On April 30th I attended yet another appeal of a Poriskyite tax evasion conviction, this time it was Russell Porisky, the man himself! Russ and his wife Elaine Gould had a joint appeal against their convictions for income tax evasion and counseling fraud. Russ was the man who, through diligent research, realized that we Canadians actually didn't had to pay income tax if we chose not to. He teased this out of his own bizarre convoluted interpretation of the Income Tax Act, an interpretation that only he could discern, and he packaged all of this tax knowledge together into a course of instruction presented by an organization he called the Paradigm Education Group. Paradigm consisted of Porisky at the top and numerous "educators" under him who gave seminars and lessons on how to evade paying taxes. Porisky skimmed a fee off the top from the suckers who bought into his scheme and the educators also took a cut for doing the gruntwork of teaching the Paradigm scheme. Unfortunately, while avoiding tax is entirely legal, Russ's scheme actually entailed evading taxes, a criminal act. The net result was dozens, maybe hundreds, of criminal charges laid against Porisky and his "students". Virtually all were convicted. Some got conditional sentences and criminal penalties and some, like Porisky, got jail sentences. Porisky's tax evasion trial, conviction, and sentencing is written up in detail in an earlier part of this thread. The April 30th hearing was his appeal of his, and his wife Elaine Gould's, convictions. This was Porisky's last chance at redemption, the final chance, from the man, who's brainchild the Paradigm system was, to convince a court that he was correct.
And it was a sad, sad, spectacle. The man who single-handedly created and ran one of the largest tax evasion scams in Canada's history was abandoned, almost forgotten, with only four spectators to watch his fate, Michael Millar, a true believer facing his own day of reckoning next month, two guys apparently from the prosecution side, and me. Porisky didn't look, or sound, well. He had a limp and looked worn out. He was self-represented and barely seemed to have any personal involvement in the job at hand. Unlike Keith Lawson he seemed defeated before he started.
The hearing started with the court (three appellate judges) asking Russ how much time he thought he needed to present his case. If you'll recall Keith Lawson used his entire allotment of two hours, spending it futilely flailing away hoping that something would stick. Porisky needed a bit less time than Keith, one hour and fifty-three minutes less to be precise. He told the court he'd take about ten minutes but I timed him and he was done in seven minutes.
The court told him that they'd read his factum and materials and he should bear that in mind when giving his arguments. They asked the two appellants if both were speaking or just one of them;
Russ - mumble, mumble, mumble.
The court asked him to speak louder.
Russ - mumble, mumble, mumble.
This was an ongoing problem for me but not a lengthy one given the seven minutes that Russ actually spoke. Porisky started by passing a paper to the Crown and the court. He said that he faced difficulty speaking in open court so he wanted to enter the paper (an affidavit) he'd passed over as his submission and he'd read it out orally. This was news to Crown and court but neither appeared to have any problem with the approach so he read out the document. Because of difficulty hearing him I can't guarantee I got everything but there didn't seem to be much. Porisky said that he wanted to enter his oral argument this way because he had difficulty speaking in open court and doing so "elevated" his distress and he was overwhelmed.
He gave a history of the case management hearings to date including a failed Section 684 (of the Criminal Code) application for legal assistance. Every application they made during the case management was denied. They'd argued about the legality of the search warrant, asked for an adjournment, something about the bill of rights and privacy. They'd wanted a "private appeal", whatever that was supposed to be. He also noted that they were appealing on the basis that they were prejudiced by the trial judge using the words "avoid" and "evade" interchangeably in the instructions to the jury.
We thought the jury would review the evidence and realize our non-commercial intention and the government's attempts to commercialize us, neither of us wanted a commercial enterprise or make a profit. Elaine was a housewife taking care of seven children and I was pursuing a private endeavor. (Note - The comment about commercializing them was in reference to the CRA assigning Russ and Elaine a Goods and Service Tax number, according to Russ this was a violation of their rights). And that was about it. After seven minutes he was done.
Russ was essentially making the same argument that Keith Lawson made in his appeal;
http://www.quatloos.com/Q-Forum/viewtop ... 00#p274711
but, as impossible as it seems, his failure to provide any context for phrases like "commercial enterprise" and "private endeavor" resulted in him making even less sense than Keith did. Keith had explicitly argued that the Supreme Court of Canada's decision in
Stewart meant that he didn't have to pay tax if he chose not to. Porisky argued the same thing but without mentioning
Stewart or any other decision to support his position. He just said things. He had two years or so to prepare for this hearing and all he managed to cough up was seven minutes of gibberish on a single sheet of paper.
The court asked him if he was relying on his written factum. Yes.
Then Elaine Gould, his wife and co-defendant, spoke up. As best I can recall this is the first time she's spoken in the entire series of trial and appeal hearing. At least it's the first time in a hearing I've attended. She told the court that the CRA took them from their natural rights to make them commercial enterprises. "We had to defend our rights by entering the system. We got issued a GST number but we are not a business. We have tried from the beginning to try and establish our rights. I'm a stay at home mom and Russ ran a personal endeavor." And that was it for Elaine.
With Russ and Elaine done it was the Crown's turn. First point considered was the evade and avoid argument. Crown said that the trial judge had applied the correct usage of the words and had followed legal authorities and this court.
Rollin' in my sweet baby's arm's
Rollin' in my sweet baby's arm's
I'm goin to lay around the shack till the mail train comes back
Then I'll be rollin' in my sweet baby's arms.
I ain't goin' to work down on the railroad
Ain't goin' to work down on the farm
Goin' lay around the shack till the mail train comes back
Then I'll be rollin' in my sweet baby's arms.
Sorry, a bottle of red wine and Leon Russell on the headset distracted me from the travails of Russ and Elaine. Back on track wherever that was. Right; Crown arguments. To be fair they didn't really interest me that much at trial either. Like Keith Lawson's appeal this disaster was DOA and all that Crown really had to do, as with Keith's hearing, was show up. But Crown deserves their turn so on to Porisky's personal endeavor idiocy. Crown said that the personal endeavor argument had no air of reality to it. Crown cited paragraphs 6 to 9 of
Mahmood;
R. v. Mahmood
2016 ONCA 75
http://canlii.ca/t/h32dj
Which state;
[6] Mr. Mahmood’s principal submission is that the trial judge confused the jury by making no distinction between tax evasion (illegal) and tax avoidance (legal) in the course of his charge to the jury.
[7] I do not accept this submission. In his jury charge, the trial judge set out the essential elements of the offence of tax evasion that the Crown must prove:
For you to find Mr. Mahmood guilty of any of these counts, Crown counsel must prove each of these essential elements beyond a reasonable doubt:
i. that Mr. Mahmood knew that tax was owed under the Act as charged;
ii. that Mr. Mahmood did something or engaged in a course of conduct that avoided or attempted to avoid the payment of tax;
iii. that Mr. Mahmood intended to avoid or intended to attempt to avoid payment of that tax.
[8] In my view, this was an accurate and sufficient charge on this issue. The language the trial judge used mirrors this court’s enumeration of the elements of the offence of tax evasion in R. v. Klundert (2004), 2004 CanLII 21268 (ON CA), 187 C.C.C. (3d) 417, at para. 47:
In most cases of tax evasion, the trial judge will adequately describe the elements of the offence by instructing the jury that they must be satisfied beyond a reasonable doubt that the accused:
• did something or engaged in a course of conduct that avoided or attempted to avoid the payment of tax imposed by the Act;
• knew there was tax imposed by the Act; and
• engaged in the conduct for the purpose of avoiding or attempting to avoid payment of tax imposed by the Act or knowing that avoiding payment of tax imposed by the Act was a virtual certain consequence of his actions. [Footnotes omitted.]
[9] Moreover, I would observe that in the context of $3,000,000 in fees and commissions over a four-year period, no income tax returns filed for those years, and not one penny of income tax or GST remitted, there is no air of reality to a potential tax avoidance versus tax evasion explanation for Mr. Mahmood’s conduct.
Which I find a touch confusing because my notes show this quote relates to the Crown's personal endeavor argument but it clearly relates to the avoid vs. evade argument. Blame it on my difficulty in taking notes. Russ spoke too low and the Crown went to fast for my rudimentary skills. The only speaker I could both clearly hear and keep up with was Elaine.
I'll note at this point that that the court treated Elaine and Russ much more kindly than they did Keith Lawson. Not that this had any effect on the outcome but the atmosphere was much more sympathetic to the defendants. The court was very perfunctory with Keith, hustling him along and being quite sharp in response to his idiotic arguments. But not here. The judges were polite and considerate. At Keith's hearing they told the Crown that the court didn't need to hear from them. But the court didn't say that here although Russ and Elaine's arguments made no more sense than Keith's.
She came down from Birmingham one cold December day
As she rolled into the station you could hear all the people say
There's a girl from Tennessee, she's long and she's tall
She came down from Birmingham on the Wabash Cannonball
Sorry, drifting again. Just listening to The Wabash Cannonball. The Roy Acuff version, not the classic and superior Carter Family version. But who cares if I'm wandering? Let's be realistic, by 10:30 Russ and Elaine had shown us they had nothing and the hearing was, for all intents and purposes, over. However, in contrast to Keith Lawson's hearing, the court actually asked Crown some questions. Perfunctory, rote, softball questions, but questions nonetheless. The court questioned a point in Porisky's factum, something about how the Crown had shown at trial that Elaine and Russ had made $1,800,000 from of Paradigm between 2004 to 2008. Since the answer to that question is buried in a mountain of documentary evidence I doubt that the court really expected a detailed response. As far as I could tell the question was irrelevant to the appeal because the quantum of income made but not reported was a fact and, apart from exceptional circumstances (palpable and overriding error), facts aren't appealable issues. My notes, at best marginally coherent, were hopeless at this point and I have no idea what Crown said in response except that I recall that they referred to the document trail presented at trial. As best I can read the notes the Crown's response was;
Any suggestion that a personal endeavor is a lawful (?) relies on Paradigm's theory which has been refuted by the courts.
Court - Is material properly before court?
Crown - No.
And that was it for the Crown. Then Elaine wanted to speak again in response.
Gould - All of the evidence before every judge tried to make Russ and I a partnership. Russ was not a business, he was doing a personal endeavor. I was a stay at home housewife bringing up seven children. We adapted to what happened but it wasn't a business. The search warrant happened the GST number was added by the CRA one year after the search.
I wondered what the hell this had to do with the right to respond to the Crown's submission, a thought obviously shared by the court;
Court (cutting into Elaine's stream of consciousness) - I offered you an opportunity to respond to Crown. Not other things.
Gould - All those cheques to Russ and I were not for Russ and I. (note - that's an exact quote). Then something about her Section 684 application and done. During all of this Russ was just sitting there, as far as I could tell totally uninvolved, as if he had nothing invested in the outcome.
The court said they were going to stand down then let us know what they were going to do next. So we had a short break. We sat around for five minutes then the court came back and said that they'd recess for an hour, be back at 11:30, and they'd give their decision. So I wandered off for an hour and was back by 11:30. Hearing resumed;
Court - We are in a position to give judgment. The judge gave a rundown of the history of the case. The charges related to a business operation run by Russell Porisky. Paradigm has been consistently described by the courts as bogus and nonsensical. The judge referred to the Steinkey and Lawson decisions and noted that Paradigm had business-like characteristics and that the appellants had not reported the income they made from it.
Then the court told Porisky that they were going to toss his seven minute speech and the affidavit he'd read it from because it contained only questions of fact and facts do not form any grounds for an appeal. This meant that the appeal was restricted to whatever was in the factum and the only ground for appeal in the factum was the issue of avoid vs evade in the trial court's instructions to the jury. It took the judge one sentence to eliminate that ground;
In my view the jury was properly instructed and there is no basis for this court to intervene.
As a basis for this the court cited a number of cases,
[R. v. Klundert (2004)
http://canlii.ca/t/21j7z
R. v. Kennedy
http://canlii.ca/t/1jflb
Lawson
http://canlii.ca/t/hzj87
Samaroo
http://canlii.ca/t/hzn28
Samaroo is a very recent case I'm planning to write up but haven't gotten around to yet. The other three have been reviewed on Quatloos. The judge read quickly from a prepared decision. I didn't bother to try and keep up with her since the decision would probably be released fairly promptly and I could just cut and paste from that. A few points;
The judge said that the appellants did not point to specific parts of their trial decision to support the contention that the judge had used avoid and evade synonymously.
While Gould had argued that they were not a partnership documents showed otherwise.
Given my lackadaisical approach to writing up the appeal the decision was released before I sat down last night to write this so you can review the actual decision rather than relying on my ramblings;
R. v. Porisky
2019 BCCA 159
http://canlii.ca/t/j05gw
As best I can recall this released decision is exactly the same as the decision read out in court. As with Keith's Lawson's decision I'm a bit skeptical that the court managed to put that together in the hour break. I'm assuming that it was largely written before the hearing since it must have been obvious to the court that the only issue in the factum, the evade/avoid argument, was totally without merit. The court would have made this change to update for the affidavit;
[6] At the hearing of the appeal, the appellants advised us that they had requested the appeal to be only in writing, that they had made a limited application for appointment of counsel under s. 684 of the Criminal Code, R.S.C. 1985, c. C46, which was unsuccessful, and subsequently abandoned their pursuit of a full s. 684 application. They produced the affidavits they filed in support of those applications for the purpose of demonstrating their intentions in respect of what they characterize as their personal endeavor, or perhaps more particularly, Mr. Porisky’s personal endeavor.
[7] I appreciate the appellants’ distress regarding these proceedings. However, the matters they raised before us this morning are matters of fact that do not form any ground of appeal before us. This appeal must be determined on the basis of the appellants’ written arguments as contained in their factums.
And torpedoed the avoid/evade issue with this;
[15] The appellants do not point to any particular part of the judge’s instructions to the jury to support their proposition that the judge used the words “avoid” and “evade” synonymously. The Crown identifies one instance where the judge was discussing the fault component of the crime:
Did Ms. Gould and/or Mr. Porisky know that there was tax imposed by the Act on her/his income for at least one of the years 2004, 2005, 2006, or 2007? And if so, did she or he engage in the conduct that gave rise to avoiding the payment of income tax for the purpose of avoiding or attempting to avoid payment of that tax or knowing that avoiding payment of income tax was a virtual certain consequence of her or his action?
These questions raise the mental or fault element of the offence charged. They are related to one another and because of that I will deal with them together. They require a consideration of whether the Crown has proven that the purpose of the prohibited conduct was to avoid or evade the payment of taxes.
[Emphasis added.]
[16] I agree with the Crown’s submission that this passage would not have been confusing in light of the judge’s clear instruction that the Crown was required to prove that the appellants knew that tax was owing under the Income Tax Act.
[17] In addition, the evidence before the jury was that between 2004 and 2008, the appellants received gross revenues, based on cheques made payable to Mr. Porisky, Ms. Gould or Paradigm, of about $1.4 million, and invoiced revenue of about $1.1 million. They reported none of it. While Ms. Gould argued before us that she and Mr. Porisky were not a partnership, the evidence before the jury was based on documents, and there is no basis on which we could interfere with these factual matters.
[18] The circumstances are similar to those in R. v. Mahmood, 2016 ONCA 75 (CanLII), where the defendant received fees and commissions of $3 million over a four-year period yet filed no tax returns and remitted no payment. Given the evidence before the jury in this case, I would come to the same conclusion as the court in Mahmood, that there was “no air of reality to a potential tax avoidance versus tax evasion explanation” for the appellants’ conduct.
With the appeal done the next point to be considered by the court was a potential appeal of Russ and Elaine's sentences. But the court had no record of a sentencing appeal being filed and told the Crown that there seemed to be no reason for the court to review the sentences. Elaine helpfully explained the situation;
Russ is on parole and I've served my sentence so sentencing is not part of this.
What? They've already served their sentences? News to me. Turned out that Russ had served out his jail time, spent time in a halfway house, and was just finishing his term of parole. Elaine had done her conditional sentence and was finished. Keep in mind that they did not have to serve their sentences while their conviction appeal was in process. The court would, as they did with Keith Lawson, have allowed Russ and Elaine to remain free on bail until their conviction appeal had been heard had they requested bail. Did they have so little faith in their own appeals that they thought they might as well get their inevitable sentences done? If so why bother to appeal the convictions? They certainly seemed to have made an absolute minimum effort to prepare and present a case.
And that was it, over before noon, and I wandered off to Harvy's for a burger. To recap Russ and Elaine were tried and convicted back in 2012, got the conviction quashed on appeal, were tried, and convicted again, appealed again, and lost this time. Barring filing a leave to appeal to the Supreme Court of Canada, which would certainly be denied, that's the end of Russ and Elaine's epic trial journey.
Up next, Keith Lawson's sentencing appeal at the end of the month and Michael Millar's conviction appeal in June.