Decision Date: July 23, 2013
Link: Case Summary Document
Citation: [2013] ONSC 4694 (Ontario Superior Court of Justice, Gilmore J.)

Summary:

This sentencing decision dealt with one of the many tax fraud schemes involving charitable donations which have occurred in Canada in recent years. Doreen Tennina was a tax agent who prepared tax returns for many hundreds of clients. The Crown’s case was that Tennina ‘rigged’ hundreds of tax returns she prepared to include charitable deductions her clients did not know about and charitable donations they had not made. This resulted in cash returning to her own pockets, and not returned to clients, since they did not know about it.  This cash was unreported as income. The tax fraud scheme resulted in the evasion of over $17 million of tax.

Tennina absconded on the eve of her trial on two counts of fraud, leaving her clients subject to assessments by the Canada Revenue Agency (CRA) which caused personal financial tragedy and bankruptcy for many.

Her Honour described the scheme as ‘elaborate, deliberate and well planned’. The Crown had sought the maximum sentence of 10 years imprisonment on each count, to run concurrently, and a fine on count two to reflect the amount of tax revenue lost. Her Honour had no hesitation in imposing the sentence sought since the integrity of the tax system was in question:

‘There is also the fraud on the public purse to consider, which goes far beyond the taxes evaded.  The reassessment and appeal process for the hundreds of taxpayers involved may go on for years.  That will cost each and every one of us while CRA spends time and resources processing this rather than on other duties. The cost to the court system has also been almost incalculable.’

Moreover, the integrity of charities in Canada had been compromised as well:

‘Ms. Tennina, by her actions, has compromised the good will and deeds done by so many charities.  Who could blame an individual for hesitating to donate in the future after reading about this case?  That damage cannot be calculated in dollars and cents.  The result is that charities, who already find it difficult to obtain donations, must now feel compelled to demonstrate legitimacy before even asking for donations.’

Her Honour held that there were no mitigating factors.  Tennina had shown no remorse, she had absconded, she had not repaid any of the money owing, and she had no family or health issues to be considered. As she was not present for the trial, and unlikely to return to Canada, rehabilitation was not an issue in the sentencing decision. Rather the main point to be made in sentencing was general deterrence:

‘General deterrence is the most important factor in this case.  The public must be made aware that not only are fraudulent schemes of this magnitude illegal, but the ripple effect on government, court resources and individuals has both an emotional and financial cost that affects every citizen in this country.’

In addition, there were aggravating factors involved as per section 380.1 of the Criminal Code:

 A) the magnitude, complexity, duration or degree of planning of the fraud committed was significant;

B) that the offence adversely affected or had the potential to adversely affect the stability of the Canadian economy of financial system, or any financial market in Canada or investor confidence in such a financial market;

C) the offence involved a large number of victims;

 C.1) the offence had a significant impact on the victims given their personal circumstances, including their age, health and financial situation;

 D) in committing the offence, the offender took advantage of the high regard in which the offender was held in the community;

 E) the offender did not comply with a licensing requirement or a professional standard that is normally applicable to the activity or conduct that forms the subject matter of the offence;

F) the offender concealed or destroyed records related to the fraud or to the disbursement of the proceeds of the fraud.

Her Honour held that all these aggravating factors applied in this case and sentenced Tennina to 10 years imprisonment on each count, to be served concurrently, and fined her $699,608.

The case may be viewed at: http://www.canlii.org/en/on/onsc/doc/2013/2013onsc4694/2013onsc4694.html

Implications of this case

This case is regarded as important because of the message it sent about deterrence in cases involving charitable deduction fraud, which have been frequent in Canada. The sentence was harsh, but symbolic, since the accused was not in the country. Nevertheless, Her Honour did also refer to specific deterrence, which would no doubt keep the accused out of Canada at least:

‘…Ms. Tennina must be stopped in her tracks.  She must be isolated from society to ensure that no further harm is done.  Her life of luxury illegally earned off the backs of innocent taxpayers must not be condoned.’