In 2005, federal tax auditor Francesco Fazio went to a restaurant in Montreal and called on the manager to follow him for a private meeting in the handicapped washroom.
This RCMP allegation filed in court went on to say that Mr. Fazio warned the manager of La Belle Place that he had uncovered undeclared revenue from beer sales. Mr. Fazio said that if the restaurant didn’t want to face a hefty tax bill, it would have to pay a $90,000 bribe.
“Think about it, and when I come tomorrow, you tell me,” Mr. Fazio allegedly told the manager.
On Tuesday, the RCMP charged Mr. Fazio and two of his former colleagues at the Canada Revenue Agency – Elias Kawkab and Luigi Falcone – with a total of 12 charges of fraud and corruption.
The Mounties allege Mr. Fazio was ultimately unsuccessful in his attempt to obtain a kickback at La Belle Place, and allege his actions were part of a broader scheme by CRA officials to obtain extra income from taxpayers.
“The accused allegedly attempted to extort money from restaurant owners in exchange for lower income tax assessments,” the RCMP said in a news release.
The RCMP alleged that Mr. Kawkab, a former CRA team leader, successfully obtained $100,000 from a Montreal restaurant owner “on an agreement that he would erase unreported income.”
Mr. Kawkab allegedly received the money in $100 bills in his grey Acura MDX from the manager and owner of Restaurant Arahova, who assembled the money by remortgaging a house, court records show.
The manager of the restaurant eventually became aware of the broader scheme at play, and angrily asked Mr. Kawkab for a reimbursement, the court records show. Mr. Kawkab allegedly gave back $50,000 at a discreet meeting at a Tim Hortons in Montreal.
Finally, the RCMP are alleging that Mr. Falcone, a retired tax auditor, tried to squeeze $50,000 from a restaurant owner “to lower a bogus tax notice, before even auditing his financial statements.” The request was allegedly made at a public park in Montreal after Mr. Falcone warned the owner of the restaurant to avoid making phone calls and to ensure that he would not be followed to the meeting.
The charges are the first to be laid as part of the RCMP’s four-year-old investigation, dubbed Project Coche, into allegations of corruption and fraud at the Montreal offices of the CRA. Seven auditors and team leaders have been fired as part of the investigation that has raised questions about whether the federal tax-collection agency was infiltrated by criminal elements.
“The RCMP investigation into these allegations of corruption within the Canada Revenue Agency was initiated in 2008 and is still ongoing,” the federal police force said. “More charges could be laid in this matter.”
In the House of Commons, Revenue Minister Gail Shea said that the government “will not tolerate this type of misconduct.”
“CRA employees are in a position of public trust and we demand professional and ethical conduct. This is why our government has increased our budget for internal investigations by 127 per cent and we have nearly doubled the number of internal investigators,” she said.
In recent search warrants, the RCMP have alleged that other CRA officials helped firms in Quebec’s construction industry to evade taxes. The RCMP have alleged in search warrants that CRA officials received gifts or compensation from a construction firm, including free home renovations, trips to Las Vegas and the Bahamas, and an upscale evening at a Montreal Canadiens home game.
Two CRA auditors were fired in 2009 after investigators alleged that they shared a bank account containing $1.7-million in the Bahamas with Francesco Bruno, owner of construction firm B.T. Céramique.
None of the allegations in the search warrants have been proven in court. The first court appearance by Mr. Fazio, Mr. Kawkab and Mr. Falcone is scheduled for June 11.
Charges against former tax-agency workers
Francesco Fazio, 55, from Ville Saint-Laurent
Position: Former tax auditor, dismissed in 2011
Charges: Allegedly sought $90,000 from owner and manager of a restaurant called La Belle Place after warning of a hefty tax bill.
Elias Kawkab, 50, from Ville Saint-Laurent
Position: Former team leader, dismissed in 2011
Charges: Allegedly received $100,000 in cash from the owner of Restaurant Arahova after other CRA officials threatened to impose a large bill for unreported income.
Luigi Falcone, 50, from Laval
Position: Resigned as tax auditor in 2009
Charges: Allegedly met the owner of Restaurant Agostini in a public park in 2006, asking for a $50,000 payment to avoid facing a $250,000 tax bill.