Canadian Tax Evasion Scandal: Over $100K Settled for Canadian Investor Allegedly Evading $30 Million Tax Debt

In 2011, self-described “tree surgeon” Serge Berdichevsky, who has since retired, engaged in his own tax evasion case, including a scheme to evade Canadian taxes. His fellow citizens also came to his aid.

Berdichevsky was asked to pay a fine, but he went through with the plan to evade taxes, creating many offshore companies. Some of those companies belonged to himself and his wife, in a scheme to cheat the Canadian government out of $30 million in taxes.

The Justice Department was able to recover $3.2 million from Berdichevsky. It was only after the scheme collapsed that he was caught. He was later sentenced to seven years in prison.

A year later, Berdichevsky filed for bankruptcy, which meant that the law firm where he was a partner, whose staff raided by police, can’t enforce the $30 million debt with the Canadian government. The bankruptcy proceedings stalled as the business needs creditors to sign off on the documents.

How is the Canadian government handling this case?

Berdichevsky filed for bankruptcy under Chapter 11, allowing him to reorganize his finances. Under Chapter 11, the trustee is in charge of turning the balance sheet around.

The trustee hopes that the failure of Berdichevsky’s operation will compel him to accept the $30 million in taxes, but Berdichevsky is fighting that, saying that he was duped and tricked into the scheme.

That’s the way the bankruptcy laws are meant to work in Canada, where people are responsible for the debts owed to them.

The trustee says that there are hundreds of offshore accounts that could come up as part of the court case.

This is important because the only reason Canadians know about this case is because Berdichevsky has filed bankruptcy. There’s no reason why Canadians should know about it or be alerted to it, unless they want to.

It doesn’t sound like the banks who in the first place opened many of Berdichevsky’s offshore accounts wanted anything to do with him and his offshore network. That means they’re just carrying out the work of the Revenue Department, which is supposed to be the government that deals with disputes like this.

On Saturday, the Canadian government’s CBC News released a story about Berdichevsky and his case, revealing the payments that the Canadian government is getting from him to the tune of $117,000 over a ten-year period. The report did not go into detail, but noted that the government is collecting 15 percent of the money being sent to Berdichevsky as part of the plan to recover the $30 million owed to the government.

ABC News is also reporting this story. In the interview with ABC, Canadian Revenue Agency inspector Jim Stack compares Berdichevsky’s pay to the payments made by U.S. rich people whose offshore tax accounts were investigated.

“He was in it for himself, his business, his investments,” Stack told ABC. “It was just not the case that these people were paying less than 15 percent [and] that was our goal.”

Unlike the United States, where people with offshore accounts might face years-long Internal Revenue Service investigations, Canadians pay no tax for the offshore accounts. Under Canada’s system, Canadians cannot be charged with tax evasion if they are in the process of paying their debt.

That system is supposed to be unfair, but in the last 15 years, it has cost the Canadian government more than $10 million in trust accounts, despite widespread speculation that people were using trusts to avoid taxes. Canada had to renegotiate its tax treaties with more than 50 countries to close the trust loophole and institute new anti-tax evasion measures.

Britain is even more concerned about the tax situation and has announced plans to close its tax loopholes, the BBC reported. Tax dodging is becoming a serious problem. It’s time that Canada had the same guts and bravery to curb the abuses taking place.

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