Kiwan c. La Reine

Kiwan c. La Reine
Court (s) Database
Tax Court of Canada Judgments
Date
2004-08-18
Neutral citation
2004 TCC 136
File numbers
2000-458(IT)G
Judges and Taxing Officers
Pierre R. Dussault
Subjects
Income Tax Act
Decision Content
[OFFICIAL ENGLISH TRANSLATION]
Docket: 2000-458(IT)G
BETWEEN:
GHASSAN KIWAN,
Appellant,
And
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeals heard with the appeals of Ziad Hanna (2000-956 (IT)G),Ramzi Salamé (2000-964(IT)G) and May Nassar (2000-965(IT)G)
on October 21 and 22, 2003, at Montreal, Quebec.
Before: The Honourable Judge P. R. Dussault
Appearances:
Counsel for the Appellant:
Me Yves Ouellette
Counsel for the Respondent:
Me Nathalie Lessard
Me Simon-Nicolas Crépin
___________________________________________________________________
JUDGMENT
The appeals from the assessments under the Income Tax Act for the 1990, 1991, 1992, 1993, 1994 and 1995 taxation years are dismissed with costs in favour of the Respondent pursuant to the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 18th day of August, 2004.
"P. R. Dussault"
Dussault, J.
Certified true translation
Colette Beaulne
[OFFICIAL ENGLISH TRANSLATION]
Docket: 2000-956(IT)G
BETWEEN:
ZIAD HANNA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeals heard with the appeals of Ghassan Kiwan (2000-458(IT)G),
Ramzi Salamé (2000-964(IT)G) and May Nassar (2000-965(IT)G),
on October 21 and 22, 2003, at Montreal, Quebec.
Before: The Honourable Judge P. R. Dussault
Appearances:
Counsel for the Appellant:
Me Yves Ouellette
Counsel for the Respondent:
Me Nathalie Lessard
Me Simon-Nicolas Crépin
____________________________________________________________________
JUDGMENT
The appeals from the assessments under the Income Tax Act for the 1992, 1993, 1994 and 1995 taxation years are dismissed with costs in favour of the Respondent pursuant to the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 18th day of August, 2004.
"P. R. Dussault"
Dussault, J.
Certified true translation
Colette Beaulne
[OFFICIAL ENGLISH TRANSLATION]
Docket: 2000-964(IT)G
BETWEEN:
RAMZI SALAMÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeals heard with the appeals of Ghassan Kiwan (2000-458(IT)G),
Ziad Hanna (2000-956(IT)G) and May Nassar (2000-965(IT)G),
on October 21 and 22, 2003, at Montreal, Quebec.
Before: The Honourable Judge P. R. Dussault
Appearances:
Counsel for the Appellant:
Me Yves Ouellette
Counsel for the Respondent:
Me Nathalie Lessard
Me Simon-Nicolas Crépin
____________________________________________________________________
JUDGMENT
The appeals from the assessments under the Income Tax Act for the 1990, 1991, 1992 and 1993 taxation years are dismissed with costs in the favour of the Respondent pursuant to the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 18th day of August, 2004.
"P. R. Dussault"
Dussault, J.
Certified true translation
Colette Beaulne
[OFFICIAL ENGLISH TRANSLATION]
Docket: 2000-965(IT)G
BETWEEN:
MAY NASSAR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
____________________________________________________________________
Appeals heard with the appeals of Ghassan Kiwan (2000-458(IT)G,
Ziad Hanna (2000-956(IT)G) and Ramzi Salamé (2000-964(IT)G),
on October 21 and 22, 2003, at Montreal, Quebec.
Before: The Honourable Judge P. R. Dussault
Appearances:
Counsel for the Appellant:
Me Yves Ouellette
Counsel for the Respondent:
Me Nathalie Lessard
Me Simon-Nicolas Crépin
__________________________________________________________________
JUDGMENT
The appeals from the assessments under the Income Tax Act for the 1994 and 1995 taxation years are dismissed with costs in favour of the Respondent pursuant to the attached Reasons for Judgment.
Signed at Ottawa, Canada, this 18th day of August, 2004.
"P. R. Dussault"
Dussault, J.
Certified true translation
Colette Beaulne
[OFFICIAL ENGLISH TRANSLATION]
Citation: 2004TCC136
Date: 20040818
Docket: 2000-458(IT)G
BETWEEN:
GHASSAN KIWAN,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND BETWEEN:
Docket: 2000-956(IT)G
ZIAD HANNA,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND BETWEEN:
Docket: 2000-964(IT)G
RAMZI SALAMÉ,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent,
AND BETWEEN:
Docket: 2000-965(IT)G
MAY NASSAR,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
REASONS FOR JUDGMENT
Dussault, J.
[1] These appeals were heard on partially shared evidence only. They are appeals from assessments disallowing the Appellants credits for charitable donations to the Ordre antonien libanais des Maronites / Antonian Order of Lebanese Maronites (the "A.O.L.M.") and imposing penalties on them pursuant to subsection 163(2) of the Income Tax Act (the "Act") for knowingly, or under circumstances amounting to gross negligence, making false statements in their tax returns. Further, some assessments were made outside the normal reassessment period on the grounds that a misrepresentation attributable to wilful default was made in filing the relevant tax returns and providing information under the Act.
[2] Mr. Ghassan Kiwan was disallowed credits for $5,000, $20,700, $12,500, $9,500, $11,500 and $6,000 in charitable donations for each year from 1990 to 1995 respectively. Assessments for the 1990 to 1993 taxation years inclusive were made outside the normal reassessment period.
[3] Mr. Ziad Hanna was disallowed credits for $5,500, $9,000, $5,100 and $5,500 in charitable donations for each year from 1992 to 1995 respectively. Taking into account the maximum allowed and credit carryovers, credits of $5,500 in 1992, $6,672 in 1993, $7,348 in 1994 and $5,580 in 1995 were claimed. The assessments for the 1992 and 1993 years were made outside the normal reassessment period.
[4] Mr. Ramzi Salamé was disallowed credits for $9,600, $10,000, $5,000 and $10,000 in charitable donations for each of the years from 1990 to 1993 respectively. The assessments for the four years were made outside the normal reassessment period.
[5] Ms. May Nassar was disallowed credits for $3,900 and $3,000 in charitable donations in the 1994 and 1995 taxation years respectively. A $3,831 credit was claimed in 1994.
[6] Ms. May Nassar is Mr. Ziad Hanna's spouse. None of the other Appellants are related.
[7] In the amended replies to the Notice of Appeal, the Respondent alleges that the Minister of National Revenue (the "Minister") based the assessments at issue on the assumption that the Appellants had not donated the amounts in question to the A.O.L.M. and had not provided valid receipts containing the prescribed information because the donation amounts indicated on them were false. It is therefore alleged that the Appellants did not make the donations for which they claim credits on their tax returns. Instead, they participated in a scheme involving the A.O.L.M. either issuing a receipt for an amount paid by cheque by a taxpayer and providing this same taxpayer with an equivalent or similar amount of money in cash or issuing a taxpayer a receipt on which a certain cash donation is indicated when the taxpayer had not paid any amount or paid a smaller amount in cash than that indicated on the receipt.
[8] In the case of the four Appellants, almost all of the donations mentioned were made by cheque, meaning that the scheme involved the Order issuing a receipt for an amount paid by cheque and the Appellant being reimbursed in cash.
[9] Each of the Appellants testified. Given the difficulties involved in being present in Montreal, Mr. Ghassan Kiwan testified via videoconference from Saudi Arabia.
[10] The following people testified for the Respondent:
Ms. Isabelle Mercier;
Ms. Colette Langelier, a Revenue Canada auditor;
Mr. Gaétan Ouellette, a Revenue Canada investigator;
Mr. Michel Yazbeck;
Mr. Elias Farhat;
Mr. Marcel Thibodeau.
[11] Counsel for the Appellants objected to both the testimonial and documentary evidence submitted by the Respondent. He first cited subsection 24(2) of the Canadian Charter of Rights and Freedoms (the "Charter"), section 40 of the Canada Evidence Act and section 2858 of the Civil Code of Quebec (the "Civil Code") to exclude all evidence the Minister obtained further to the information on the scheme provided by Ms. Isabelle Mercier. According to counsel for the Appellants, when the information was provided, the Minister was involved in a criminal investigation, not a compliance audit investigation, and the Minister did not obtain, but should have obtained, the appropriate search warrants. The rights and freedoms guaranteed by the Charter were therefore infringed such that the admission of the evidence would bring the administration of justice into disrepute.
[12] Counsel for the Appellants also objected to the evidence submitted by the Respondent allegedly showing that a significant number of people participated in the scheme and obtained false receipts for charitable donations. This objection was based on the assertion that the Respondent was endeavouring to provide evidence of similar activities, evidence which according to counsel was neither admissible nor relevant to ruling on the appeals at hand. While the evidence was being presented, counsel for the Appellants frequently objected to specific evidence by citing the hearsay rule and questioning the relevance.
[13] On the first issue, counsel for the Respondent stated that the Minister first conducted a compliance audit on the A.O.L.M. and it was not until later that a decision was made to conduct a criminal investigation. From that point on, all the appropriate search and seizure warrants were obtained.
[14] On the second issue, counsel for the Respondent pointed out that the evidence provided was circumstantial, that such evidence was completely admissible and that it allegedly showed not only that a scheme drawn up by the A.O.L.M. existed, but also that it was an extensive scheme given the large number of donors that had participated in it.
[15] Under the circumstances, and before turning to each of the Appellants' cases, I feel it necessary to refer to the evidence submitted with a view to situating ourselves within the general context of this case, which resulted in criminal proceedings being instituted against about fifteen donors and assessments being made for more than one thousand taxpayers.
The context
[16] On March 30, 1994, Ms. Isabelle Mercier, a physician, and her accountant, Mr. Gaétan Picard, met with Mr. Raymond Galimi, a team leader at Revenue Canada (which has since become the Canada Customs and Revenue Agency ("CCRA")), Ms. Colette Langelier, an auditor, and Mr. Gaétan Ouellette, a special investigations investigator. Mr. Picard requested the meeting with Mr. Galimi, whom he knew, because his client wanted to provide information on receipts being issued for fraudulent charitable donations by what she described as the St-Antoine-le-Grand order located at 1530 Ducharme Avenue in Outremont, Quebec. The minutes of this meeting were signed by Ms. Colette Langelier on March 31, 1994 (Exhibit I-7). During the meeting, Ms. Mercier said that two priests, Father Antoine Sleiman and Father Youssef El-Kamar, were involved in the scheme. Ms. Mercier also identified her spouse, Mr. Samir El-Boustany, and Mr. Fadi Basile, a physician, as organizers of this scheme with the priests. Based on Ms. Mercier's statement, the scheme consisted in receipts being issued for a larger amount than the amount donated and the issuing of receipts for donations made by cheque where the donor is given back a portion of the donation in cash. According to Ms. Mercier, the organization involved kept only 25% to 50%. Ms. Mercier also said that her husband took a percentage of the cash amounts and she named another person she knew at that time, Naji Abi Nader, who, she said, had benefited from the scheme for a number of years through her husband. She said that this person gave her husband a cheque for $20,000 several times a year when he was in Montreal. In return, this person received an envelope from her husband containing bills that she said she had personally counted. She said that the scheme involved the Lebanese community and that many medical professionals benefited from it. She admitted that she had benefited from it personally until 1990, and her husband, until 1992. Ms. Mercier also stated that she had always been against this way of doing things and as a result she agreed to pay the tax and the applicable penalties and interest.
[17] At the time that Ms. Mercier provided this information, she was separated from her husband and was involved in divorce proceedings. However, when she testified, she stated that although she had enough problems without adding more by facing criminal charges for making fraudulent donations, she was not seeking revenge.
[18] According to Ms. Langelier, after the meeting with Ms. Mercier and a discussion, Mr. Galimi decided to have the organization audited and asked her to conduct the audit. At that time, Ms. Langelier was a "senior" tax avoidance officer.
[19] The first step Ms. Langelier took was to obtain the A.O.L.M.'s file from the Charities Division in Ottawa, specifically, the returns filed by the organization which contained the list of donors. Ms. Langelier quickly learned from that Division that the A.O.L.M. had already been audited in 1990 for the 1984 to 1987 taxation years and that a follow-up had been conducted in late 1992 concerning the 1990 and 1991 taxation years. An audit report had been prepared in January 1993. Some problems had already been identified in connection with the dates of the receipts issued and the A.O.L.M.'s method of accounting for the money received because only cheques had been deposited. Since the bulk of the amounts received had to be sent to Lebanon, the Order had to be able to control how the funds were actually used. The A.O.L.M. was asked to make certain commitments and documents were also requested which had not been submitted. It seems that the Charities Division was about to suspend the A.O.L.M.'s registration. Ms. Langelier said that the 1993 return had not been filed as of May 1994. Given the facts discovered during previous audits, including the fact that the A.O.L.M. did not deposit cash donations, it was possible to establish links with Ms. Mercier's information, such that it was decided that the organization would be audited to see whether it had changed its way of doing things.
[20] Therefore, after reading the A.O.L.M.'s statements and previous audit reports, Ms. Langelier began the audit of the 1989 to 1993 taxation years.
[21] On September 8, 1994, Ms. Langelier, together with Mr. Galimi, met with Ms. Mercier and her accountant again at her accountant's office with a view to asking Ms. Mercier more questions about the documentation she had sent further to the meeting on March 30, 1994.
[22] In late September 1994, after telephoning the A.O.L.M. and making an appointment with the organization's accountant, a Mr. Ralph Nahas, Ms. Langelier went to the organization's premises and asked to examine all the accounting documents, monthly bank statements, cheques, deposit slips, invoices and official receipt books. Ms. Langelier had asked that the A.O.L.M.'s 1993 return be submitted to her directly, which was done at the beginning of the audit. The on-site audit took about one month, until late October 1994, during which she went to the premises seven or eight times, once accompanied by Mr. Galimi, her team leader. Ms. Langelier consulted all the documents available for the period beginning in August 1994 and later completed her work for the rest of 1994 and for 1995.
[23] Using the bank documents consulted and the other documents already in her possession, such as lists of donors included with the A.O.L.M.'s returns, Ms. Langelier created two data bases with a view to reconciling the receipts issued with the amounts deposited in bank accounts. Therefore, the purpose of this reconciliation exercise was to specifically identify the donor cheque number, the amount and date of the cheque, the date the cheque was deposited, and the number, date and amount of the receipt issued.
[24] Ms. Langelier stated that she was checking whether the A.O.L.M. had in fact used 90% of the donations collected each year for charitable purposes (Exhibit I-11).
[25] Ms. Langelier's exhaustive analysis enabled her to determine that, on the one hand, hardly any cash deposits were made, and on the other, that the A.O.L.M. had in large part withdrawn as cash the deposited cheque amounts shortly after they were deposited (see Exhibits I-10, Vol. 1 and 2, and I-12). The A.O.L.M. claimed that the amounts withdrawn in Canadian funds were placed in a safe then sent to Lebanon in suitcases carried by priests or nuns on their way through Canada. According to Ms. Langelier, despite requests for proof of the amount and date of each of these shipments of money to Lebanon or even the date of exchange of the Canadian currency, the A.O.L.M. was unable to provide the information requested and to demonstrate that the amounts in its records had in fact been sent to Lebanon.
[26] Ms. Langelier also tried to determine the extent of untraceable cash donations. She said that she was told that envelopes with donors' names on them were kept in the safe so that the organization could issue a receipt at the end of the year for cash donations made during the year. During her October 1994 audit, Ms. Langelier not only found that there was no cash in the safe, but there were not any envelopes with donors' names on them either. In this connection, she was allegedly sent in the spring of 1995 a document in Arabic that she had translated. Ms. Langelier said that this document showed only the end-of-year total of official receipts issued for cash donations.
[27] Based on the A.O.L.M's cheques made out to cash and the official receipts issued for cash donations that were not usually deposited, Ms. Langelier found that there was no trace of how almost all of the amounts received by the A.O.L.M. were used. She stated that she was unable to trace 95% of these amounts in 1991, 92% in 1992 and 84% in 1993. The amounts entered in the A.O.L.M.'s records as being Lebanese donations totalled $520,398, $964,950, $2,000,000, $2,000,000 and $2,680,000 from 1989 to 1993 respectively (Exhibit I-11).
[28] Exhibit I-11 shows, among other things, a significant number of cash withdrawals compared to the amounts on official receipts issued and donations deposited. For example, in 1991, the A.O.L.M. issued official receipts for a total of $2,436,142 in donations and deposited a total of $1,302,135, of which $1,152,741 in cash was withdrawn. In 1992, official receipts were issued for a total of $2,728,670. A total of $1,173,685 in donations was deposited of which $1,090,528 in cash was withdrawn.
[29] Ms. Langelier did not complete her audit work until June 1995. She then made an appointment with the Special Investigations Division with a view to referring the matter to that section for investigation.
[30] According to Ms. Langelier, she was able to identify three types of schemes through her audit and analysis work:
1) official receipts were issued for cheques of the same amount, the cheques were deposited and then cheques were written out to cash by the A.O.L.M.;
2) back-dated receipts were issued for payments made by cheque in a subsequent year for only a fraction of the amount of the receipt;
3) official receipts were issued but not supported by a payment by cheque.
[31] Ms. Langelier stated that certain audits of donors' tax returns enabled her to confirm that the first situation occurred primarily with professionals and the second, mainly salaried workers and retirees.
[32] The referral to Investigations was officially approved on June 29, 1995. Ms. Langelier stated that she had not had any contact with Mr. Ouellette or anyone else from the Special Investigations Section between March 1994 and June 1995, which was further confirmed by Mr. Ouellette.
[33] Mr. Gaétan Ouellette is currently retired. He has 25 years of experience as an investigator in the Special Investigations Section, where he held positions at almost all levels.
[34] In March 1994, he was a liaison and development officer in the Section, which was responsible, among other things, for welcoming people who would like to provide information. It was in this capacity that he was asked to attend the meeting with Ms. Isabelle Mercier and her accountant. According to Mr. Ouellette, during this meeting, which was also attended by Ms. Langelier and Mr. Galimi, and which was held in the latter's office, Ms. Mercier provided information on what she claimed to be a receipt-selling scheme that had been cooked up in a monastery; she provided the names of a few people who were involved in the scheme; she mentioned that she had been personally involved perhaps one or two years before; and she explained a bit about how the scheme worked, specifically, the percentage the people involved actually paid.
[35] At the end of the meeting, and after discussing the matter, it was decided that the case would be handled by Audit and not be investigated. At this point, it is important to recall Mr. Ouellette's response[1] to this decision:
[TRANSLATION]
Q. Why didn't you request an investigation in this case?
R. Well, I am not personally convinced that we had the grounds when we met with Ms. Mercier to investigate the issue. Firstly, we did not know... we were not aware of the scope of the phenomenon; we were not very familiar with the organization; Ms. Mercier had not really given us figures that were terribly impressive. Based on all of that, we do not conduct an investigation just to obtain that type of information.
[36] In his testimony, Mr. Ouellette stated categorically that neither he nor anyone else in the Special Investigations Section had had any type of contact with Ms. Langelier, her team leader, Mr. Galimi, or with anyone in the Audit Division between March 30, 1994 and when the issue was referred to the Special Investigations Section on June 29, 1995 or shortly before. Similarly, he stated that he had not received any documents from anyone during this same period. He also said that he had not had any contact either with Ms. Isabelle Mercier or her accountant before the investigation began. Mr. Ouellette stated that he had simply not taken an interest in the matter or enquired about it during the period from March 1994 to June 1995.
[37] Mr. Ouellette said that the meeting about the referral to the Special Investigations Section was probably held a few days before the referral form was officially signed. Ms. Langelier and Mr. Galimi attended the meeting. Mr. Ouellette was also there as well as Mr. Ratté, the head of the Special Investigations Section and perhaps a team leader from the Special Investigations Section. Mr. Ouellette said that the decision to accept the referral was made during this meeting.
[38] Mr. Ouellette stated that later, after a number of discussions, the decision was initially made to assign the case to one team and one investigator in particular. However, the investigator declined the case allegedly because of his workload. The case was eventually assigned to Mr. Ouellette because of a shortage of investigators. Further, he said that it was a very sensitive case which required expertise. He was chosen because of his many years of experience in the Special Investigations Section.
[39] Mr. Ouellette said that after reviewing the tables prepared by Ms. Langelier which consisted in a compilation of all the banking information and receipts issued by the A.O.L.M., he was convinced that a scheme was involved (Exhibit I-9).
[40] After returning from vacation, Mr. Ouellette contacted Ms. Isabelle Mercier on August 23, 1995, to set up a meeting, the purpose of which was to inform her that there were grounds for an investigation and to have her sign an affidavit, which he told her he would use for the investigation. Mr. Ouellette said that Ms. Mercier asked that Ms. Langelier, whom she knew, be at the meeting, which he agreed to. The meeting was held in a Special Investigations Section office.
[41] In late October or early November 1995, Mr. Ouellette laid down information about the A.O.L.M. and its accountant Ralph Nahas, with a view to obtaining warrants to search the A.O.L.M. monastery and the office of the organization's accountant.
[42] The A.O.L.M. search warrant was executed on November 8, 1995 in the presence of Father Jean Slim, who was in charge of the monastery. Mr. Ouellette said that he finally presented himself several hours after the group of investigators had entered the premises and the people present had refused to provide their names. Father Slim was served the official warning as were Messrs. Ralph Nahas and Samir El-Boustany, who had arrived at the monastery a little earlier.
[43] Ms. Langelier, who had attended the investigators' meeting before the search, was present at the search with a view to obtaining information on places where documents could be found.
[44] The search warrant for the accountant, Ralph Nahas, could not be served because the address provided, and even checked with his professional association, was incorrect. A search warrant for the residence of Mr. Nahas was finally executed on July 10, 1996. The residence of Mr. Samir El-Boustany, the husband of Ms. Isabelle Mercier, was also searched on that same date. Another warrant, for a Mr. Jamousse, was not executed because he had left Canada and was in the United States. Mr. El-Boustany was one of the heads of the A.O.L.M. and Mr. Jamousse had been mentioned as a donor recruiter on a document seized from the A.O.L.M. during the search on November 8, 1995.
[45] Mr. Ouellette said that four types of tax avoidance schemes were discovered during the investigation:
1) cheques were written for the exact amount of the receipt issued by the A.O.L.M. and the donor was reimbursed an amount in cash, most often 80% or 85% of the amount of the receipt;
2) receipts were sold for 15% or 20% of the amount of the receipt;
3) cheques were written for 15% or 20% of the amount of the receipt;
4) receipts were issued for no consideration.
[46] Mr. Ouellette said that about 20 donors who received receipts for a total of $100,000 or more between 1989 and 1994 were the subject of a criminal investigation. Finally, 16 charges were laid and 12 people pleaded guilty. Three charges were withdrawn and proceedings were stayed in one case.
[47] Forty to 50 boxes of documents were seized during the November 8, 1995 search and they contained mainly accounting and banking documents, including deposit slips (Exhibit I-10, Vol. 1 and 2), cheques made out to cash by the A.O.L.M. (Exhibit I-12) and cheque stubs (Exhibit A-8, Book 6)[2].
[48] The documents seized were in Father Slim's office, the adjoining library and in the basement.
[49] A diskette was among the documents seized from the A.O.L.M. on November 8, 1995, and it contained an electronic file entitled "Biblio-Reç" (Exhibit I-21, Tab 3). This nine-page document contains information on 354 receipts issued by the A.O.L.M. in 1993. The information on these receipts, which are listed in the document sequentially, is provided in 15 columns. Among other things, columns B to J first show in many cases the percentage paid (generally 15% or 20%), then the receipt number, the donor's first and last name, his or her telephone number, the amount of the receipt, the amount "payable", the amount "paid", and the "remaining amount payable". Mr. Ouellette said that these last three columns show the amount the donor is to be paid, has already paid or has left to pay. He also said that his subsequent checks showed that the CA indicated in column K means that the receipt was provided for cash. The amount indicated in column L entitled "nôtre [ours]" is the amount the A.O.L.M kept. In some cases, the entry in column M entitled "via" means the person who recruited the donor. The name of Mr. Jamousse, who has already been mentioned, is found. Mr. Ouellette was able to justify his interpretation of Biblio-Reç using information gathered from other documents seized from the A.O.L.M., such as photocopies of donors' cheques, envelopes, and other torn-up documents that were placed in a waste basket.
[50] Other documents were seized later from the residence of the accountant, Ralph Nahas, including two printed electronic files, one entitled "Biblio-Avant moi [Biblio before me]" (Exhibit I-21, Tab 15), and the other, " Biblio-Reç (Exhibit I-21, Tab 16). This latter file is not the same as that seized from the A.O.L.M. on November 8, 1995. It contains sequence numbers 355 to 495, which are not included in the file seized from the A.O.L.M. on November 8, 1995 (Exhibit I-21, Tab 3). However, the two files seized from the accountant are incomplete, as only the information in columns A to E is included, that is, the receipt number, the donor's first and last name, his or her telephone number and the amount of the receipt. Mr. Ouellette hypothesized that a more complete document had to have existed at one point. Mr. Ouellette said that several donors in the "Biblio-Avant moi" file pleaded guilty or confessed.
[51] Donors were questioned during the investigation. Confessions were made in several cases (Exhibit I-21, Tab 10). Mr. Ouellette said that more than 50 other people also confessed to the same lawyer.
[52] Mr. Ouellette said that other donors confessed later after information on the scheme and its terms and conditions were sent to the Audit Division with a view to reassessing donors. Mr. Ouellette mentioned that at that point he recommended that donors that had received receipts for less than $1,000 (Exhibit I-21, Tab 11) not be included in that reassessment.
[53] The names of certain people who confessed to receiving a forged receipt for 1993 are included in "Biblio-Reç", while the names of a number of others are not (Exhibit I-21, Tabs 3, 10 and 11).
[54] Mr. Ouellette said that just over 1,000 people were reassessed for the 1989 to 1995 years. Of these, about one hundred appealed to this Court.
[55] Mr. Ouellette did not conduct any investigations concerning the Appellants. I would also like to point out that none of the Appellants were specifically audited before the reassessments were made. However, the names of three of the Appellants can be found in documents seized from the A.O.L.M., and from Ralph Nahas. I will discuss them at the appropriate time.
[56] At the Respondent's request, in addition to Ms. Isabelle Mercier, three other donors testified to receiving receipts for larger amounts than the donations actually made.
[57] Mr. Michel Yazbeck is a dentist originally from Lebanon. He moved to Canada in 1979. He said he remembers hearing about the A.O.L.M. issuing tax receipts in the Lebanese community, but not where. He said that he received a receipt for $10,000 in 1990, for $10,000 in 1991, and for $8,000 in 1992, by providing in each case the monastery's priest with a cheque for the amount concerned. Two weeks later, after the cheque had been cashed, he went back to the monastery and was given $8,000 cash, for example, for the $10,000 cheque. He said it was the same procedure each time. He said that he was issued the receipt dated December 22, 1992 for $8,000 in 1993 when he was preparing his tax return for 1992 (Exhibit I-5). Mr. Yazbeck confessed to Revenue Canada in February 1997 to receiving 80% of the amount of the cheque in cash (Exhibit I-6).
[58] Mr. Elias Farhat is an engineer. He is also from Lebanon. For his part, he said that he received a receipt for $10,000 in 1993 and two receipts, one for $5,000 and the other for $4,500, in 1994 for paying only an amount in cash equivalent to 1/5 of the amount of the receipts (Exhibit I-17). He said that at a party in Montreal, a friend told him that he could make a donation and receive a receipt for a larger amount than the donation. He stated that this information travelled by word of mouth in the Maronite community. However, the receipt dated December 31, 1993 for $10,000 was allegedly received after a visit to the monastery in January or February 1994; that time he paid $2,000 in cash. He said that he was mailed the receipt later because at that point he was working in Sept-Îles. His name and the relevant information on this donation are found in "Biblio-Reç" at number 92. The receipt number is 122 (Exhibit I-21, Tab 3).
[59] Mr. Marcel Thibodeau is now retired. He used to be a teacher. He said his accountant, Jean-Maurice Labelle, told him in March 1993 when he was preparing his 1992 tax return that it was possible to obtain a receipt for five times more than the amount paid in cash. Mr. Thibodeau said that he gave Mr. Labelle $1,000 cash and was given an A.O.L.M. receipt dated December 31, 1992 for $5,000 (Exhibit I-19, Page 1).
[60] Mr. Thibodeau said that he received a telephone call in December 1993 from a Mr. Roger Antabli, who asked him if he wanted to "participate" again in 1993. If he did, he had to go to Buffet Antabli on Acadie Nord Boulevard before December 31. Mr. Thibodeau said that Mr. Labelle had told him that Mr. Antabli was the "contact" who would call him. Mr. Thibodeau therefore went to the designated location and gave the person who introduced himself as Mr. Antabli $2,000 cash. In return, he was given a receipt for $8,000 that had already been filled out (Exhibit I-19, Page 2). Mr. Thibodeau's name appears on the printout of the electronic file entitled "Biblio-Reç" seized from the A.O.L.M.'s accountant (Exhibit I-21, Tab 16). The number is 390, the receipt number is 429 and the amount indicated for the receipt is $8,000. As already mentioned, there is no other information in this second part of "Biblio-Reç". Mr. Thibodeau received another $8,000 receipt after the same procedure was followed in late 1994 (Exhibit I-19, Page 3).
[61] Mr. Thibodeau's spouse also made a donation to the A.O.L.M. and after she received a notice of reassessment disallowing the tax credit, Mr. Thibodeau contacted Mr. Gaétan Ouellette using the telephone number with the notice of assessment, with a view to making a disclosure. Since Mr. Ouellette had asked him to send a letter, Mr. Thibodeau then sent him a letter of confession (Exhibit I-20).
[62] Ms. Mercier told us during her testimony what she personally knew about the scheme, which her husband, Mr. El-Boustany, had organized. Father Sleiman told Ms. Mercier about the scheme during a meeting attended by her husband in the basement of the church. The conversation allegedly continued a little later in the priests' office. She said that her husband had also explained the scheme to another person who came to the house. Ms. Mercier stated that she had personally made donations from 1988 to 1990 by giving her husband cheques who then gave them to the priests, specifically to Father Sleiman, Father Slim and Father El-Kamar. Ms. Mercier stated that the latter and her husband became friends and was the person with whom her husband primarily dealt. Ms. Mercier received receipts for the amount of the cheque issued (Exhibit I-18). However, her husband allegedly received cash refunds of 50% to 80% of the cheque amounts. He allegedly deposited these cash deposits himself initially in a bank account for the mortgage on the house and then in a joint account. Ms. Mercier, however, said she was unaware of the total amount deposited in this way in these accounts.
[63] While she provided few details about the information provided at the March 30, 1994 meeting, Ms. Mercier mentioned in her testimony the names of the people she knew who had allegedly participated in the scheme at that time. She explained, more specifically, that a friend from outside Montreal, Mr. Naji Abi Nader, gave her husband a cheque for $20,000 three times a year, and in return, her husband gave him a receipt for the exact amount of the cheque and $16,000 in cash. Each time, the receipt and the cash, in $1,000 or $100 bills, were placed in an envelope that her husband kept in a desk in their bedroom. Ms. Mercier said she saw the receipt and counted the money in the envelope three or four times, but was unsure in exactly which year. She had also allegedly personally seen her husband give the envelope to this person on one occasion. She also mentioned in passing that even afterward she found a receipt made out to Mr. Abi Nader in the truck her husband often used.
[64] Ms. Mercier also mentioned, without, however, being too clear, that after the meeting on March 30, 1994, she had met with Mr. Gaétan Ouellette from the Special Investigations Section a second time in 1994, not in 1995, and at that meeting she gave him her own receipts obtained for tax purposes for 1989 and 1990. The meeting was allegedly held in the same office as the first meeting. Ms. Mercier was, however, unable to confirm whether Ms. Langelier or Mr. Galimi were at this meeting.
[65] I would like to simply point out here that Ms. Langelier testified that she and Mr. Galimi met with Ms. Mercier a second time on September 8, in her accountant's office. For his part, Mr. Gaétan Ouellette stated that he did not have any contact with Ms. Mercier between the date of the first meeting, March 31, 1994 and August 23, 1995, the date when he had her sign an affidavit after the case was sent to the Special Investigations Section. Mr. Ouellette stated that he had contacted Ms. Mercier a few times after August 23, 1995, as did investigators from Quebec who were looking after the case of Mr. Abi Nader.
The Appellants
Ghassan Kiwan
[66] Appellant Ghassan Kiwan is currently a consulting cardiologist for the Aramco oil company in Saudi Arabia. He left Quebec in July 1997.
[67] Mr. Kiwan immigrated to Canada in 1977 and obtained his licence to practice medicine in Quebec in 1982. After specializing in internal medicine and cardiology, he became an associate cardiologist and then head of the cardiology department at the Lanaudière regional hospital in Joliette. At that time, he was living in Repentigny and did so until he moved to Saudi Arabia in July 1997.
[68] Mr. Kiwan testified that he is a practicing Maronite Catholic and started attending mass at the A.O.L.M. church on Ducharme Street in Outremont in 1983 or 1984.
[69] He said that from 1990 to 1995 in particular, he attended mass about twice a month and various parties to raise money for the hall and the monastery that the A.O.L.M. had built. He also said he occasionally went to other churches, such as in Repentigny, Joliette and Montreal.
[70] Mr. Kiwan mentioned that he was also a member of the Maronite Union, which also raised money for the same purposes as the A.O.L.M. He said that his brother, Roger Kiwan, and Mr. Fadi Basile also belonged to this civil charity organization which assisted Maronites and needy people in general.
[71] Under cross-examination, Mr. Kiwan said that he referred many patients to Mr. Fadi Basile, a cardiologist who practiced in Montreal, with whom he also had fairly frequent contact. Mr. Basile was also a personal friend and a friend of his brother Émile. Mr. Kiwan testified that he had always been involved in charity work and knew the Maronite priests, including the head of the monastery to whom he had provided sample medications to be sent to Lebanon. Mr. Kiwan said that he did not know Messrs. Nahas, Jamousse or Abi Nader, but said that he knew Mr. Nabil Attié, a friend of his brother Émile Kiwan.
[72] Under cross-examination, Mr. Kiwan stated that he had always made his donations by cheque and gave them to the accountant priest when he made short visits to the monastery on Friday nights when he was