R. v Watts, 2016 ONSC 4843
Larry was the "mastermind" behind the Fiscal Arbitrator scam. He's mentioned here;
Where I noted his trial had started.
https://www.dioguardi.ca/blog/tax-trait ... y-cra.html
Well now it's done and a jury has found him guilty of fraud. Now it's time for sentencing.
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.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.
Anyhow, a few numbers on the extent of the Fiscal Arbitraror fraud;
The two sides were a bit apart in their idea of what constituted an appropriate sentence;Background Facts
 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.
 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
 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.
 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.
A conditional sentence is one where you just stay home instead of associating with all of those nasty crooks in jail. 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.
 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.
Watt's main argument struck out immediately;
But one of the Crown's aggravating factors didn't make it either; 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.
I like that last little bit. He defrauded the CRA and then blamed the CRA for catching him and his clients. That's chutzpah! 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.