The name "Vandelay Industries" must have rung a bell in the mind of an investigator with the Canada Revenue Agency (Canuck version of the IRS) as he went through the handwritten expense claim submitted by a Nova Scotia company that claimed it had done C$117,850 in business with "Vandalee Industries". In a sworn affidavit, the snooper wrote, "Based on an internet search, and from my personal knowledge, I know that 'Vandelay Industries' is often a pop culture reference to a fictional company created in the television sitcom Seinfeld." (Walt wonders how much time the copper claimed to have put in doing the "internet search"!)
Based on the affidavit, the CRA got search warrants and production orders related to ten companies registered in Canada's Ocean Playground (TM). After following the paper trails, they charged three sisters and their mother with fraud offences totalling C$3.6 million ($2.7 mil in real money) related to GST/HST refunds.
For non-Canadian readers, Agent 3 explains that GST/HST is a kind of value-added tax. Sellers of goods and services are supposed to collect the tax on everything they sell and remit that to the federal and provincial governments. But they can deduct the GST/HST they've paid on inputs and operating expenses. If your business pays out more than it takes in, you can be entitled to a refund. And that's what the ladies -- not very good businesspeople -- did, making claims for large refunds, with their claims supported by a slew of fake invoices, expense reports and sales records.
Georgette Young, her sisters Angela MacDonald and Nadia Saker, and their mother, Lydia Saker, purported to be the proprietors of a group of companies engaged in publishing cookbooks, making salad dressing and wigs, catering and selling fur coats for kids. The ten companies under their control claimed to have done $56 million in sales out of a modest home in North Sydney NS, a small storefront in nearby Boularderie, a local farm, and a house in Kentville NS.
At least on paper, their sales were impressive, including 54,000 cookbooks in six months, hundreds of children's coats sold for a grand apiece, and half-million-dollar orders for frozen seafood lasagna, spaghetti and meatball dinners. All this, according to court records, even though the companies had no employees and, in some cases, didn't even have bank accounts.
Sadly, even though business was booming, the ladies failed to collect much of the GST/HST that was due, which led to their claiming large refunds. Before CRA auditors became suspicious, the companies got refunds totalling C$276,000. Claims of more than C$3 million were ultimately denied. In almost every case, CRA investigators said they couldn't find any trace of the stores or other enterprises the family companies were purported to have done business with. Even the addresses didn't appear to exist.
They included sales of C$400,000 to Upstairs Department Store, at 41 Hissiem Street in North Sydney. Apparently that's just up the road from Tycoon Book Distributors (C$433,125 in sales) and AMM Groceries (C$2,534,000 in sales). Quite something for a town with a population of just 5700 souls.
But what of "Vandalee Industries"? According to court records, that name was twice listed on an expense summary for Kishk Inc., a food company operated by Ms Young. The services provided? "Management, marketing and packaging". Investigators concluded that "the majority of these transactions are believed to be fictitious and included on the Goods and Services Tax/Harmonized Sales Tax Returns in an attempt to obtain false refunds." DUH!
The ladeez are supposed to appear in a Sydney courtroom even as this is written. They each face ten counts of fraud, to which they have not yet entered pleas. We must therefore believe that they are innocent... until proven otherwise.
