According to Statistics Canada, 84% of Canadians aged 15 and over, or just under 24 million people, reported making at least one financial donation to a charitable or non-profit organization when the last survey on gift giving was conducted in 2010. With over $10 billion in yearly donations, it is unsurprising that there are those that seek to take advantage of Canadians’ spirit of giving. In a recent sentencing decision, R v Raza, 2016 BCSC 1030, the British Columbia Supreme Court sentenced two brothers, Fareed Raza and Saheem Raza, to over four (4) years for their roles in orchestrating a charitable donation scheme.
From 2003 to 2009, the Raza brothers used their tax return preparation business to issue over 1,700 inflated donation receipts for a registered charity. The Canadian Revenue Agency estimated that the brothers issued donation receipts totalling $11 million, which resulted in $4.9 million in tax refunds. However, the charity’s tax returns which were also prepared by the brothers only showed donation revenue of $815,000. The Court found that the brothers kept nearly all of the cash donations that were made. Those that had donated to the scheme in expectation of an inflated tax receipt had all of their donations disallowed with penalties and interest. The Court refused to make a restitution order to reimburse taxpayers for their cash contributions, instead finding that “they were willing participants to the scheme and not victims.”
At their sentencing hearing, the brothers argued that their culpability and sentence should be less because many of the taxpayers who participated in the scheme had some level of knowledge about the fraud. The Court rejected this argument ruling that:
“Moral culpability is not a finite quantity that is to be divided between the number of accused who participate in a scheme.
It is unfortunate, but even when making charitable donations Canadians should remain on guard for the warning signs of fraud. The CRA publishes tips and a list of warning signs to watch for including:
- the pressure to give right away;
- charities that use free email addresses; and
- organizations that use names similar to popular charities.