Enforcement Notification - Tax evasion - Nova Scotia's self-described "housewives who make cupcakes" receive prison sentences and fines for $3.6 million fraud scheme

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Canada Revenue Agency

Jun 24, 2022, 14:03 ET

SYDNEY, NS, June 24, 2022 /CNW/ - The Canada Revenue Agency (CRA) announced that on June 23, 2022, Georgette Young, of Sydney, Angela MacDonald, of Kentville, Nadia Saker, of Leitches Creek and Lydia Saker, of Sydney Mines were each sentenced in the Nova Scotia Supreme Court in Sydney. Young was sentenced to four years in prison and fined $1,997,601, MacDonald was sentenced to three years in prison and fined $961,186, Nadia Saker was sentenced to three years in prison and fined $493,620 and Lydia Saker was sentenced to two years in prison and fined $335,099. On February 24, 2022, the three sisters, their mother (Lydia Saker), and their ten companies were found guilty of ten counts of fraud and ten counts of claiming false Goods and Services Tax/Harmonized Sales Tax (GST/HST) refunds.

A CRA investigation revealed that between January 1, 2011, and July 31, 2015, the four women filed false GST/HST returns reporting over $56 million in sales and requesting over $3.6 million in refunds in an attempt to defraud the CRA. The women fabricated false invoices, some of which included over $16 million in marketing and advertising, $6.4 million in cookbooks and food products, $5.5 million in catering and $3.7 million in children's clothing. During this period, the investigation determined that only five of the ten companies had active bank accounts, and the actual business activity of those five companies was in the range of $60,000.

The four women filed Input Tax Credits (ITCs) creating refunds of $3,628,805. Of the $3,628,805 in fraudulent refunds requested, the four women received $275,960, and an additional $81,399 was allocated to amounts owed to the CRA. When the CRA began to audit the filed returns, the four women doubled down on their fraud by supplying fictitious invoices and amending claims in an attempt to hide the massive scale of their fraud.

All case-specific information above was obtained from the court records.

In addition to the court imposed fines and/or jail sentences, convicted taxpayers have to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA.

The majority of Canadians pay their taxes in full and on time. Registered business owners can claim ITCs to recover the GST/HST paid or payable on the purchases and operating expenses related to their commercial activities.

To ensure that the tax system is fair for everyone, the CRA makes sure that people who try to avoid or evade paying their fair share of taxes are held accountable. Whether or not a file is accepted for criminal investigation is based on many factors, including the availability of evidence and the reasonable prospect of a prosecution. In order for charges to be considered, there needs to be sufficient evidence to establish that a crime has been committed and that the individual did so with intent.

The CRA is dedicated to maintaining the integrity of Canada's tax system, thereby contributing to the social and economic well-being of Canadians, particularly during these unprecedented times. The CRA continues to aggressively pursue tax evasion and false claims with all tools available to it. The CRA works to ensure that individuals and businesses report all income earned and only claim benefits to which they are entitled, so that important benefit programs can be administered to those who need them. Any individual or business who underreports income, or claims losses or benefits to which they are not entitled, including ineligible claims for COVID-19 benefits, may have to repay the benefit amounts and may be subject to other possible action.

Associated Links
http://www.cra-arc.gc.ca/gncy/cmplnc/otip-pdife/menu-eng.html
Leads Program
Voluntary Disclosures Program

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SOURCE Canada Revenue Agency

Media Relations - Regional contact, Jeffrey Lansing, Canada Revenue Agency, 902-233-5085, [email protected]

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Canada Revenue Agency

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Government of Canada