A Nova Scotia Supreme Court judge said instead of portraying herself as a cupcake-baking housewife, four Cape Breton women contrived an elaborate tax fraud scheme.
In Thursday’s ruling, Judge Robin Gogan found defendants Lydia Saker and her daughters Nadia Saker, Angela MacDonald, Georgette Young, and 10 of their companies guilty on 20 counts — half of them related to fraud. The remaining penalties come under the federal Excise Tax Act.
It was all part of a $3.6 million tax fraud scheme linked to GST and HST returns that the Canadian Revenue Agency said increased in size between January 2011 and July 2015.
“The magnitude of the fiction in this case is astonishing,” Gogan said. “The arrogance was shocking. When CRA began reviewing, and then auditing credit returns, the defendants doubled down on their fraud by providing fictitious invoices and altering claims in an attempt to conceal the sheer scale of their fraud.”
The women and their companies claimed $56 million in sales of products such as cookbooks, salad dressings, frozen dinners and children’s fur coats. CRA then accused them of inflating sales and operating costs to accept higher GST and HST returns.
Gogan said that although Young was an “orchestral conductor”, he noted that Saker and his other daughters played along.
The women were paid a $276,000 refund, according to court records, but were turned down $3 million after CRA auditors became suspicious.
During closing arguments in July, Young told the judge that they were “cupcake housewives, certainly not gangsters or con artists,” and that the family were targets of the CRA conspiracy.
“I will reject this application completely,” said Gogan. “Absolutely no cupcakes are made. What is baked here is an epic portion deception, made to equal measure of deception, vanity, gall, and massively misguided creativity.
“It is my hope that the Canadian public will never experience this recipe again.”
Gogan himself decides cases involving a large amount of electronic and documentary evidence from the Crown. The evidence includes material from civil audits and documents prepared by investigators.
She praised the work of “diligent civil servants” to end the criminal activities of women. It should be noted, however, that the behavior of the women exposed several vulnerabilities in the Canadian tax system.
‘Can’t fund your life through fraud’
Mark Donohue is one of two prosecutors for Crown in the case. He said the decision would be a deterrent effect for people who want to commit tax crimes.
“[It shows] people who might think of doing something similar that there are repercussions for this,” Donohue said. “That it’s not their money, it’s taxpayers’ money, and that you can’t fund your life through fraud, basically.”
Before leaving the courtroom, Gogan urged the women to consider talking to a lawyer before sentencing. During their five-week process, the women represented themselves.
Young told the court that several attorneys in the local area would take their case.
The family didn’t stop to talk to reporters outside the courtroom, but Young pointed out that the family plans to appeal the decision.
Donohue said Crown would likely seek jail time for the four women, but he was not clear on what sentence he was seeking.
The four women are expected to return to court to serve their sentences on May 24.
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