Fair warning: The pendulum continues to swing and a tax fraud schemer gets serious jail time and a hefty fine

August 30, 2013 | David W. Chodikoff

Most Canadians are sick and tired of reading newspaper accounts or watching evening news programs that report the typically light sentences that white collar criminals appear to receive in this country.  Perhaps as a result of what might be called the “Madoff Effect” (you may recall that Bernard L. Madoff, the Ponzi schemer extraordinaire, was sentenced in the U.S. to 150 years in the summer of 2009), this view of ‘light sentencing’ is no longer entirely accurate.  Arguably, over the last several years, Canadian courts have toughened their approach towards white collar criminals and in the worst cases, Canadian courts have hammered the accused.  A good example of this later point is the Reasons for Sentencing in the case of R. V. Tennina, 2013 ONSC 4694.

The Crown sought the maximum sentence for Doreen Tennina.  She was accused of being the brains behind a well-planned fraud scheme that resulted in the evasion of over $17 million of tax.  In order to achieve this goal, Ms. Tennina gained the trust of hundreds of clients (i.e. taxpayers).  As the tax preparer, she prepared individual tax returns to include various deductions that clients did not know about and included charitable donations that individuals never made.  Ms. Tennina compounded her problems by failing to report the cash income she made from the scheme.  And finally on the eve of her trial, she absconded, leaving her numerous clients subjected to reassessments by the Canada Revenue Agency (the “CRA” or “Agency”), thereby causing further harm by pushing many of her clients into financial ruin and bankruptcy.

The Crown sought the maximum penalty for the two separate counts of fraud over $5,000.00 and a fine on the second count in the amount of tax evaded (approximately $699,608.00).

The sentencing hearing was held at the end of May, 2013.  Justice Gilmore provided a succinct guide to some important fundamentals that determine the duration of a sentence in the context of a wrongdoing involving tax.  Justice Gilmore commenced the Reasons for Sentencing with the reminder that the tax system is not only dependant on the integrity of the taxpayer, but also on the integrity of the tax preparer.  Simply, “if the system is to work, returns must be honestly completed”.

Justice Gilmore stated that what goes beyond the taxes evaded is the fraud on the public purse.  The reality is that the reassessment and appeal process for hundreds of taxpayers will likely go on for years.  This situation will cost every citizen because of the time and resources spent by the CRA to process these files rather than focusing on other Agency priorities. 

Justice Gilmore also pointed out that the cost to the court system was ‘almost incalculable’, in part, because the matter took four years to gets to trial and the trial, itself, took eight days, even though Ms. Tennina left the country the night before her trial commenced!

Justice Gilmore also raised the damage caused to numerous charities.   Essentially, Ms. Tennina’s actions plainly compromised the good works performed by these groups.  As expressed by Justice Gilmore: “Who could blame an individual for hesitating to donate in the future after reading about this case? That damage cannot be calculated in dollars and cents”.

In sentencing, judges typically take into account any mitigating factors, such as attempts to repay monies, children, and health or employment issues.  However, in this case, there were no such factors for the court to consider.

One of the fundamental principles of sentencing is the consideration of rehabilitation.  However, in this case, the court also concluded that the possibility of rehabilitation was remote.

The Court concluded that general deterrence was the most important principle with respect to the sentencing in this case and that specific deterrence was equally important.  The Court considered section 380.1 of the Criminal Code which sets out the numerous aggravating factors that the court considers in respect of sentencing in fraud cases.  Justice Gilmore concluded that many of the aggravating factors applied in this case and thus, the Court had no problem in reaching its conclusion.  Ms. Tennina was sentenced to 10 years of imprisonment on count one, and 10 years of imprisonment on count two to run concurrently.  Justice Gilmore also imposed a fine in relation to count two in the amount of taxes evaded by Ms. Tennina – that amount being $699,608.00.

In the past years, it was common for those convicted of tax crimes to simply face a fine and some form of conditional sentence.  Nowadays, the courts are no longer forgiving when certain citizens try to cheat the tax authorities. Jail time is both a possibility and a reality.


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