They would apply for and get GST rebates on car sales even though no money or vehicles had ever changed hands, according to investigators. The transactions occurred on paper only. Revenue officials say the dealers ran a series of similar schemes that cost
The Toronto Star
March 30, 2005
GST fraud worth 2 years: Crown
Pair convicted in phony auto sales. Prosecutor wants Ottawa paid back.
Morgan Campbell
Two men convicted in the largest GST fraud on record, in a "complex and yet beautifully simplistic" plan, should serve at least two years in penitentiary, a Crown prosecutor told court yesterday.
Peter Solty, 49, of Aurora, and 45-year-old Ewaryst "Ed" Prokofiew, of Mississauga, were arrested in 1999 as part of Project Phantom, a joint investigation by the Canada Revenue Agency and several police services. The three-year probe found a group of GTA car dealers who were collecting GST rebates on what police say were "fictitious" sales.
They would apply for and get GST rebates on car sales even though no money or vehicles had ever changed hands, according to investigators. The transactions occurred on paper only. Revenue officials say the dealers ran a series of similar schemes that cost the government about $20 million in total.
In January, Solty and Prokofiew were convicted of fraud over $5,000 when a jury found, after a five-week trial, that they had taken more than $3 million in GST refunds for fictitious sales of bulldozers and other equipment. When convicted this time, Prokofiew already was appealing a conviction and prison sentence in another branch of the scam. Solty had been acquitted in that same case.
In addition to asking for at least a two-year sentence, Crown prosecutor Gracie Romano asked Justice David Corbett to order both men to repay the government $3.2 million.
Corbett said yesterday that although he might make the men pay back the government, the total wouldn't approach Romano's request. "If I impose a restitution order of $3.2 million, neither one of the accused will ever be able to pay," he said. "It's a financial life sentence."
Lawyers for Solty and Prokofiew both asked Corbett to impose conditional sentences of just less than two years. Solty's lawyer, Nicholas Xynnis, said his client could pay back about $300,000. Prokofiew's lawyer, Richard Fedorowicz, settled on $375,000 but at first hesitated to name a dollar amount because he worried that the government might recoup more than it had lost in the first place.
Corbett assured Fedorowicz that the government won't receive more than it's owed.
"I'm a crafty fellow," Corbett said. "I can certainly form a restitution order that will not result in the unjust enrichment of the CRA."
Prokofiew and Solty are the last of more than 15 defendants convicted in a network of tax-fraud schemes that spanned three years in the late 1990s. Some defendants pleaded guilty and began serving conditional sentences as early as July 2001.
Solty told the hearing that before his 1999 arrest, he was a successful dealer who never made less than $200,000 a year. Since then, he has split with his wife — now Prokofiew's live-in girlfriend — and has watched more than $800,000 in savings and investments evaporate.
"I've lost my business, my reputation, quite a number of my business associates," he told the hearing. "I've lost my family. I've lost my self-esteem, my self-worth. I have nothing."
Corbett will announce his decision April 11.
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Risks: Fraud, Canada, 20050331 GST fraud
