Sentence in $41M tax fraud increased but further jail time nixed
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A U of T student who duped the Canada Revenue Agency out of more than $41 million in HST corporate refunds should have been sentenced to 36 months not the 13 he’d received, Ontario’s highest court ruled Wednesday.
But the Ontario Court of Appeal spared fraudster Kevin Ekow Plange any further jail time, stating it “wasn’t in the interests of justice” to throw the 30-year-old back into custody.
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The appeals court reserved its decision on whether to strike down the Mandatory Minimum Sentence of two years for fraud exceeding $1 million.
Trial judge Justice Shaun Nakatsuru declared the MMS unconstitutional as “cruel and unusual punishment” in March 2018.
The reasons for both the sentence appeal and the MMS decision will be released at an undetermined date.
Plange, now 30, wept outside the courtroom after the decision.
The single man, who had no previous criminal record, pleaded guilty last year admitting to submitting fraudulent tax forms — misrepresenting himself as a company official of Chevron and others — so that an initial series of payments totalling $35 million were deposited into Plange’s TD bank accounts in 2013.
The bank froze the funds.
In early 2014, Plange filed more forms, this time on behalf of Suncor Energy Inc. and others and another $5 million-plus was deposited into his Scotiabank accounts.
Plange received only $15,000 which he paid back to the CRA.
“We agree with the Crown attorney (David Quayat) that the sentence was unfit, even taking into account the significant mitigating factors,” stated Justice David Doherty on behalf of Justices James MacPherson and Mary Lou Benotto.
“The sentence should have been three years.”
“We’re pleased he wasn’t re-incarcerated” said Plange’s lawyer Darren Sederoff.
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“There was no loss to the CRA,” said Sederoff.
“We hope the appeals court upholds the trial judge’s quashing of the MMS. It simply casts too wide a net in our technologically-advanced society.”
Quayat said Nakatsuru erred in striking down the MMS based on “reasonable hypothetical” cases, which either don’t meet the definition of fraud or aren’t reasonable.
The first hypothetical of a self-employed man who “fudges” his income after an bad year to qualify for a million-dollar mortgage “doesn’t amount to a fraud and isn’t reasonable,” stated Quayat.
The mortgage-applicant isn’t being dishonest, and the lender wouldn’t simply lend money “on the word of a self-employed man without demanding proof of income or tax documents,” argued Quayat.
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