CRA loses a big one in Provincial Criminal Court. VooDoo Accounting Fails the CRA

The following case is just a tip of the ice berg as to what is going on with CRA today.

This is taken from the Nanaimo Daily News, published: Thursday, April 7, 2011

We deal with this stuff everyday and it is hard to believe that this can happen in Canada today. I suggest the smoking gun lies with the government of the day. Think about this when you cast your federal vote.

Also see comments below, also published in the Nanaimo Daily News.

Tax fraud case is a ‘David and Goliath story’ that vindicates restaurant owners: Lawyer
Danielle Bell, Nanaimo Daily News

The owners of Nanaimo’s MGM Restaurant were found not guilty on Wednesday on allegations of tax fraud totalling more than $1 million.

Calling the Crown prosecution’s case weak, flawed and the alleged numbers “highly uncertain,” Judge Justine Saunders said the evidence against the owner and the two corporations could not sustain a conviction on any of the counts.

Tony and Helen Samaroo, their restaurant and their holding company Samaroo Holdings, were named in 21 charges of making false statements and evading payments under the Income Tax and Excise Tax Acts.

They were discharged in provincial court in Nanaimo.

“This is not just an acquittal, this is a vindication of their innocence,” said Chris Tollefson, lawyer for Helen. “This is truly a David and Goliath story.”

Afterwards at the MGM, which the Samaroos have operated for more than two decades, the couple and their lawyers celebrated with champagne.

“I’m glad this over,” said Tony, 62. “This has been very hard on my family and kids.”

The trial took 19 days to complete, most used for the Crown case. The offences allegedly took place between 2004 and 2006. The amount of unpaid taxes alleged against the Samaroos was $512, 776 each. Crown prosecutors had several theories, namely that the Samaroos misappropriated unreported cash and understated their income and the income of the MGM and Samaroo Holdings.

Allegations included a paper trail pursued by a Canada Revenue Agency accountant in the investigation pointed to nearly $1 million being deposited to their personal accounts of the Samaroos and shareholder loan accounts of the MGM and Samaroo Holdings; that Tony skimmed unreported cash from one till tape or shift per day; that the Samaroos used unreported cash to pay third-party suppliers, liquor and wages, and the net worth analysis indicated they could not have saved close to $1 million from 1980 to 2003.

A CRA investigation began in March 2006, which led to several search warrants and the seizure of numerous documents at the MGM, the nightclub owned by Samaroo Holdings, the motel owned Samaroo Motel Ltd, the Samaroo home, bank, credit union and accountant offices.

In her 23-page reasons for judgement, Saunders said the Crown theory is that the figure of $1.7 million, as alleged in the indictment, is “undoubtedly completely incorrect.”

As defense lawyer Steve Kelliher puts it, said Saunders, the Crown engaged in “voodoo accounting” to come up with the numbers to support the charges.

With the significant flaws in the net worth analysis, discrepancies between evidence regarding shareholder loan accounts, the unreliable extrapolation regarding sales at the MGM and the enormous markup calculated by the CRA accountant, deemed too hypothetical to rely on, Saunders said the Crown’s case is weak.

Saunders also said the Crown cannot rely on the calculations of the CRA accountant to prove its case.

There were 51 Crown exhibits, most of which were large binders containing hundreds of working papers. 250-729-4255

The Daily News (Nanaimo) 2011

T Netley

Thu, Apr 7, 11 at 10:45 AM
The owners have a lot more b— than I would. Congratulations on proving these bullies wrong
Going South

Thu, Apr 7, 11 at 12:07 PM
Congratulations to the Samaroo family for fighting CRA and winning. We are also fighting RCA right now; it’s not easy or cheap and certainly doesn’t feel fair. Many innocent taxpayers are screwed by RCA each year but either don't realize it or can’t afford the legal costs to fight it. The government isn’t always right or honest, and I’ve learned that unfortunately there’s not much you can do about it.

Thu, Apr 7, 11 at 01:31 PM
Good, now turn around and counter sue them in civil court for damages and launch a private criminal prosecution for malicious prosecution against the individuals in the CRA. The CRA is out of control! Who says Government doesn’t rule with a gun?

Thu, Apr 7, 11 at 04:11 PM
I was thrilled to read of this victory. CRA are nothing more than thugs. I know of one lovely family who have been nothing less than hunted down and harassed beyond belief. These are hard working, honest, law abiding people who have done absolutely nothing wrong, and yet are hounded year after year. I hope the family I am thinking of reads this and takes hope and strength that CRA CAN be beaten!
Cory P

Thu, Apr 7, 11 at 06:29 PM
i plead guilty to these guys trumped up stuff a few years ago. i could not afford the fight .they were dishonest all the way through.
Jack & Mary

Fri, Apr 8, 11 at 02:40 AM
Congratulations Helen & Tony.
Kirk L. Nymann

Fri, Apr 8, 11 at 08:36 AM
Clearly, we are under the thumb of a corrupt government. Changing the seats in the dance hall will not stop the dance hall from collapsing. The very structure of government needs to change. It’s time for the People of Canada to stand up, REMOVE the old system of governance and REPLACE it with a system based on a CONSTITUTION (rather than a Constitution Act). And, surprise, surprise, there IS one available at – just e-mail for a free PDF copy today!
Concerned citizen
Sat, Apr 9, 11 at 12:57 AM
A hearty congratulations to the defense counsel — Chris Tollefson and Steve Kelliher.

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