$8.1 million GST scam involving businessman and phantom cars

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The following is now available on the CRA Web site:

News release

Vancouver, British Columbia, August 27, 2007… Michael Wolfe was sentenced today by the Supreme Court of British Columbia after being convicted on April 20, 2007, of seven counts of Goods and Services Tax (GST) fraud and failure to remit GST. Wolfe was sentenced to two years less a day in prison and fined $6.9 million.

A Canada Revenue Agency (CRA) investigation found that between 1996 and 1998, Port Chevrolet Oldsmobile Ltd. (Port), and its Director Michael Wolfe, received or attempted to receive $8.1 million in GST refunds as part of an auto export scam. Port claimed to have purchased over 1,600 brand new vehicles at cost plus GST from an unrelated company, Rags To Riches Motorcars Ltd. (Rags). The key to the scam was that the vehicles did not actually exist; the transactions were created on paper only. Port would then “re-sell” the fictitious vehicles back to Rags without charging GST, claiming they were destined for export. Port then filed GST returns requesting credits for the amount of GST paid to Rags for the purchase of the vehicles. These returns resulted in sizable refunds for Port.

When people or corporations are convicted of tax evasion, in addition to any fines imposed by the courts, they are still obligated to pay the full amount of federal and provincial taxes owing, plus interest and any civil penalties that may be assessed by the CRA.

“The Canada Revenue Agency is responsible for collecting the taxes that governments levy to pay for the many public services and social programs that Canadians enjoy,” said Agency Commissioner William V. Baker. “The sentence imposed by the courts in this case is a reminder of the serious consequences for anyone who deliberately evades their tax obligations or attempts to use the tax system to defraud their fellow citizens.”

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-arc.gc.ca/convictions

SOURCE: CRA Newsroom


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