Canada Revenue Agency

Canada Revenue Agency

June 03, 2009 07:47 ET

Charity Scheme Tax Preparer Jailed and Fined for Tax Fraud

TORONTO, ONTARIO--(Marketwire - June 3, 2009) - Paul Leo-Mensah, of Etobicoke, pleaded guilty in Ontario Court of Justice in Toronto on April 21, 2009 to one count of fraud over $5,000 and two counts of tax evasion. On May 28, 2009, he was sentenced to time served plus one day and fined $145,760. Leo-Mensah had been in custody since his arrest on July 2, 2008. Leo-Mensah was given six months to pay the fine.

A Canada Revenue Agency (CRA) investigation revealed that Leo-Mensah, a tax preparer in Etobicoke, provided his clients with false charitable donation receipts totaling $11,699,104 from a number of churches and similar charitable organizations. He prepared and falsified 801 income tax returns for approximately 300 different individuals. In doing so, these individuals understated their federal tax payable. As a result, the CRA issued refunds totaling $3,275,749 based on the false figures. Leo-Mensah collected over $972,630 in fees from his clients once the refunds were received, and paid a portion of his fees to associates, including officials of the charitable organizations. Leo-Mensah himself retained approximately $561,693 that he did not declare as income in 2004 and 2005.

"Tax evasion costs all of us," said William V. Baker, Commissioner of the Canada Revenue Agency. "The job of our investigators and auditors is to make sure that all Canadians pay the tax they owe."

Schemes involving false or inflated charitable donation receipts and tax preparer fraud are both being investigated as part of Project Trident, a CRA-wide enforcement project that helps protect the tax base by prosecuting key players in fraudulent tax schemes and reassessing related tax returns. Project Trident targets three types of fraud: identity theft, charities-related fraud, and tax preparer fraud. For more information, visit www.cra.gc.ca/projecttrident.

Taxpayers who receive a refund to which they are not entitled to will have their income tax return adjusted. They will then have to pay back all outstanding amounts. The CRA is continuing its efforts to recover overpayments made to taxpayers in this particular case.

Individuals convicted of Criminal Code offences of fraud or uttering forged documents face a maximum jail term of 14 years. When individuals or corporations are convicted of tax evasion, they have to pay the full amount of tax owing, plus interest, and any penalties the CRA assesses. In cases of gross negligence, the Income Tax Act and Excise Tax Act allow the CRA to assess a penalty of up to 50% of the unpaid tax or the improperly claimed benefit. In addition, the court may, on summary conviction, fine them 50% to 200% of the tax evaded, and sentence them to a jail term of up to two years.

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

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

Contact Information

  • Canada Revenue Agency
    Colin Kohlsmith
    Communications Manager
    905-615-2838