Newfoundland and Labrador’s attorney general is suing the son and daughter of the businessman who was a central figure in a kickback and fraud scheme at the legislature.

The government wants Christina Serna and Robert Hand to repay up to $2.3 million, saying taxpayers suffered “deprivation” as a result of their actions.

Lawyers for the government argue that the duo did not fulfil their responsibilities under the Corporations Act.

The Newfoundland and Labrador government has filed another in a series of Supreme Court actions to recoup cash associated with the legislative spending scandal. (CBC)

“The plaintiff claims that the defendants have converted assets of the Crown to their own benefit without legal cause or justification,” the province’s statement of claim alleges.

The sister and brother were sole directors of a company, JAS Enterprises, linked to payments from the spending scandal by the auditor general and police.

But Serna and Hand deny the government’s allegations, and have filed a statement of defence at Newfoundland and Labrador Supreme Court.

In court documents, they say the government’s action “is without foundation in fact or in law,” and want it dismissed.

The pair say their father, John Hand, was the company’s commissioned sales rep for the provincial government account.

But they say they “did not authorize, direct, allow or otherwise enable any fraudulent transactions to be completed through John Hand.”

The defendants say the business JAS Enterprises did with the government was legitimate, and the company had nothing to do with other firms linked to their father and the scandal.

They insist the government must prove each and every transaction for which it claims money was paid to JAS Enterprises and no goods were received.

Bribery and fraud conviction

John Hand was sentenced last year for paying kickbacks and defrauding the house of assembly.

According to court filings related to his criminal conviction, John Hand told police that his family played no role in his fraudulent activities.

Businessman John Hand – pictured in a 2010 file photo – pleaded guilty to three charges connected to Newfoundland and Labrador's constituency spending scandal. (CBC)

Those documents note that the government made at least $450,000 in payments to three companies linked to John Hand as a result of fraudulent invoices.

In an agreed statement of facts filed in provincial court, Hand admitted the scheme may have involved as much as $2.3 million in fraudulent invoices.

Lawyers for the government later won a default civil judgment against him for that full amount.

Fast forward to this May, when the province went to Supreme Court to force John Hand’s daughter and son to answer questions under oath before deciding whether to sue them.

Chief Justice David Orsborn rejected that application.

The government filed its statement of claim against the duo soon after.

Ongoing legal efforts

The latest lawsuit is part of ongoing government efforts to recoup cash lost in the spending scandal.

In addition to John Hand, four politicians and a former key house of assembly bureaucrat were convicted and sentenced between 2009 and 2011 on fraud and corruption-related charges.

They were all ordered to repay certain amounts of cash as restitution in those criminal proceedings.

The province has filed civil actions — some dating back more than five years — to try to get the rest.

So far, those proceedings have resulted in a net gain of $110,000.

According to figures obtained by CBC News under access-to-information laws, the province has spent nearly $750,000 on legal, accounting and consulting fees related to those recovery efforts.

The amount of cash recouped is roughly $860,000.

The numbers include payments up to the middle of July.

Government 'obligation'

Attorney General Tom Marshall said proceeding with such recovery efforts is the right thing to do.

"The provincial government has an obligation, on behalf of taxpayers, to pursue the legal remedies available to it to recover misappropriated public funds," Marshall said in a prepared statement.

Meanwhile, David Eaton — the lawyer for Christina Serna and Robert Hand — stressed in an email to CBC News that the statement of defence filed in court denies each and every allegation made by the government.

The house of assembly spending scandal exploded onto the political scene in 2006, with the first in a series of damning reports by the auditor general.

Subsequent police investigations led to the six convictions related to abuse of politicians’ taxpayer-funded expense accounts.