Abinader c. La Reine

Abinader c. La Reine
Court (s) Database
Tax Court of Canada Judgments
Date
2007-02-23
Neutral citation
2007 TCC 111
File numbers
2002-4812(IT)G
Judges and Taxing Officers
François M. Angers
Subjects
Income Tax Act
Decision Content
Docket: 2002-4812(IT)G
BETWEEN:
NAJI ABINADER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
__________________________________________________________________
Appeals heard on September 6, 7, 8, 12, 13, 14, 15 and 16, 2005,
at Roberval, Quebec.
Before: The Honourable Justice François Angers
Appearances:
Counsel for the Appellant:
Martin Dallaire
Sebastien Talbot
Counsel for the Respondent:
Nathalie Lessard
Simon-Nicolas Crépin
__________________________________________________________________
JUDGMENT
The appeals from the assessments made under the Income Tax Act in respect of the taxation years 1989 through 1995 are dismissed, with costs to the Respondent.
Signed at Ottawa, Canada, this 23rd day of February 2007.
"François Angers"
Angers J.
Translation certified true
on this 27th day of June 2008.
Erich Klein, Revisor
Citation: 2007TCC111
Date: 20070223
Docket: 2002-4812(IT)G
BETWEEN:
NAJI ABINADER,
Appellant,
and
HER MAJESTY THE QUEEN,
Respondent.
[OFFICIAL ENGLISH TRANSLATION]
REASONS FOR JUDGMENT
Angers J.
[1] These are appeals from reassessments dated June 20, 1997, and confirmed on September 13, 2002. By these reassessments, the Minister of National Revenue ("the Minister") disallowed all the tax credits that the appellant had claimed for the taxation years 1989 through 1995 in respect of charitable gifts to the Ordre antonien libanais des Maronites (OALM), and imposed penalties for each of those taxation years. The reassessments concerning the taxation years 1989 through 1993 were made after the normal reassessment period.
[2] During the years in issue, the appellant obtained receipts from the OALM for the following amounts: $60,000 for 1989, $64,000 for 1990, $60,000 for 1991, $60,200 for 1992, $50,000 for 1993, $50,000 for 1994, and $50,000 for 1995. The appellant also obtained receipts for charitable donations to other registered charities, the amounts involved being $456, $1,915, $2,500, $0, $200, $250 and $30 for the taxation years 1989 to 1995 respectively. The appellant's income tax returns disclose that he claimed charitable gift credits of $53,788, $54,171, $52,319, $66,284, $61,388, $61,571 and $50,030 for the years 1989 to 1995 respectively.
[3] The respondent alleges that the appellant did not donate to the OALM during the years in issue the amounts shown on any of the receipts because the receipts and the amounts indicated thereon are false. The respondent maintains that during the years in issue, the OALM operated a scheme whereby it issued official receipts for charitable gifts in exchange for the payment of 20%, on average, of the amount stated on those receipts, or whereby, in some cases, it issued a receipt to the taxpayer showing a cash donation of an amount equal to the amount that the taxpayer paid to the OALM by cheque, but of which the OALM later returned 80%, on average, to the taxpayer in cash. As well, according to the respondent, the OALM sometimes issued a receipt to a taxpayer who had not donated anything or had paid a minimal (20%) cash amount. The respondent further maintains that the appellant was a participant in this OALM scheme and that all the receipts for the years in issue were issued under this scheme.
[4] For his part, the appellant submits that he genuinely made charitable donations to the OALM, that the amounts of his donations are consistent with his professional income, that his financial situation—meaning his assets—is inconsistent with the respondent's allegations, and that he cannot possibly have enriched himself at the respondent's expense. In addition, citing the Canadian Charter of Rights and Freedoms, the appellant objects to the admission of evidence obtained as a result of the execution of search warrants at his home and on the OALM's premises. However, the appellant dropped his objection to the admission of the evidence obtained through a search at his home, his office and his cottage. The appellant is pleading the expiry of the limitation period and invoking procedural fairness, and questions the relevance of similar facts referred to by some of the respondent's witnesses.
[5] The involvement of the Canada Revenue Agency ("the Agency") began in late March 1994 when Isabelle Mercier, with the help of her accountant, arranged a meeting with representatives of the Agency in order to tell them about her participation, and that of her husband (Samir El‑Boustany), the appellant, Dr. Fadi Basile and Antoine Hani in a scheme set up by the OALM. Ms. Mercier was accompanied by her accountant, and the Agency was represented by auditor Colette Langelier, Gaetan Ouellet of the special investigations service, and team leader Raymond Galimi. At the meeting, she explained her situation and that of the others named above. She said that she had arranged the meeting because she was having a lot of problems with her husband at the time. They had in fact been separated since September 1993, and they had three children. Her husband had donated his entire salary in one taxation year, and the amount was deposited back into their joint account a few days later. Fearing reprisals from the Agency, she preferred to meet with its representatives in order to make them aware of this modus operandi.
[6] Ms. Mercier married Samir El-Boustany, a radiology technician, in December 1984. A Lebanese Catholic and a member of the OALM's board of directors, he attended the order's church and was friends with its priests in Montreal. Thus, Ms. Mercier was familiar with the OALM and moved in OALM circles during the first years of her marriage; she made charitable gifts to the OALM in the years 1988 through 1990, and got four or five receipts. The amount of her first donation to the OALM, which she made in 1988, was $200, and she was given a receipt for that amount. However, for the gifts that she made in subsequent years, which ranged from $3,000 to $5,000, she was given a receipt for the donation amount along with a cash amount varying between 50% and 80% of the donation amount. Her husband deposited this cash in their joint account, and it was used to pay the mortgage on their home. In fact, Ms. Mercier says that her husband was the intermediary between her and the OALM, and played the same role between other donors and the organization. On several occasions, she was present as he attempted to attract donors and explained the scheme to them; most of the people that he approached were physicians and friends of his, a few of whom were identified. She was also present one Sunday, after Mass, when her husband and Father Antoine Sleeman discussed the scheme. After Father Sleeman left, around 1989, she became acquainted with Father Youssel El‑Kamar, who became a personal friend of her husband's. He was the person who signed the receipts for the OALM. He was very familiar with the scheme and discussed it in her presence at her home. Ms. Mercier also knew Fathers Jean Slim and Claude Nadras.
[7] As for the appellant, Ms. Mercier met him early in her marriage. He was of Lebanese origin, was married to Nicole Leduc, a Quebecer, and was a resident at the Hôtel-Dieu hospital in Montreal. The two couples became friends and visited each other even after the appellant left Montreal to take up residence in Roberval. They went on trips down south together, and the appellant and his family visited them whenever they were visiting Nicole Leduc's parents in Brownsburg, Quebec. In addition, they saw each other during summer vacation.
[8] Ms. Mercier testified that the appellant participated in the scheme set up by the OALM. She had receipts issued to her by the OALM, as well as cash, in a drawer in her bedroom. Her husband would receive a cheque from the appellant, go to the church, and come back with an envelope addressed to the appellant, a receipt, and cash. She said that she saw this happen several times. Most of the time, the cash totalled $16,000, because she counted the money on one or two occasions. The money consisted of $100 and $1,000 bank notes. From the receipt and the thickness of the envelope, she knew what the amount was. Her husband always placed the envelope in his desk drawer. After a few days, the appellant or his father-in-law would come to pick up the envelope in her presence; this happened several times. She testified that she was aware that this was being done from 1990 through 1992. She is less certain about 1993, because she and her husband separated in September of that year.
[9] In discussions she had with the appellant about the cash, he told her that he used it to cover his expenses for conferences abroad, that he purchased a Porsche, that he renovated the second floor of his house and paid the workers in cash, and that he purchased a plot of land. She testified that Ms. Leduc was probably aware of what was going on, because the money had to be spent on something, and they spoke about it. Ms. Mercier also found in the family vehicle an OALM envelope containing two receipts made out to the appellant: one receipt, for $20,000, was dated July 23, 1991 and bore the number 1752; the other, for the same amount, was dated August 20, 1991 and bore the number 1761. She told her husband about this, and he replied that it did not matter because both receipts had been reissued (Exhibit I‑24).
[10] Ms. Mercier met the same representatives of the Agency, with the exception of Mr. Ouellet, a second time in September 1994 in order to clarify what she had said. She brought documents such as receipts and cheques. On August 23, 1995, she signed a statement before Mr. Ouellet and Ms. Langelier in which she informed them of what she knew about the OALM scheme. On January 31, 1997, she signed a second statement containing essentially the same assertions regarding the scheme and the appellant's participation therein. However, she added that during the summer, on visits to the appellant's home, her husband brought envelopes from the OALM containing cash and receipts, and that her husband brought back cheques that the appellant had made out to the OALM. It should be remembered that Ms. Mercier's husband was an OALM promoter who sought donations, and such donations allowed donors to take advantage of one of the schemes put in place by the OALM.
[11] Following the meeting with Ms. Mercier in September, the team leader decided to audit the OALM through the Charities Division in Ottawa, and he entrusted this task to Colette Langelier. Ms. Langelier has been working for the Agency for about 30 years. She learned that the Ottawa office was preparing to suspend the OALM's registration. She obtained the T3010 statements containing the names of the OALM's donors, and its audit report, and, after familiarizing herself with their contents, she noticed several anomalies in how the OALM did things, which made it possible to make connections with Ms. Mercier's assertions. Therefore, it was decided to audit the OALM, and she was assigned that task.
[12] As we know, Ms. Langelier met Ms. Mercier again on September 8, 1994, along with team leader Raymond Galimi. At this meeting, she obtained documents from Ms. Mercier, including copies of her ex-husband's cheques and deposit slips. Among these documents was a cheque for $15,000 issued to the OALM by her ex-husband, which the OALM cashed. The OALM gave him 15 thousand‑dollar bills, which he immediately deposited, because the money for the donation had been taken from his line of credit. Moreover, the audit enabled Ms. Langelier to confirm the information provided by Ms. Mercier, and to reassess her ex‑husband for the taxation years 1989 through 1992.
[13] So Ms. Langelier contacted the leaders of the OALM and began an audit for the years 1989 through 1993. She completed the audit for 1994 and 1995 later on. Ms. Langelier obtained copies of accounting documents, monthly bank statements, cancelled cheques, deposit slips and receipt books from Ralph Nahar, the OALM's accountant. All of this information was reconciled in the document filed as Exhibit I‑28, which contains the name of each donor, the amount and date of the cheque, the date on which it was deposited, and the number, date and amount of the receipt issued. The document makes it possible to compare the total deposits made by the OALM with the receipts issued and the amount of the withdrawals made by the OALM using cheques payable to "Cash" written shortly after the donations were deposited. Ms. Langelier also noticed that there were very few deposits of cash donations. The OALM was unable to show that the donations received were actually sent to Lebanon as it claimed. Apparently, the OALM's representatives explained to Ms. Langelier that the money withdrawn through the cheques payable to "Cash" was kept in the safe and given to people who were travelling to Lebanon, or to priests who were going there. However, the OALM was unable to provide any names or dates, or to indicate any amounts thus sent to Lebanon or any conversion from Canadian to Lebanese currency. Ms. Langelier was unable to determine the use of over 90 of the amounts on the receipts issued by the OALM.
[14] Her audit work and, in particular, the reconciliation in Exhibit I‑28, enabled Ms. Langelier to identify the three different forms of the scheme. Under the first, a donation was received by cheque and a receipt for the same amount was issued. The cheque was deposited, and this was followed by a withdrawal by means of a cheque made out to "Cash" by the OALM. The amount withdrawn, which was 80% of the donation amount, was given to the donor. The second form of the scheme consisted in issuing an antedated receipt for payments made by cheque that represented only a fraction of the amount shown on the receipt. In the third form of the scheme, a receipt was issued for which no corresponding inflow of cash could be found in the OALM's bank accounts. Each of these techniques is illustrated by an example in Exhibit I‑28. Ms. Langelier also noted that most of the donors from 1989 to 1994 made charitable donations only to the OALM and that a number of them claimed 20% of their net income.
[15] Gaetan Ouellet is now retired. He was the investigator on the OALM file, but his involvement only really began in late June 1995, specifically, on June 29, when Ms. Langelier signed the referral to the investigations unit. His only involvement before then was to attend the first meeting with Ms. Mercier in March 1994, a meeting that did not affect him at all because Mr. Galimi, the section head, kept the file. Thus, Mr. Ouellet was not involved until Ms. Langelier's referral. Mr. Ouellet says that he had no contact with Ms. Langelier, Mr. Galimi or Ms. Mercier from March 1994 to June 1995, and that he obtained no documents concerning the matter.
[16] The file was accepted by, and transferred to, the investigations unit, and it was by chance that Mr. Ouellet inherited it. He thus began his investigation into the OALM's schemes in late August 1995. He examined Ms. Langelier's work and the OALM's tax returns and obtained the file that was in the possession of the Charities Division in Ottawa. He submitted a summary report, but had trouble getting his superiors to authorize a search.
[17] He therefore met with Ms. Mercier twice, and obtained from her an affidavit dated August 23, 1995 (Exhibit I-25) in support of a request for warrants to search the OALM's premises. A warrant was in fact executed on November 8, 1995. Another search warrant, dated July 10, 1996, was executed at the residence of Ralph Nahar, the OALM's accountant, and the residence of Samir El-Boustany, who was Ms. Mercier's husband and a friend of the OALM's priests and leaders.
[18] Through the investigation, Mr. Ouellet was able to determine that the OALM was engaged in the same types of schemes as those that were uncovered in the audit. Receipts were issued without donations having been made, donations were made and the donors were given back, in cash, 80% of their donations along with a receipt for the full amount of the donation, or donors were given receipts for a certain amount but actually paid only 20% of that amount.
[19] The search enabled the investigator to obtain the OALM's deposit slips, the cheques that the OALM had made out to "Cash", the cheque stubs, the receipts, and the receipt books for the period from 1989 to 1995. All of these documents are, moreover, covered by counsel for the appellant's objection based on the Charter and on the argument that the documents are not relevant to the instant case. I shall deal with this issue further on in my reasons.
[20] The documents that were seized include a computer diskette containing a receipt library called "biblio-reç" (Exhibit I‑11, Tab 3). "Biblio-reç" holds information regarding the issuance of 354 receipts by the OALM. Mr. Ouellet's investigation enabled him to understand how "biblio-reç" worked, and thus to explain its different columns and the information in each. Column "L" shows the percentage of the donation that the OALM kept, namely 20%. "Biblio-reç" also shows the receipt number, the donor's first and last name, the donor's telephone number, the amount of the receipt, the amount payable, the amount paid, and, in some cases, the amount remaining to be paid. In his testimony, Mr. Ouellet gave as an example the fact that the appellant's name appears in "biblio-reç" twice for the years in issue. The first donation was $10,000; he was apparently paid back $8,000 and the OALM apparently kept $2,000; the receipt bears the number 81 and the name of the person who recruited the appellant is "SAMR", which, according to Mr. Ouellet, stands for Samir El‑Boustany. The appellant's second donation was $20,000 and the receipt bears the number 292. It can be seen that the OALM gave him $16,000 in cash, but the part of the donation that OALM retained is not shown, and further on, the word [TRANSLATION] "replace" appears.
[21] The other seized documents, in particular those seized at the residence of the accountant, Mr. Nahar, include a "biblio-avant moi" and another "biblio-reç" (Exhibit I-11, Tab 58), albeit one from which certain columns are omitted. On the other hand, it does contain the names of donors who pleaded guilty to offences under the Criminal Code and of others who admitted that they participated in the OALM scheme. In fact, the exhibits tendered in evidence include several admissions. There appears in "biblio-reç" (Exhibit I‑11, Tab 58, No. 435) an entry for receipt number 474—issued to the appellant—together with the annotation [TRANSLATION] "replacement".
[22] Mr. Ouellet said that he found in boxes of discarded material photocopies of cheques, including two signed by the appellant and payable to the OALM: one for $20,000 dated November 1, 1994, and another for $10,000 dated December 1, 1994 (Exhibit I-11, Tab 128). Another document seized at the same location contains a two‑page document on the first page of which it says that $16,000 has already been returned to the appellant. On the second page, the amount of $20,000 is entered next to the appellant's name, and the year indicated is 1994 (Exhibit I-11, Tab 56, Item 6).
[23] Among the cheque stubs seized at the OALM's premises is one with the number 285, dated July 31, 1992, and showing an amount of $25,000 payable to "Cash". The object is identified by the name Ziad Saba and by the annotation [TRANSLATION] "bank cheque". Ziad Saba was the appellant's brother‑in‑law at the time, and he lived in Lebanon. Mr. Ouellet also found in the OALM's documents a copy of a $25,000 bank draft dated July 22, 1992, payable to Ziad Saba. The copy of this bank draft was found in an OALM envelope bearing the appellant's name.
[24] Mr. Ouellet gave other examples during his testimony. As a result of the investigation, 1,000 to 1,200 donors were reassessed for the years 1989 to 1995, and all the donors who gave more than $100,000, including the appellant, were criminally prosecuted. The appellant's file was accordingly transferred to the Agency's Quebec City office in late 1996 and given to Jean-Claude Delisle, an investigator. A copy of a letter of solicitation by the OALM was seized during the search that was conducted. The letter made it very clear that the OALM needed funds to meet its financial obligations in Montreal, not to send to Lebanon.
[25] The respondent called one witness and tendered transcripts of testimony given by two witnesses in other proceedings. All three witnesses testified that they had received receipts from the OALM for amounts higher than their actual donations.
[26] The first witness is Michel Yazbeck, who was born in Lebanon and has been a dentist since 1988. He got three receipts from the OALM: a receipt for $10,000 in 1990, another for $10,000 in 1991 and one for $8,000 in 1992. In each case, an OALM priest gave him a receipt for the full amount, and 80% of the donation was returned to him in cash about two weeks later.
[27] The second witness is Elias Farhat. He is an engineer living in Montreal, but is originally from Lebanon. He learned about the OALM's scheme through a friend. He obtained three charitable gift receipts from the OALM: one for $10,000 in 1993, and one for $5,000, and another for $4,500, both in 1994. He paid only 20% of the amounts stated on the receipts.
[28] The last witness is Marcel Thibodeau. He learned of the scheme through his accountant, who, in March or April 1993, suggested making a donation to the OALM as a way to reduce his income tax. He thus made a $1,250 gift in 1993, for which he received a $5,000 tax receipt for his 1992 taxation year. Mr. Thibodeau knows nothing about the OALM. Toward the end of 1993, acting on instructions he had been given, he went to a restaurant and walked up to small counter to get into the back. He gave $2,000 to a person unknown to him and received a receipt from the OALM for $8,000. The same scenario occurred again in 1994. Mr. Thibodeau made no donation in 1995 because nobody contacted him. He became aware of the scheme later upon reading an article about it and the OALM in a January 1996 issue of the newspaper La Presse.
[29] Jean-Claude Delisle is an investigator with the Agency's Quebec City office. The appellant's file was sent to him in April or May 1996, whereupon he undertook an examination of all the documentation relevant to the schemes implemented by the OALM as well as of the work done by Ms. Langelier and Mr. Ouellet, including the information obtained from Ms. Mercier and the photocopies of the two cheques which the appellant had made out to the OALM, that is to say, the cheque for $20,000 dated November 1, 1994, and the $10,000 cheque dated December 1, 1994.
[30] Mr. Delisle then set about obtaining search warrants, which he did in fact obtain on July 3, 1996. On July 10, 1996, he searched the appellant's residence and office and the appellant's accountant's office. Later he obtained another warrant, to be executed at the appellant's secondary residence in Quebec City. A list of all the documents that were seized was tendered in evidence along with the information on which the requests for the search warrants were based. In addition to the documents, a sum of $10,000 in cash was found in the appellant's safe.
[31] At the same time that the search warrants were executed, the appellant was charged with two offences under paragraph 239(1)(a) of the Criminal Code. In November 2001, after lengthy proceedings before the courts, particularly with respect to the validity of the search warrants and the admissibility of the evidence obtained in the searches, the Department, despite a decision that was favourable to it in the sense that a new trial was ordered, chose not to resume the proceedings against the appellant. This is the very evidence that the appellant states in his pleadings was obtained in violation of his rights and so should be excluded. As stated above, the appellant abandoned this ground of appeal at the trial insofar as the evidence obtained through the execution of the search warrants at his home was concerned.
[32] Mr. Delisle prepared a list of the items and documents that were seized, and he examined them. The items seized at the appellant's home were his banking records, credit card statements, bank statements, receipts, purchase invoices and everything related to financial transactions. In his testimony, Mr. Delisle established connections between the appellant's gifts to the OALM during the taxation years in issue and certain purchases or expenditures made by the appellant in cash around the same dates as those on which he made the gifts. Mr. Delisle's aim in so doing was to show that the appellant was a participant in the schemes implemented by the OALM. I will come back to these different connections later on in these reasons.
[33] Naji Abinader was born in Lebanon. He is a physician and his specialty is orthopedics. He arrived in Canada in 1981 and settled in Montreal to finish his studies. This is how he became acquainted with Montreal's Lebanese community. His father had told him to contact a relative named Fadi Basile and a cousin who was living in Quebec City. Once he finished his residency in his area of specialization, the appellant and his spouse, a Canadian, moved to Roberval in 1986 in order to fulfil the requirement that graduates from foreign countries practise in a remote area for four years. He received a relocation incentive and a 20% premium on his fees for each medical procedure he performed. The appellant chose to remain in Canada because living conditions in Lebanon were seriously compromised by the protracted war. The appellant says that he sent his father $10,000 in 1987 to help the parish. He does not remember the form in which this gift was sent. However, during his testimony at his examination for discovery, the appellant said that it was a gift of $15,000 or $20,000. The amount of $10,000 was confirmed by a letter obtained from the St‑Élie Maronite parish and signed by Father Paul Youssef. However, Father Youssef did not testify at the trial.
[34] It was during a visit to Fadi Basile's home in Montreal that the appellant was informed by Mr. Basile about the possibility of making donations through a charity and receiving a receipt for income tax purposes. The charity in question was the OALM. Fadi Basile told the appellant that Samir El-Boustany was a member of that organization and that he should talk to him about it. The appellant knew Samir El-Boustany because he was the brother of one of the appellant's friends in Lebanon. In fact, the appellant had met Mr. El‑Boustany during the first year of his residency in Montreal; and they have been friends ever since and saw each other socially. They both married Canadians and they each have three children of the same age. As stated earlier, Samir El‑Boustany was Isabelle Mercier's husband. The two families were friends and saw each other socially. Mr. El‑Boustany's family went to Roberval during the summer and Mr. Abinader's family went to Montreal from time to time. They have also travelled outside Canada together. During his examination for discovery, the appellant testified that Samir El‑Boustany was the one who introduced him to the OALM and suggested that he make donations to the organization in order to obtain receipts. However, the appellant says that he misspoke at the examination for discovery.
[35] So in 1998, the appellant told his father that he would send money to Lebanon, but would proceed differently, that is to say, through the OALM. The appellant says that his father, moreover, looked into the organization in Lebanon and that it appeared to be involved in charitable works.
[36] The appellant thus decided that he would contribute an amount equal to the premium on his professional fees, that is, 20%, to the OALM. The tax consequences actually made it possible for him to be more generous.
[37] The appellant says that he did not verify anything. He did not know the priests and he relied totally on Samir El-Boustany. He was aware of the fact that Mr. El‑Boustany and his wife donated to the OALM and that Dr. Fadi Basile did so as well. However, only his wife, his accountant, Mr. and Mrs. El-Boustany and Fadi Basile knew that the appellant was making donations to the OALM.
[38] The appellant did not have a fixed schedule for making donations each year to the OALM. At his examination for discovery, the appellant testified that his donations were made when he had enough money to make them. At trial, he stated that he sometimes used his line of credit to make his donations to the OALM. The amount of his annual gifts was tied to the 20% premium that he received from the Régie for practising in an outlying area. The appellant acknowledges that his accountant had explained that he was entitled to deduct charitable gifts amounting to 20% of his income.
[39] All the cheques for donations to the OALM for the period in issue were delivered to Samir El-Boustany, either by mail or by personal delivery at his home. The receipts from the OALM were either sent to the appellant by mail or given to him by Mr. El‑Boustany himself or Gaetan Leduc, Mr. El-Boustany's father‑in‑law. The appellant also asserts that the dates on the cheques corresponded to the dates on which the donations to the OALM were made. He says that he never wrote any antedated or postdated cheques. All the receipts prior to 1993 bore the appellant's office address.
[40] The appellant says that he made his personal purchases, paid his expenses and did his financial transactions by cheque or credit card. He also says that his wife, not he, manages his money. He explained that his wife brings him the cheques and he signs them, and that she looks after the finances with the accountant.
[41] The appellant testified that all his income is reported. He acknowledges that he received an average of $400 per week in cash at his office. The cash was for medical care not covered by the Régie, such as certain injections (infiltrations) or the preparation of medical reports. This cash was in small bills, and he never received a $1,000 bill. The money was rarely deposited at the bank or caisse populaire; rather, it was placed in a safe at his office. The money was used for groceries and other family needs. The appellant says that as much as $10,000 could accumulate in his safe.
1989
[42] In 1989, the appellant donated a total of $60,000 to the OALM. The amount was donated in four instalments. According to the receipts issued by the OALM, the first donation was $12,000 and the receipt was issued on May 4, 1989, the second donation was $16,000 and the receipt was issued on August 14, 1989, the third donation was $16,000 and the receipt was issued on October 4, 1989, and the last donation was $16,000 and the receipt was issued on December 28, 1989.
[43] According to Jean-Claude Delisle and the documentation seized at the appellant's home, the first cheque, for $12,000, cleared on April 18, 1989. On May 19, 1989, the appellant allegedly settled an invoice (Exhibit I-3, Tab 136) for the purchase of a piano by making a second payment of $7,900 by cheque and paying the balance of $4,900 in cash. Mr. Delisle did not find any cash withdrawal from the appellant's bank accounts that could cover the $4,900 cash payment, even though he audited the bank and credit card accounts. He was missing the March and November 1989 statements for one credit card, but he had everything else.
[44] Mr. Delisle also said that the $16,000 cheque for the third donation to the OALM in 1989 cleared on October 4, 1989. On the previous day, the appellant had paid an invoice (Exhibit I-3, Tab 136) for $1,370 using cash, and no cash was withdrawn from any of the appellant's accounts. On December 22, 1989, a cheque for $16,000 cleared, and on January 3, 1990, the appellant paid $1,000 in cash toward $3,275.25 in purchases from Serge Charest (Exhibit I-3, Tab 136); the difference was paid by credit card. Mr. Delisle did not check whether a $1,000 withdrawal was made by the appellant. However, he noted that his audit disclosed that the OALM sometimes made cash remittances in advance of receiving a donation or making a deposit.
1990
[45] In 1990, the appellant made four donations to the OALM for a total of $64,000. The first receipt, for $20,000, is dated July 6, 1990; the second, for $20,000, is dated August 1, 1990; the third receipt, for $12,000, is dated October 23, 1990; and the last, also for $12,000, is dated December 28, 1990.
[46] During the same year, the appellant bought a billiard table for $1,798.20, all but $500 of which he paid in cash (Exhibit I-3, Tab 136) on February 7, 1990. Mr. Delisle did not find any corresponding cash withdrawal from any of the appellant's accounts. On February 10, 1990, the appellant purchased furniture for $4,750 and made a $750 cash deposit (Exhibit I-3, Tab 136). On August 3, 1990, the appellant paid $1,750 in cash on that purchase, and on August 21, 1990, he paid the balance by means of a cheque for $2,250.
[47] The appellant made another purchase, this time for $750, on March 16, 1990. Mr. Delisle was unable to find evidence of the payment method (cheque or credit card) during his audit and therefore concluded that the payment was made in cash. The invoice (Exhibit I-3, Tab 136) indicates that the goods were delivered to the appellant's home on August 3, 1990.
[48] The appellant also had renovation work done at his office and at his home in the summer of 1990. The cost of the labour, $11,200, was paid in cash (Exhibit I-17). In fact, the contractor confirmed this, and acknowledged that he did work for the appellant from 1990 to 1994 under the same arrangement, namely, payment in cash so as not to have to report anything to the tax authorities. He testified that he received at least $3,000 cash for work done in 1993. The appellant acknowledged that he paid these amounts in cash, but said that the money came from his safe. He added that he made very few cash withdrawals during the period in issue because he is not the sort of person who goes and withdraws money.
1991
[49] The appellant made two donations of $20,000 and two donations of $10,000 in 1991. He received two receipts for $20,000 from the OALM: one on July 23, 1991, and the other on August 20, 1991. Two receipts for $10,000 were issued to him by the OALM on October 30, 1991 and November 12, 1991.
[50] The auditor, Jean-Claude Delisle, found a connection with the July 24, 1991, donation. He noticed that two plane tickets to Beirut, Lebanon were purchased on July 27, 1991, for Mr. and Mrs. Gaetan Leduc, the appellant's in‑laws, and were paid for in cash. Moreover, the appellant and his family travelled with Mr. and Mrs. Leduc on this trip. Their own tickets were paid for by cheque. The seven tickets and two receipts were mailed to the appellant in Roberval on August 6, 1991, and that is in fact where they were found. They were purchased from a Montreal travel agency (Exhibit I-3, Tab 126).
[51] Gaetan Leduc testified in reply at the trial that he had personally purchased and paid for the two plane tickets in question. However, in a written statement signed before the auditor Delisle on April 15, 1997, Mr. Leduc solemnly affirmed that the appellant had defrayed the cost of his and his wife's plane tickets. He does not remember purchasing the tickets, and he never contacted the Agency to say that he was uncomfortable with the contents of his statement. With respect to the conveyance of envelopes containing cash and cheques to the appellant, he testified that he only went to Samir El-Boustany's house once, where he picked up an envelope containing photographs and a letter for the appellant.
[52] During the trip to Lebanon in September 1991, the appellant opened a joint bank account with his brother‑in‑law Ziad Saba at the American Express Bank, where his brother‑in‑law worked. The appellant claims that he deposited US$20,000 from his safe into the account. He took the money to Lebanon in Canadian currency and converted it to U.S. currency in Beirut. He opened the account in order to have a foothold in, and a material connection with, the country. He trusted his brother‑in‑law and so, if the situation deteriorated in Lebanon, he would be there to look after the account. The appellant also testified that it was on his father's recommendation that he opened the account, and that he told him that he would try to check with the OALM priests to see whether he could have his donations to the OALM sent directly to Lebanon without going through the mother house.
[53] Upon returning to Canada, the appellant contacted Samir El‑Boustany to implement this scenario. I reproduce here an excerpt from the appellant's testimony on this point:
[TRANSLATION]
. . . Once I was back here, I called Samir and said: "Listen, Samir, I've been to Lebanon, I've just got back, and my relatives and my parish aren't managing to get a share of those donations." I said: "I saw that things are being done but they are not able to get their share." I said: "Personally, I'd like to have it sent directly; I'd like the organization here to send part of the money directly over there so that I can be sure that my relatives will . . . that my relatives, my parish, will be able to benefit from it." He said: "I'll look into it with the priests." They looked into it and after that he called me back and said: "Yes, we can do that." So, between '91 and '93, he said: "How can we work things to send the money?" I said: "Listen, I have an account in Lebanon, a joint account with Ziad. You send the money there, and if anything happens, Ziad will be able to protect it, and the next time I go to Lebanon, I will give it out." So he said: "Yes, but, I don't know, will they trust you?" I said: "Listen. I have trusted them since '88 and have been sending . . . I've never said a word. "I said: "I want my people over there, my little parish, they want to build a church and a school, and they need money, and I want to get involved." I said: "I, we . . . in our family, it has always . . . I said: "My grandfather made a donation when the church was built. He made a donation; he gave the two . . . the little altars." I said: "My father was in the construction business and he made . . . he helped when there was a need for concrete, cement, stones, etc. He gave." And I said: "I want to help them too. I want to do my part."
So that was successful. He sent money into my joint bank account in Lebanon from '91 to '93. In '93, I went back there with my wife and we took the money from the donations and gave it directly to the St-Élie parish.
[54] However, the Lebanese bank statement (Exhibit I-3, Tab 107) discloses two deposits made on September 5, 1991: a deposit of US$6,000 and a deposit of US$13,800. The auditor, Mr. Delisle, said that for those US dollar amounts an amount of C$22,508 would have been required. When cross‑examined about this bank statement, the appellant now said that Ziad deposited the US$6,000 and that he himself deposited the US$13,800. The appellant did not retain any details of the transactions on his bank account in Lebanon. One thing is certain according to Mr. Delisle: there is no withdrawal from any of the appellant's bank accounts in Canada that corresponds to the said deposits made by the appellant in Lebanon.
[55] On the same trip to Lebanon, the appellant purchased US$9,600 (C$10,900) worth of jewellery on September 12, 1991. The bill for that purchase was found at the appellant's home. According to the auditor, Mr. Delisle, the total amount spent by the appellant in September 1991, after the exch