Larry Watts - Fiscal Arbitrator fraudster gets six years

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Larry Watts - Fiscal Arbitrator fraudster gets six years

Postby Burnaby49 » Fri Aug 05, 2016 3:13 am

Eight if he doesn't pay the fine.

R. v Watts, 2016 ONSC 4843
http://canlii.ca/t/gsp3d

Larry was the "mastermind" behind the Fiscal Arbitrator scam. He's mentioned here;

http://www.quatloos.com/Q-Forum/viewtopic.php?f=50&t=9804&p=166192

Where I noted his trial had started.

https://www.dioguardi.ca/blog/tax-traitors-fiscal-arbitrators-income-tax-recovery-scheme-promoters-raided-and-charged-by-cra.html

Well now it's done and a jury has found him guilty of fraud. Now it's time for sentencing.

Mr. Watts, will you stand please:

Lawrence Watts – you were found guilty, by a jury, of defrauding the Government of Canada, in an amount exceeding $5,000. On that conviction, and for the reasons given, I sentence you to serve six years in federal penitentiary. In addition, you will pay a fine in lieu of forfeiture, in the amount of $149,129.11, of which $100,000 will be paid no later than June 16, 2016, and the remaining $49,129.11 will be paid no later than June 6, 2019. In default of payment of the fine, you will serve an additional two years, to be served consecutively to the six-year term, and to any other term of imprisonment that you are then serving.

You may be seated.


Harsh, very harsh. Larry was just trying to help the little people who didn't want to pay tax but couldn't afford those elitist expensive tax experts.

Anyhow, a few numbers on the extent of the Fiscal Arbitraror fraud;

Background Facts

[1] Following a twenty-three-day jury trial, Lawrence Watts was found guilty of one count of fraud, in an amount exceeding $5,000, contrary to section 380(1)(a) of the Criminal Code. The charge arose from the preparation, by the offender, of one or more income tax returns for 241 Canadian taxpayers. In each case, a non-existent business loss, of a non-existent business, was reported which had the effect of extinguishing the taxpayer’s tax liability for the then current, and three previous years. This resulted in a claim for a refund of all of the tax paid in the three previous years, and of the money withheld at source by their employers for the then current year. The taxpayers who testified at trial gave evidence that they had not carried on a business, or incurred the losses reported on their returns, had not suggested to Watts that they had incurred losses, and did not know where the numbers on their returns had come from.

[2] The total amount of federal tax revenue that would have been lost had all of the returns been assessed as filed was $10,507,131, based upon the reporting of $64,253,889 of non-existent losses. However, at some point, Canada Revenue Agency caught on to the scheme and began to disallow the refund claims. The actual amount paid out in federal tax refunds, or otherwise credited to the taxpayers’ federal tax accounts, was $2,750,288

[3] In preparing the tax returns, Mr. Watts used the business name “Fiscal Arbitrators”. For his services, the taxpayers were charged twenty per cent of the tax refunds, or credits, received from CRA. Documents seized from Watts’ office showed projected revenue of $1,902,227.

[4] Pursuant to an admission made by Mr. Watts under section 655 of the Code, the parties agreed that the total amount received by Fiscal Arbitrators was $545,401.92, that after payments to agents and promoters, a sum of $298,256.21 remained, that the remaining amount was split between Watts and a partner, Carlton Branch, all with the result that the personal benefit to Watts was $149,128.11.

The two sides were a bit apart in their idea of what constituted an appropriate sentence;

[11] Crown counsel’s position is that the appropriate range of sentence in this case is between eight and ten years in federal penitentiary, and that Mr. Watts should serve a sentence of ten years. In addition, she argues that he should be ordered to pay a fine in lieu of forfeiture, in the amount of $149,128.11, being the amount admitted to be his personal benefit from the fraud.

[12] Mr. Watts’ position is that the appropriate range of sentence in this case is between six and thirty-three months, and argues that a conditional sentence would be appropriate (his offence was committed prior to the 2012 amendments to section 742.1 of the Code). He opposes the imposition of a fine in lieu of forfeiture.

A conditional sentence is one where you just stay home instead of associating with all of those nasty crooks in jail.

Watt's main argument struck out immediately;

[18] Mr. Watts argued that his sentence should be consistent with sentences imposed under the Income Tax Act, for the offence of tax evasion, with a maximum penalty of imprisonment for five years. However, in R. v. White (1997), 1997 CanLII 2426 (ON CA), 32 O.R. (3d) 722, the Court of Appeal rejected this argument as being without merit. In determining an appropriate sentence in cases of fraud, the court may look at cases decided under the Income Tax Act, but is not limited by them.

But one of the Crown's aggravating factors didn't make it either;

[28] Crown counsel argued that Mr. Watts has caused immense emotional and financial devastation for the majority of his clients, including sixty-five personal bankruptcies, resulting from their liability to repay the refunds received, and to pay administrative penalties. While I can accept that many of his clients are devastated, they must shoulder a large portion of the blame: it was a “money for nothing” scheme that was just too good to be true. Also, although CRA records show that sixty-five of Watts’ former clients filed either an assignment in bankruptcy, or a bankruptcy proposal, there is insufficient evidence to satisfy me, beyond a reasonable doubt, that he is responsible for those bankruptcies. At the same time, however, I reject his argument that CRA is responsible for the bankruptcies, as a result of its failure to relieve his clients of the administrative penalties that were applied.

I like that last little bit. He defrauded the CRA and then blamed the CRA for catching him and his clients. That's chutzpah!
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Re: Larry Watts - Fiscal Arbitrator fraudster gets six years

Postby The Observer » Fri Aug 05, 2016 10:08 pm

Some Judge In Canada wrote: Also, although CRA records show that sixty-five of Watts’ former clients filed either an assignment in bankruptcy, or a bankruptcy proposal, there is insufficient evidence to satisfy me, beyond a reasonable doubt, that he is responsible for those bankruptcies.


This was the same point I was making in the Menard thread in regards to the fact that the marks cannot walk away and pretend that they were simply victims in these schemes. There is simply too much reasonable evidence out there that suggests strongly that scammers like Watts are completely wrong.
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Re: Larry Watts - Fiscal Arbitrator fraudster gets six years

Postby Dr. Caligari » Sat Aug 06, 2016 4:42 am

The Observer wrote:
Some Judge In Canada wrote: Also, although CRA records show that sixty-five of Watts’ former clients filed either an assignment in bankruptcy, or a bankruptcy proposal, there is insufficient evidence to satisfy me, beyond a reasonable doubt, that he is responsible for those bankruptcies.


This was the same point I was making in the Menard thread in regards to the fact that the marks cannot walk away and pretend that they were simply victims in these schemes. There is simply too much reasonable evidence out there that suggests strongly that scammers like Watts are completely wrong.


I don't disagree with your point, but I don't think it's the same point the judge was making. I think the judge was saying that the prosecution just showed that Watts' clients filed bankruptcy, but didn't introduce the evidence to show that those bankruptcies were the result of Watts' scheme-- the clients may have had other financial problems unrelated to Watts. (The prosecution could have probably made their case by presenting the bankruptcy court filings, but [I assume] didn't think the judge was going to be that picky.)
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Re: Larry Watts - Fiscal Arbitrator fraudster gets six years

Postby Burnaby49 » Sat Aug 06, 2016 5:10 am

Dr. Caligari wrote:
The Observer wrote:
Some Judge In Canada wrote: Also, although CRA records show that sixty-five of Watts’ former clients filed either an assignment in bankruptcy, or a bankruptcy proposal, there is insufficient evidence to satisfy me, beyond a reasonable doubt, that he is responsible for those bankruptcies.


This was the same point I was making in the Menard thread in regards to the fact that the marks cannot walk away and pretend that they were simply victims in these schemes. There is simply too much reasonable evidence out there that suggests strongly that scammers like Watts are completely wrong.


I don't disagree with your point, but I don't think it's the same point the judge was making. I think the judge was saying that the prosecution just showed that Watts' clients filed bankruptcy, but didn't introduce the evidence to show that those bankruptcies were the result of Watts' scheme-- the clients may have had other financial problems unrelated to Watts. (The prosecution could have probably made their case by presenting the bankruptcy court filings, but [I assume] didn't think the judge was going to be that picky.)


The prosecution had the bankruptcies included as part of their aggravating circumstanced list in support of a long sentence. Those poor taxpayers suffered so much by getting caught trying to scam the government. While their screwing around with their taxes might have been a significant reason for most of the bankruptcies the judge wasn't buying it because there was no proof, just an assertion by the Crown. Judge wasn't sympathetic to their plight anyhow since they'd brought it on themselves by fling false tax returns.

[28] Crown counsel argued that Mr. Watts has caused immense emotional and financial devastation for the majority of his clients, including sixty-five personal bankruptcies, resulting from their liability to repay the refunds received, and to pay administrative penalties. While I can accept that many of his clients are devastated, they must shoulder a large portion of the blame: it was a “money for nothing” scheme that was just too good to be true. Also, although CRA records show that sixty-five of Watts’ former clients filed either an assignment in bankruptcy, or a bankruptcy proposal, there is insufficient evidence to satisfy me, beyond a reasonable doubt, that he is responsible for those bankruptcies. At the same time, however, I reject his argument that CRA is responsible for the bankruptcies, as a result of its failure to relieve his clients of the administrative penalties that were applied.


For those of you not following the Fiscal Arbitrator saga closely (all of you) I made a central reference file on them until there was so many I stopped bothering.

http://www.quatloos.com/Q-Forum/viewtopic.php?f=50&t=10942

The scheme was totally moronic. Idiots would let Watts or some other scammer prepare their tax returns claiming huge unsubstantiated business losses against their income. The losses were entirely fake, none of the fools had businesses. So some guy making $50,000 a year as an employee would claim say $500,000 in business losses against this year's income and try and carry it back to prior years. All of them, at Tax Court, swore that they had no idea that they'd claimed the losses. "I never looked at my return after Larry prepared it, I just signed it" "I had no idea why I was getting all those refunds but Larry said that it was all legitimate so I assumed it was OK." They thought this would get them off the hook. It didn't.

This was the same point I was making in the Menard thread in regards to the fact that the marks cannot walk away and pretend that they were simply victims in these schemes. There is simply too much reasonable evidence out there that suggests strongly that scammers like Watts are completely wrong.


Not quite correct. Keep in mind that I obviously have no sympathy for them whatever. But, when Watts started the scam, there was no specific information on it saying that it was bullshit. However anyone not blinded by greed would have reasonably wondered how it was legit to claim a half million dollars of business losses when they worked as a garbage collector and didn't have a business. But none bothered to go to an actual legitimate tax accountant or lawyer to get a reality check, they just signed the returns and filed them.

But I'd agree with your comment about Menard's suckers. He's been a loser for so long and so consistantly that he has an extensive public record of failure spelling out in detail why. So anyone getting involved in his schemes can't argue that they weren't aware they were buying into pre-ordained failure.
"Yes Burnaby49, I do in fact believe all process servers are peace officers. I've good reason to believe so." Robert Menard in his May 28, 2015 video "Process Servers".

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Re: Larry Watts - Fiscal Arbitrator fraudster gets six years

Postby The Observer » Sun Aug 07, 2016 1:29 am

Burnaby49 wrote: But, when Watts started the scam, there was no specific information on it saying that it was bullshit.


Yet you pointed out:

The scheme was totally moronic.


However anyone not blinded by greed would have reasonably wondered how it was legit to claim a half million dollars of business losses when they worked as a garbage collector and didn't have a business.


They can't have their cake and eat it too. My point is that they did have enough information to know that this was not legitimate and can't simply hide behind the claim that they were 100% virginal victims.
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Re: Larry Watts - Fiscal Arbitrator fraudster gets six years

Postby ArthurWankspittle » Fri Aug 12, 2016 8:08 pm

Six years plus two more if no restitution is very heavy by Canadian standards.
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Re: Larry Watts - Fiscal Arbitrator fraudster gets six years

Postby Burnaby49 » Fri Aug 12, 2016 8:34 pm

ArthurWankspittle wrote:Six years plus two more if no restitution is very heavy by Canadian standards.


He won't serve six. I'd guess two or three. We've had two very recent heavy sentences on tax matters. The second is Russell Porisky's five and a half years for evasion and counselling fraud. Courts don't like these guys telling people how to evade tax.
"Yes Burnaby49, I do in fact believe all process servers are peace officers. I've good reason to believe so." Robert Menard in his May 28, 2015 video "Process Servers".

https://www.youtube.com/watch?v=XeI-J2PhdGs

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Re: Larry Watts - Fiscal Arbitrator fraudster gets six years

Postby Judge Roy Bean » Fri Aug 12, 2016 8:48 pm

Does Canada's federal penal system have parole provisions?
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Re: Larry Watts - Fiscal Arbitrator fraudster gets six years

Postby Burnaby49 » Fri Aug 12, 2016 8:50 pm

Judge Roy Bean wrote:Does Canada's federal penal system have parole provisions?


Parol, and early release for good behaviour (an assumption on my part), are the reasons he won't serve six.
"Yes Burnaby49, I do in fact believe all process servers are peace officers. I've good reason to believe so." Robert Menard in his May 28, 2015 video "Process Servers".

https://www.youtube.com/watch?v=XeI-J2PhdGs


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