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Who‘s Robbing Millions From Bank of Canada? -$1.1Bil Identified in Frauds
Who‘s Robbing Millions From The Bank of Canada?
CRA Admits It Paid Out $63Mil in Sham Overseas Tax Refund Scheme. $1.1Bil Identified in Carousel Frauds, Agency Says
The Canada Revenue Agency says funds were wired overseas by participants in a scheme that deprived the treasury of untold millions.
The Fifth Estate 27 NOV 2023
Elaborate frauds known as carousel schemes are using fake business transactions to reap fraudulent tax refunds from the Canada Revenue Agency, costing Canadian taxpayers hundreds of millions of dollars.
In early 2020, the Canada Revenue Agency came to believe it had made a $63-million mistake.
The sum, the agency concluded, had been paid out in "illegitimate" tax refunds as part of what it now alleges was a "sham designed to deceive."
Iris Technologies, a Markham, Ont.-based company, had increased its sales from $27 million to $800 million in two years, according to CRA records. Buying and then exporting bulk internet telephone minutes had put the firm in a position to claim more than $120 million in tax refunds.
The CRA said in court filings that Iris "knew or was wilfully blind" to the fact that it was involved in what is known among tax experts as a carousel scheme.
Samer Bishay, Iris's CEO, has denied the allegations and launched multiple appeals in the Federal Court of Appeal, Federal Court and the Tax Court of Canada. Iris is also suing the agency for $275 million, alleging abuse of process, misrepresentation and misfeasance in public office.
An investigation by The Fifth Estate and Radio-Canada's Enquête into carousel schemes in Canada has revealed international networks of sophisticated criminals claiming hundreds of millions of dollars from Canadian government coffers while facing few to no consequences.
Samer Bishay, once named one of Canada’s top 25 immigrants by RBC, founded Iris Technologies more than two decades ago.
Cryptocurrency transactions, bank records, false invoices and corporate filings in Canada, the United States and the United Kingdom were all essential pieces of a scheme which, at its centre, relied on Canada's outdated tax rules and an unwitting CRA.
The case involving Iris is one example among many The Fifth Estate found in Tax Court records.
"I believe that the fault here is with the tax authority," said Mike Cheetham, a Dubai-based tax fraud analyst and expert on the subject of carousel schemes.
"There will always be criminals. They will always attack the low-hanging fruit. And your tax system is wide open for this fraud."
Well-known to authorities in the EU and U.K., a carousel scheme sees participants pass goods around in a circle of companies, failing to pay sales tax when the goods are imported but collecting a tax refund on the export.
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