CRA probing ex-bureaucrat at centre of alleged fraud,
Worker fired for allegedly stealing $11.6 million in COVID-19 funds
The Canada Revenue Agency has launched an investigation into the Ontario bureaucrat who was fired after the alleged theft of $11.6 million in COVID-19 funds, the Star has learned.
Sanjay Madan, a former computer specialist at the provincial Ministry of Education, has piqued the interest of federal tax authorities, sources say.
Madan is also alleged to be the mastermind of a sophisticated “kickback” scheme that stole $30 million from the Ontario government dating to 2011. He has admitted under oath that he understated his income by “substantial amounts.”
Speaking confidentially in order to discuss a case that is before the courts, insiders say the revenue agency has been closely monitoring the matter.
CRA spokesperson Paul Murphy declined any official comment.
“In order to ensure and maintain the integrity of the work of the Canada Revenue Agency, and to respect the confidentiality provisions of the Income Tax Act and the Excise Tax Act it administers, the CRA cannot comment on investigations that it may or may not be undertaking,” Murphy said in an email.
In documents filed with the Ontario Superior Court, the province alleges that “some or all of” Madan, his spouse, Shalini, their adult sons, Chinmaya and Ujjawal, and associate Vidhan Singh perpetrated “a massive fraud” last spring to funnel Support for Families payments to hundreds of TD and Bank of Montreal accounts.
The government’s allegations have not been proven in court.
There are seven Ontario Provincial Police detectives working on the case, but no criminal charges have been laid.
Madan, who earned $176,608 a year as a Ministry of Education information technology manager, has amassed real estate and cash in Canada and India worth an estimated $28 million.
A government injunction has frozen those assets, including about $12.4 million in Indian bank accounts, a 30-unit student housing complex in Waterloo that was recently listed for sale for $8 million, a $2.57million seven-bedroom house in North York, six Toronto condominiums, and more than $1 million in proceeds from the sale of a four-bedroom house.
He also owns two villas in Hyderabad, India.
During cross-examination for the civil case this month, Crown attorney Christopher Wayland asked Madan, a landlord who operated several computer consulting companies on the side, about his taxes.
“Was the income understated?” asked Wayland. “Yes,” replied Madan.
“By how much?” the Crown asked.
“Substantial amounts,” the exbureaucrat testified.
“Why did you not file tax returns on behalf of Intellisources Inc.?” asked Wayland, referring to one of Madan’s holding companies.
“Just to keep it low profile,” he replied.
“Why did you want Intellisources Inc. to have a low profile?” the lawyer asked.
“Because they were holding the Waterloo properties, right?” said Madan, pointing to the student apartment complex he listed for sale last fall for $8 million.
“So I thought that if I sell it, I will be able to at least convert the cash and when the time comes for restitution, I can pay it back.”
Pressed by Wayland on that point, he said, “I wanted to keep it low profile … because obviously then the whole secret commission thing would have been out.”
That’s a reference to the alleged kickback scheme that the government claims saw millions paid out under the table for the awarding of information technology work to contractors and subcontractors.
Madan, who files tax returns in Canada and India, said “at least 50 per cent of the contribution” that paid for the Waterloo complex came from the alleged commissions.
While Madan has permanent residency status in Panama, a tax haven that has no extradition treaty with Canada, he does not file income tax returns there.
His Canadian tax records for the past decade have been provided to the civil prosecutors.
Madan was the IT lead on the application program for the Support for Families program, a $378-million fund launched by Premier Doug Ford’s government last year.
It gave Ontario parents $200 per child under age 12, and $250 per child and youth under 21 with special needs, to help with any educational expenses for in-home learning early in the pandemic
On Jan. 8, Madan testified he and Singh and four other associates — not his wife and sons, who have denied any wrongdoing — hired Ministry of Education computer consultants for the past decade.
Court documents allege Madan, Singh and their associates received millions in “secret commissions” paid in exchange for selecting contractors and subcontractors on IT projects.
The Star is not naming the associates or the firms allegedly involved because the claims have not been proven in court.
Madan testified he “took advantage” of “an inefficiency in the overall process” of procurement.
“I’ve seen $30 million going out the door for no deliveries and breaking of the contracts, so … I thought that, because I do a lot of good things as well, this can be justified,” he said.
“But now I’m discovering that … I was doing wrong.”
Madan said last spring he asked Singh, “Do you want to make some extra money?”
On Friday, he will be in court to try to ease the injunction freezing his assets to pay his mounting legal bills.