CRA employees steal $300,000 in refunds from Canadian Taxpayers

The CRA’s credibility is reeling after an access to information (ATIP) probe revealed that 2 senior employees in the Debt Management division were found to have been stealing from Canadian Taxpayers. This massive fraud was detected in 2008 and has been going on for almost 8 years in both cases.  Further proof that the quality of management at the Agency is not up to par with the responsibilities they are required to perform.  With access to people SIN numbers, and the ability to move billions of dollars annually, the current crop of team leaders, managers and all of senior management are shown yet again to lack the competency to properly manage staff.

What makes this fraud even more appalling is that while uncovered in 2008, the CRA kept news of it from going public for more than a year, until the facts were released through a request under access-to-information law.

In the one case, a veteran male CRA employee routed approximately $300,000 generated from illegitimate returns into his bank accounts. In the other case, a veteran female employee defrauded the Canadian public of approximately $100,000 through manipulating their systems into issuing refunds and payments to accounts she had set up and controlled for this purpose.

On September 16th, 2009, the CRA refused to name the fraudsters or reveal whether they were fired or charged and convicted, saying that to identify them would violate “privacy laws”.  The CRA also refuse to confirm or deny that any or all of the stolen monies were recovered after the fraud was discovered in 2008.  CRA spokeswoman Caitlin Workman did, however, reveal that “They no longer work here,” she said.  She also dismissed the notion that this fraud would erode the publics’ credibility in the CRA and that these two individuals actions an anomaly, “We have close to 45,000 employees here, and they deal with millions of tax and benefit files on a daily basis. And here we are talking about two individuals.  Yes, we take it very seriously, but it should also be put in perspective.”  Ms. Workman said internal fraud of this magnitude is very infrequent, “I don’t have any numbers for you but they are very rare.”

The crime:

The male employee took more than $300,000 by routing bogus refunds and related Canada Child Tax Benefit and GST credit payments to his personal accounts, the ATIP documents revealed.  “For the last eight years, at least, he had filed tax returns and claimed [benefits and credits] for individuals he did not know,” the Internal Audit investigation revealed.  “Based on the information gained and the list of social insurance numbers found at his workstation, it is reasonable to believe that [he] may have had a role to play in the issuance of illegitimate refunds on more than 50 accounts.” 

The female CRA employee, prepared and filed hundreds of illegitimate returns, ensuring the tax refunds and goods and services tax credits were routed to her own bank accounts.

This was made public through access-to-information requests made by researcher Ken Rubin.  Anyone is entitled to make an ATIP request into their own personal tax information at any time.

Internally, this fraud was brought to light after other CRA employees became suspicious when they tried to verify some of the claims and could not reach the taxpayers in question.  The ATIP request found internal documents stating; “After reviewing the motor vehicle records and conducting credit bureau checks … [a staffer] was unable to determine the whereabouts of the taxpayers involved and could not establish whether or not they actually existed.”

Where it appears that CRA management failed the Canadian public the most is that the internal investigation turned up that both employees had made thousands of unauthorized searches into taxpayers’ accounts, including gaining access to their own files, and members of their family.  Gaining unauthorized access is the most severe offense at the CRA, a current employee who did not want to be named stated that, “We are required every year to sign a document stating that we will not access information that does not directly relate to our work-load and for every account we enter, we are required to fully diarize the reasons for accessing it.  We are told that if we access information that we should not be accessing, we will have our access suspended immediately pending investigation and if found guilty, suspended or fired”.  There is no way that “thousands” of an authorized accesses should have been allowed.  It just goes to show that management let down the Canadian public by not knowing what employees are doing on a daily basis, or for allowing these accesses to occur without punishment.

It might come down to the fact that these (now former) employees were part of the “old boys network” and that their transgression were tolerated until it was brought to the attention of someone senior at the CRA who would not let it occur anymore.  The contact at the CRA stated that there are others who have been suspected of carrying out similar frauds who still are employed by the CRA including putting themselves on the payroll of companies they are auditing, or by accessing information of friends, colleagues or even staff their manage.   

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Author: Warren Orlans

Welcome to inTAXicating. My name is Warren Orlans and this is my blog. With over 17-years experience in the taxation industry, 11 of them working for the Canada Revenue Agency (CRA), and the rest working in the private sector at large financial institutions responsible for resolving tax issues for corporations and individuals and the Canadian lead for a large US bank on FATCA implementation. My tax career began pretty much out of university at the CRA, in Collections, where I moved up, across, over and up again through their division with stops in Enforcement, Taxpayer Relief (then Fairness), Audit, Directors Liability, Training, Mentoring, GST, GST/HST, Payroll, Corporate Tax, Personal tax, and probably much more. If you have a collections, compliance or audit issue with the CRA, inTAXicating is the place you need to contact. inTAXicating works in strategic partnership with amazing tax lawyers, insolvency practitioners, mortgage brokers, debt counselling experts and much more. When dealing with governments, knowledge is power. We possess strong understanding of government so we know what the next step is before the government does. When you have a collections problem with the CRA, do you hire a graphic artist? No, you get a former collector who trained the staff, and who worked as a resource officer for 5 years. Then you know you are on the right track to resolving your tax problem(s). Others offer suggestions. We offer solutions! info@intaxicating.ca

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