CRA scam too easy

This is an editorial with two messages: one, that in this electronic age of checks and balances, it can still be remarkably easy to take millions from a nation’s tax agency. The other message? That judges recognize that punishments have to fit crimes, regardless of legislation.

First, here’s a thumbnail of the crime: using something called an RC366 form downloaded from the Canada Revenue Agency website, Ontarian Kevin Plange changed banking information for seven companies, putting his bank account numbers in place of theirs, so that their refunds would go to his accounts.

Hardly a sophisticated crime by a former arts student with a gambling problem.

He was caught and the CRA even issued a news release on the conviction — neglecting, of course, to say just how frighteningly easy it was for Plange to steal a colossal amount of money from the agency.

As the judge wrote, “Mr. Plange downloaded the RC366 form from the CRA’s website and placed his personal banking information on the forms alongside the names of several corporations. He filled out the forms and mailed them in. The form consists of one page with very few boxes that need to be filled in. One box requires the name of the corporation and its business number. Another box requires the direct deposit routing information for the new bank account. The only other part of the form that is filled in is the certification of the officer/director of the company with a contact telephone number.”

By the time the CRA figured out something was amiss, they’d put $41,831,073 into Plange’s account.

So, not exactly rocket science. But frighteningly effective. (The agency recovered all of the money in the end: Plange had only spent $15,000, which he repaid.)

Here’s the judge again: “Mr. Plange’s unsophistication is exemplified by his near complete lack of knowledge about how the system worked and his inability to personally capitalize on his exploitation of this obvious shortcoming in the CRA’s process of refunding monies to corporations.”

And that’s the other part of this editorial: under the former Conservative government’s mandatory minimum sentencing provisions, Plange, because he defrauded the CRA of over $1 million, was facing a minimum sentence of two years in prison. The $1-million figure was supposed to mark the crime as major fraud.

But the judge decided that the two-year minimum would be cruel and unusual punishment, because it didn’t take into account the circumstances of individual cases, only the bare financial number the fraud involved.

Plange received an 18-month sentence. And the CRA?

They might class this case as a success, saying, as they did in their news release, “The CRA publicizes convictions in cases of tax evasion to maintain confidence in the integrity of Canada’s self-assessment tax system.”

But as the judge pointed out last week, “Bluntly, it was absurdly easy.”