Illegal tax shelter scam results in 6 arrests in Toronto
RCMP financial crime unit shuts down operation that allegedly bilked millions from investors
The RCMP has arrested six people in Toronto in a financial scam involving an illegal tax shelter that defrauded individual Canadians and Revenue Canada of millions of dollars.
The scheme involved selling "business losses" on real and fictitious companies that people could use as a deduction on their income tax, potentially saving them thousands in taxes, RCMP Ontario commanding officer Stephen White said at a news conference Wednesday.
Six people were arrested in a dawn raid on a west Toronto address on Wednesday.
Each has been charged with two counts of fraud over $5,000 and commission of an offence for a criminal organization. They are:
- Vincent (Vince) Villanti, 66, of Whitby.
- Shane Davidson Smith, 46, of Peterborough.
- David Prentice, 52, of Oakville.
- Ravendra (Ravi) Chaudhary, 65, of North York.
- Andrew Lloyd, 42, of Pickering.
- Joe Loschiavo, 49, of Etobicoke.
The RCMP got its first consumer complaint about the scam in 2012 and has so far identified 493 victims of the fraud in the period from 2009 to 2012.
Police say the scheme may have been operating as far back as 2004.
Victims had invested between $1,000 and $300,000 in the scheme which involved a set of small business enterprises set up by the fraudsters as well as legitimate businesses looking for funding whose books were manipulated to look as if they had business losses.
The idea was that the customers would earn back their investment by writing the business loss off on their income taxes.
Revenue Canada stood to lose $200 million from the scam. However, auditors began looking into the writeoffs and most of the refunds were disallowed, according to Supt. Dave Bellamy, the officer in charge of handling Greater Toronto Area financial crime.
The victims, who come from Alberta, Manitoba, Saskatchewan and Ontario, were approached through investment counselling groups or over the internet.
The investigation is ongoing and more arrests are possible, Bellamy said.