Her Majesty the Queen v. Kenneth Griffin, [1994] 1 CTC 116

Feldman, J. (orally):—Mr. Griffin pleaded guilty to tax evasion by preparing false tax returns for 97 customers over three taxation years. One hundred and fifty- five false returns were prepared, including false claims totalling over $1,000,000. Under the Income Tax Act [R.S.C. 1952, c. 148 (am. S.C. 1970-71-72, c. 63)] subsection 239(2), the maximum penalty for the offence is five years in the penitentiary.

The defence has submitted several mitigating factors. The accused is 34 years old. He has pleaded guilty, thereby saving the expense of a trial. He has only a significant criminal record involving a mischief conviction, and one for impaired driving. He was an alcoholic at the time of the offence and has abstained now for 11 months as of today. His profit in respect of the venture was not extensive, something in excess of $25,000 over three years. His 13-year live-in relationship with the co-accused has terminated as a result of the stress of the charges. He is currently unemployed but has a job offer with an airline after this matter has run its course. He says that the government has recovered the lost money from the taxpayers involved who were assessed at 25 per cent penalty and interest. Counsel for the accused, therefore, asked for an intermittent sentence with the substantial period of community service and probation.

The Crown acknowledges the mitigating factors, however, points out the aggravating factors as follows. The accused was an accountant whom some, if not all, of his clients (many of whom are recent immigrants from Eastern Europe) repose trust to prepare their tax returns. The fraudulent activity was a commercial venture extending over a period of three years and was, therefore, clearly premeditated. The false claims involved altered dental receipts, false business losses, and false personal exemptions claimed. There were a large number of taxpayers involved as well as a significant sum of money. The Crown states that the government may not in fact have recovered all of the money falsely claimed and as well has spent a significant sum in investigating the entire matter and seeking to recoup the losses.

The Crown submits that the primary factor in sentencing on tax evasion matters is general deterrence. This is particularly so where the accused is in the business of preparing tax returns for others. A message must be sent out that those engaged in that activity are trusted both by their clients, by the government, and therefore by the entire community to act with honesty. If they do not, they will be dealt with appropriately. Income tax evasion is a fraud not only on the government but on all members of our society who must each bear their fair burden and who depend on their fellow taxpayers to do so. Tax evasion is not a sport; it is a crime.

The Crown has provided the Court with some relevant case authority including the following cases: R. v. Olah (1979), 7 C.R. (3d) 273, 4 Sask. R. 62 (Sask. C.A.), a 1978 case from Saskatchewan where the sentence was two years less a day. R. v. Stavroff, June 21, 1978 (Ont. S.C.), Corey, J. (unreported), a 1978 decision of the Ontario High Court where the sentence was 18 months. R. v. Lambert, [1979] C.S.P. 1028, a decision from Quebec where the penalty was 12 months' incarceration as well as a significant fine. R. v. Mirando, July 8, 1982 (Ont. H.C.), Evans, J. (unreported), a 1982 decision of the Supreme Court of Ontario where the sentence was, I believe, two years less a day and a substantial fine. R. v. luliano, June 4, 1990 (Ont. Prov. Div.), Livingstone, J. (unreported), a 1990 decision of the Ontario Provincial Court where the sentence was three years’ incarceration. And finally, the Ontario Court of Appeal decision in R. v. Poynton, [1972] C.T.C. 411, 72 D.T.C. 6329, from 1972, where the penalty assessed was one year in prison.

The Crown in this case seeks a term of 18 months in the reformatory. It is clear that the primary principle of sentencing in this case must be general deterrence. Specific deterrence and reformation of the accused are also relevant but the indications of his personal difficulties and his so far successful attempt to deal with his alcoholism point to someone who may have come a long way towards learning his lesson. Of course, the mitigating factor of the guilty plea must also be taken into account. However, it is clear that in cases of this sort, a significant period of incarceration is required in order to ensure that it is well understood in this community that this type of activity is illegal and will not be condoned. The fact that such a substantial amount of money was involved along with 97 taxpayers are also serious aggravating factors.

In my view, a sentence of 12 months in the reformatory will serve the principle and purposes to which I have referred along with three years' probation on the following terms: (1) The accused is to report to a probation officer as required; this shall be a minimal reporting requirement possibly for the entire term and certainly after the first year. (2) The accused is to refrain from preparing tax returns for others either as a business or otherwise for the entire probationary period. (3) He is to seek and maintain if possible other employment.

I would ask his counsel to undertake to advise him of the provisions of sections 738 and 740 of the Criminal Code, R.S.C. 1985, c. C-46, in respect of probation.

MR. PREOBAZENSKI: Your Honour, one question, the reporting, I didn't catch the reporting condition. Is there reporting?

THE COURT: Well, he is to report to the probation officer as required. I anticipate that after the first year, the reporting requirement should be minimal and it may well be minimal in the first year.

MR. PREOBAZENSKI: He may want to, after his term is served, leave the country. I don't see any reason why he should report. There's no real benefit to him to—to be reporting other than opening himself up to fail to comply. If he wanted to go to the United States or Europe for business or for work or even to carry on with the—like you're trapped; you've got this reporting condition and you're hit with a fail to comply. I’m just—if this were a situation where we're dealing with someone who's a drug addict, I can see that but this is so a total—

THE COURT. Yes, I agree with you. I would have thought there must be some reporting but I anticipate it will be very minimal.

Perhaps, you could be of assistance here, Mr. Michaelson?

MR. MICHAELSON: I don't really have much to say in respect to—my understanding was that the probation officer’s look at the offender and the nature of the offence and in determining whether any reporting is required at all. I mean you may wish to limit it to a—to a short period of time so that there’s clearly an indication on your part that the reporting is not to go on for the three years or even beyond a year.

MR. PREOBAZENSKI: Perhaps, as required. Perhaps, I the condition [sic], say, "as required”. If there’s a problem—

THE COURT: If there's a problem, you can come back.

MR. PREOBAZENSKI: Okay.

THE COURT: I could put on the record that it is the Court's intention based on what I have been told that the reporting would be very minimal but it would be in the discretion of the probation officer.

Is there anything further?

MR. PREOBAZENSKI: No. That's it.

THE COURT: Thank you.

Accused sentenced.