Gifting Scheme Conviction. Be Careful With Your Hard Earned Money!

A Coaldale, Alberta man has been arrested for fraud after allegedly being one of the central figures in a so-called “gifting” scheme which has taken in about 500 individuals across the province of Alberta.

Gifting schemes have been under the microscope at the Canada Revenue Agency for over a decade, and in all cases, the CRA have rejected these schemes, and denied the donation receipts of the contributors.

While these cases play out in Tax Court, the participants are left to fend for themselves, often accruing penalties and interest which far exceed the amount of their contribution or their tax benefit.

In this specific scheme, Steele Cameron Tolman, 57, was charged with fraud over $5,000 and possession of the proceeds of crime over $5,000. He is scheduled to appear in court in Lethbridge on May 17 to answer LPS charges he is a “main presenter” or “promoter” of a gifting circle fraud which began in September 2018.

These schemes – and this scheme specifically – operate under false pretences, whereby people are recruited by telling them that if they contribute $5,000 they will eventually receive $40,000 with no risk.

The fraud occurs when that $5,000 is used to payout the $40,000 to one of the earlier members which means new members must be recruited in order to continue paying out members.

If this scheme was promoted out of a parking lot, and some guy’s back of their van, they are going to say this scheme was completely ridiculous, however, this was promoted by friends and family who received the $40,000 payout which added additional legitimacy to the scheme.

The fraud is criminal in nature because the recruitment of new members occurs under the false pretense of “no risk. Those who participated and received their $40,000, are in receipt of the proceeds of crime, which is illegal, and those who received their payouts must declare that income to the Canada Revenue Agency.

What is truly amazing is that people who participate in schemes and scams like these can claim that they did so thinking it was legal, and have used that argument in conversations with the police and the CRA.

If you give someone $5,000 and they give you back $40,000 – which seems too good to be true… Means it is too good to be true.

Much in the same way that someone donating $1,000 to a “charity” and receives a tax receipt for a donation of $2500.  It’s illegal, and you’re going to get caught and the penalties and interest will far exceed the amount of benefit received.

Be careful with your hard earned money. There are no fast and easy ways to make a buck. Don’t fall for scams and schemes and get left with a tax debt, or worse.

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Author: Warren Orlans

Welcome to inTAXicating. My name is Warren Orlans and this is my blog. I have been writing this blog since 2008 to provide clarity around taxation issues which I feel should have been explained somewhere - preferably by the CRA. I have over 20-year's experience in the taxation industry, 11 of them working for the Canada Revenue Agency (CRA), and 5-years working in the private sector Managing the tax departments for large financial institutions. It was at that point when I realized that people were coming to my blog seeking advice, and asking me to assist them with their tax issues, so I opened up my own business and started helping people deal with issues relating to the CRA. 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. If you have a tax question, feel free to ask in the comments, or email me at either info@intaxicating.ca, or intaxicatingtaxservices@gmail.com.

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