Tax preparer prepares for jail

A tax preparer from Ontario has been sentenced and fined for tax fraud, the Canada Revenue Agency (CRA) said in a release on Friday.

Aurelius Carlton Branch of Brampton, Ont., was sentenced to four-and-a-half years in jail and fined $394,772 in the Ontario Court of Justice in Newmarket on Thursday, the CRA said. Branch had pleaded guilty last November to two counts of fraud under the Criminal Code of Canada.

Branch and his partner, Lawrence Watts, operated Fiscal Arbitrators, a nationwide tax preparation firm, the release said. The firm promoted a tax protester scheme based on a fraudulent concept of a “created person,” leading clients to believe they could legally file tax returns claiming large false business losses, even though no such businesses existed.

The fictitious losses enabled 241 clients to receive or attempt to receive about $10 million in federal tax refunds, the release said.

Branch, a former CRA employee from 1976 to 1980, knew the scheme was fraudulent and used his knowledge of the Income Tax Act and CRA operations to assist his clients with obtaining unwarranted refunds, the CRA said.

Branch also failed to file his individual income tax returns for 2009 and 2010, and failed to report $926,213 of business income he derived from Fiscal Arbitrators, resulting in the evasion of $245,643 of federal income tax.

Criminal charges were laid against Branch and Watts in November 2012. Watts was tried and ultimately convicted in October 2015, and subsequently sentenced to six years of jail and a fine.

Since Branch couldn’t be located, a Canada-wide arrest warrant was issued in January 2013, and Interpol published a notice in April 2013 identifying Branch as wanted for prosecution in Canada.

In cooperation with Costa Rican authorities, Branch was arrested in September 2017 and extradited to Canada in February 2019.

In the release, the CRA warned that those convicted of tax evasion face fines ranging from 50% to 200% of the evaded taxes and up to five years imprisonment. If convicted of fraud under Section 380 of the Criminal Code, a person can face up to 14 years in jail.

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.