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article imageSix Ontario residents charged in massive $200 million fraud

By Arthur Weinreb     Mar 27, 2014 in Crime
Toronto - Six men are in custody for what is being called a "fraudulent investment scheme" whereby people purchased illegitimate business losses in order to obtain income tax write-offs. The major victim of the fraud was the Canadian government.
The RCMP announced the arrests yesterday. Six men were taken into custody yesterday and each is charged with two counts of fraud over $5,000 and the commission of an offence for a criminal organization.
The investigation began in April 2012 when the RCMP received information about a possible tax avoidance scheme. The RCMP's Financial Crimes Unit spent almost two years interviewing witnesses and examining business records obtained after the execution of search warrants.
The RCMP have identified 493 victims of the fraud that occurred between 2009 and 2012 although they believe the scam might have been operating since 2004.
it is alleged the accused set up fraudulent businesses and used legitimate companies by manipulating their books to show significant business losses. The legitimate businesses were unaware their companies were being used in the scam. Individuals would pay between $1,000 and $300,000 to purchase the "losses" of these companies in a tax avoidance scheme. They were told they could write off these losses and save more in taxes than the amount they paid to the fraudsters.
The Canada Revenue Agency (CRA) stood to be the biggest loser in issuing tax refunds in amounts up to $200 million for these fictitious losses. However according to Supt. Dave Bellamy, head of the RCMP's GTA (Greater Toronto Area) Financial Crimes Unit, most of these write-offs were examined by CRA's auditors and disallowed.
According to RCMP Insp. Henry Tso, it is estimated individuals are out about $100 million but this figure could rise if the CRA decides to go after those who received refunds.
Tso described the scam as "a sophisticated scheme, put together by 'very intelligent' accountants and lawyers. Investments were sold very professionally, through companies and brokers — including many who may have been unaware that it was a scam — that appeared legitimate.
Facing charges are Vincent Villanti, 66, of Whitby, Shane Davidson Smith, 46, of Peterborough, David Prentice, 52, of Oakville, Ravendra (Ravi) Chaudhary, 65, of North York, Andrew Lloyd, 42, of Pickering and Joe Loschiavo, 49, of Etobicoke.
All six men appeared in court yesterday. The investigation is continuing and more arrests may be made.
More about Tax avoidance, selling business losses, Rcmp, fraudulent investment scheme, Tax shelters
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