R. v. Scholz, 2020 BCPC 120

This case reminisces of the white collar crimes that are aggressively prosecuted and are also called “flying under the radar”

In August, 2009 Respondent and his wife decided to build a dream house on a vacant property –West Vancouver, BC. On August 10 2010, the corporation gave a legal consent and Respondent’s wife got 100% beneficial title. Respondent didn’t want to become a beneficiary as he wanted to immune his home from future creditors. The vacant property was meant to be used for massive building work and afterwards, couple wanted to live therein. The Excise Tax Act provided that only those who are building the property and are ready to sell it to someone else can claim rebates, thereby disentitling Respondent to claim GST/HST rebate. However, as soon as work to build the home commenced, Respondent began to claim GST rebates against the law. As the project went forward, the estimated cost of the house increased many folds making it beyond Respondent’s capacity to afford and he thereby made up his mind to sell the house. However, he didn’t inform either his wife or any other stakeholder involved in the construction including his architectures or contractors etc. about the same. In addition he also failed to inquire about the house’s potential selling price by contacting any dealers/agents.

In the meantime, the respondent and his wife moved into the property and lived there until 2017. In November 2011, Canadian Revenue Agency (CRA) started interrogating Respondent about his GST/HST rebate claims. In 2013, Respondent’s request for claims was rejected. Valuing the property at $6.8 million as a fair market price CRA determined the amount which Respondent owed in GST / HST rebate claims. Thereafter, the respondent sent copy of the rules and agency agreement to prove his entitlement to the claim, the recitals of which claimed him to be the sole beneficiary of the property, which was a prerequisite to claim rebates.

On the basis of all of this, the Provincial Court of British Columbia at trial found that Respondent fabricated a story and gave forged document just to qualify for the GST rebate. The documents were prepared for the sole requirements of CRA and hence, didn’t have originality. The judge dismissed all his testimonies, requests and claims in the light of his inconsistent stand that he wanted to sell the property but didn’t take any steps to do so. The court held Respondent guilty of presenting forged documents. The Respondent was hence charged with three violations under Excise Tax Act pertaining to sections 327(1) (a), 327 (1) (c), 327(1) (d) for which judge has reviewed Mens Rea factor. This contempt is made when someone provides false documents or wants to evade tax or asking for rebate on false, baseless claims. Additionally, Respondent was also charged with separate charges under Criminal code under 366 (1), 368(1) on the basis of Actus Rea for the false documents given and making CRA believe that these were genuine. Hence, Respondent is found convicted of 5 counts in the Indictment.