Friday, May 13, 2005

Round five - Developer goes to the Court of Appeal

On Wednesday, May 11,2005, Adam Stelmasynski was sentenced and jailed in Brantford by Judge Milanetti. His Appeal lawyer was successful in launching an Appeal at the Court of Appeal in Toronto. Justice Sharpe ordered the conditional release of the developer and for the Appeal to be heard on September 13,2005. On Thursday , Mr. Stelmasynski ,was conditionally released to pursue and perfect his Appeal .

We would like to comment on the Expositor Article "City man lands in prison for GST fraud" that is posted on this blog for your reference and review. It is my firm belief and that of others that Judge Milanetti tried to be fair and even handed in the sentencing of Adam Stelmaszynski, having watched most of the proceedings first hand. One could visibly see the intellectual struggle that she faced on certain issues or new information presented by defense council or on what she felt that she could hear within her jurisdictional bounds. She indicated that many issues presented were out of her jurisdiction and could only be answered by the higher authority of the Court of Appeal

Her comments are empazied and quoted from the May 12 Expositor article. Her decision raises many issues for the higher court to adjudicate.The article leads me to ask the following questions that many would like answers too

We feel that at best this sentence seems to be a marginal victory for the public. A Pyrrhic victory for which fraudster?

What exactly has been accomplished for the public? It appears that we have consumed limited public resources, tied up the existing court, the tax court and the appeal court in a 7.5 year process and struggle, that could potentially have been avoided if the normal procedure had been followed. At this time it appears that the public has no likelihood of collecting any money back- because the revenue Canada people did not secure the tangible assets that the funds were used for. We now have the privilege of paying for the developer to be in jail, and at the court of Appeal, rather then to create projects to make money to pay back his acknowledged debt or create new income. Somehow -this seems like a pyrrhic victory or as you indicated in your previous article and many agree -this is indeed a public fraud.

Was justice served? We do not know yet –as it is before the court of appeal

However, she said the defense counsel’s request for a conditional sentence of two years was also inappropriate, given the “significant” amount of money involved.
1. Why is it inappropriate to allow the developer at least the opportunity to repay the money by working on projects -he is no risk to the community?
2. Why is it appropriate to jail the developer and incur the further public cost of incaceration which is significant?

Elaborate scheme involving 12 sole proprietorships (The basic rights Issue -to be tried by your knowledgeable peers)

i. What is her knowledge of the development process? How many projects in the cumulative 20 million dollar range has she been successful at? Why did she not allow the information or categories as established by the Industry at the trial? The industry standard as given by Quantity survey information could have shed lots of light on this. Was it a elaborate scheme or just basic and common practice for this industry? Mastermind or basic industry practice of profit or cost centres?

That he believed he could apply for GST rebates before a project was complete.

i. Where did he get the information from? The information or reliance of GST procedure must have come from somewhere. Why did it take 3 years for the CST authority to change their minds, particularly after an official audit that said everything was okay and that he was following the right procedure?
ii. It was acknowledged that the money went into the project and not into a lavish lifestyle. In other words, the funds were secured by the development project. If Revenue Canada felt that they were defrauded or that the Taxpayers in general were defrauded, why did they not secure or place a security lien on the tangible project ( land and buildings) to protect their or everyone’s interest? GST and tax liens have a priority claim in Canada.

Milanetti said she was troubled by Stelmaszynski failure to own up to his crime.

i. How can you feel remorse for something that you feel is not wrong because you where following the instructions of the GST people in good faith, or because it has not been heard at the next higher level of adjudication- the court of Appeal
ii. Why did the judge not hear the officially induced error argument? Why did she defer it to the court of Appeals?
iii. Why did she not wait to see how the Federal tax court ruled on the process and get their assessment of the appropriate penalties if any?
iv. Stelmaszynski showed his respect for the law and belief in the fairness or integrity of the Justice system by giving facts and asking for redress and answers in his sentencing. It is still the fundamental right of an accused to seek redress from the presiding judge prior to going to appeal.

Milanetti noted that the new projects are “not unlike” the type of ventures that got Stelmaszynski into trouble in the first place.

i. If the man is a professional developer and a professional -trained with the required skill to do that type of work- just what type of projects or jobs is he supposed to apply for/?
ii. Why is the developer being penalized or censored for his courage, creative skill to innovate and try new projects? This statement is almost derisively UN Canadian and an anti entrepreneurial put down. Innovation is usually a highly prized sought after skill and norm used by most progressive enterprises to generate growth, or revenue stability.
iii. We do agree that innovation is troublesome and difficult to do in Canada in its current state of flux as demonstrated by the Gomley commission.

The judge said she was “saddened” to sentence the father of two to penitentiary time for a first offence. But Stelmaszynski behavior cannot be sanctioned, she said.

i. How can she then sanction the behavior of those that gave him the money, audited him and gave him more money? Where is the fairness and accountability in this? Are there any standards at all –or do we make them up as we go along?
ii. How can you sanction the inadvertence and breach of procedures displayed by Revenue Canada? How can criminal proceedings be used to thwart the internal revenue Canada appeal process? Is there an abuse of power and overstepping of authority in this case? We will see what the Appeal court says.

What could the public learn from this? The other side of the coin

The case was made that the Canadian taxation system is based on trust. This argument works both ways and should not be interpreted in a one sided manner. If the taxpayer gets information from the authority -in this case Revenue Canada – should he not be able to trust the information to be correct without having to interpret its correctness?

i. The message is clear “ Do not trust government information, do not trust government officials in authority or you do so at your risk “
ii. Internal government departments do not appear to communicate with each other and accept no responsibility or accountability for each other or their actions
iii. Government officials are exempted from normal rules of ethical business conduct, communication and good business practice. There are minimal quality assurance programs in place and when in place are often ignored with impunity. Government officials appear to be above the law.

What flaws were exposed in the process? The Cost/ benefit issues

a. Complexity, official irregularities and a lack of timeliness
i. Why did it take 5 years and potentially another 2.5 years in the court of appeals to get a final ruling on this case?
ii. What was the cost of the process? Manpower, court costs, lost productivity etc.
iii. Why was the fraud or “mistake” not found before or sooner? Who is in charge or accountable for this? What system has been put in place to ensure that this does not happen again?
iv. Why was the internal RC appeal process not followed? Why does the criminal charge –stop all other means of adjudication?
v. Why did revenue Canada not secure the publics interest by placing a claim on the development project- the land and building?

Multiple jurisdictions with no central governing authority that are often in conflict with the stated law

i. How can they charge interest on the interest? it appears that the civil penalties and interest were still being charged ,although the normal appeal procedure could not be used to resolve the issue because of the criminal charges. This appears to be blatantly unfair and an unwarranted double dipping or churning strategy. There is a law in Canada against charging criminal interest-. (The law should apply to government organizations too- no matter what their apparent good intentions are )

Out matched in resources –the court is not an equal playing or fair sport field

i. Let any citizen or individual beware of the public resources that will be used against him.-rightly or wrongly. It was interesting to watch as an intelligent individual with limited legal aid resources took on the unlimited resources of the crown. This remains a true David vs. Goliath situation with final outcome still to be determined at the court of appeals.

No comments: