Canada Revenue Agency

Canada Revenue Agency

May 20, 2009 14:29 ET

4-Year Jail Term and $258,005 Fine for Ottawa-Area Tax Preparer

OTTAWA, ONTARIO--(Marketwire - May 20, 2009) - In May 2007, Leo Sabourin of Embrun, Ontario, was found guilty in the Superior Court of Justice in Ottawa, to three counts of income tax evasion and one count of fraud over $5,000. Today, he was sentenced to four years in jail for the fraud. Mr. Sabourin was also fined $258,005 and given a one year and two 90-day jail sentences, to be served concurrently, for the tax evasion. The fine is in addition to any taxes and interest owed, as well as any civil penalties that may be assessed by the Canada Revenue Agency (CRA).

Sentencing was delayed several times so that Mr. Sabourin could undergo medical testing, and be evaluated to determine if he was fit to instruct his counsel during sentencing. Earlier this month, after reports by forensic psychiatrists and a range of other medical professionals were submitted to the court, the judge determined that there was not enough evidence to find Mr. Sabourin to be unfit.

A CRA investigation determined that for tax years 1993 through 1999, Mr. Sabourin evaded $207,115 in federal income tax on his personal tax returns and an additional $34,024 in federal income tax on the tax returns of his corporation. The evasion was committed by claiming personal expenses through the business, failing to report income, and claiming a false business investment loss. Until 1996, Sabourin operated a business known as LJS Accounting Services. He was then sole director of 986720 Ontario Inc., which continued operating LJS as of 1997.

Mr. Sabourin was also found guilty of fraud relating to the tax returns he prepared, or directed to be prepared, for 115 chiropractor-clients from across Ontario for tax years 1994 to1999. Mr. Sabourin used a financial plan, on behalf of his clients, to reduce the taxes payable by the chiropractors to an extent that no other accountant was able to match. His plan, if allowed, would have permitted his clients to draw significant amounts of income out of their practices tax free over the course of five to eight years. In addition, it would have allowed the corporations to deduct expenses in the same amounts. For the 115 clients, Mr. Sabourin failed to report over $15 million of income on the clients' tax returns, resulting in $4.2 million of federal tax evaded by these clients. In turn, he was able to greatly increase the volume and profitability of his business in a short time. Under his plan, Mr. Sabourin set up a technical services corporation for each of his clients. He deducted large amounts from the corporation that he did not report on the shareholder's personal income tax returns. When questioned by the government about the deductions, Mr. Sabourin submitted altered or fabricated documents to substantiate the claims.

All of Mr. Sabourin's clients who used this plan were audited by the CRA. The audits treated the income attributed to the corporation as being the income of the individual chiropractor. In every case where Mr. Sabourin's plan was employed, the chiropractors either re-filed tax returns, or were subject to re-assessments which reversed the effects of the plan.

"Canadian taxpayers must have confidence in the fairness of the tax system," said the Commissioner of the Canada Revenue Agency, William V. Baker. "To maintain that confidence, the Canada Revenue Agency is determined to hold tax evaders accountable for their actions."

Taxpayers who claim false expenses, credits or rebates from the government are subject to serious consequences. They are liable not only for corrections to their tax returns and payment of the full amount of tax owing, but also to penalties and interest. In addition, if convicted of tax evasion, the court may fine them up to 200% of the tax evaded and sentence them for up to a five-year jail term.

Individuals who have not filed returns for previous years, or who have not reported all of their income, can still voluntarily correct their tax affairs. They will not be penalized or prosecuted if they make a full disclosure before the Agency starts any action or investigation against them. These individuals may only have to pay the taxes owing, plus interest. More information on the Voluntary Disclosures Program (VDP) can be found on the CRA's website at www.cra.gc.ca/voluntarydisclosures.

The information in this news release was obtained from the court records.

Further information on convictions can be found in the Media Room on the CRA website at www.cra.gc.ca/convictions.

Contact Information

  • Canada Revenue Agency
    Rebecca Merrett
    Communications Manager
    905-277-6433