A former tax preparer and accountant in Waterloo has been sentenced to three years in prison for defrauding Revenue Canada of $1.2 million.
Michael Witen, 61, was convicted of defrauding the federal government in August 2011. He pocketed nearly half-a-million dollars in the process.
One of the frauds became known as the “circle of payments” scheme.
Federal prosecutor Catrina Braid explains the system “Essentially Mr. Witen had fraudulent invoices that were rendered to his corporate clients. Those were paid to shell companies and the money was funneled back to the individuals of the corporations minus a commission to Mr. Witen.”
The owners of several of the businesses have already been dealt with by the courts, pleading guilty to tax evasion and repaying tens of thousands of dollars in fines and back taxes.
Mark Freeman is a retired investigator with the Canada Revenue Agency (CRA) who was a team leader in the Witen case.
He says at the time, it was probably the largest search ever conducted by the CRA in Canada.
“It was a matter of tracking the funds where the scheme itself wasn’t difficult, actually determining how much was evaded by the dozen or so clients of Mr. Witen took considerable time and effort.
He adds that the sentence is the stiffest he can remember for that type of crime.
Witen must also repay $448,000 to the federal government. If that’s not done in three years, an additional three years could be added to his sentence.
According to Witen’s lawyer, the appeal papers were prepared days ago, and his client was expected to be released on bail by the end of Wednesday.
Both the conviction and the sentence are being appealed, the latter on constitutional grounds.
