profits or charities?

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Charity Lawyer Mark Blumberg

Mark Blumberg is a partner at the law firm of Blumberg Segal LLP in Toronto and works almost exclusively in the areas of non-profit and charity law.

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