From: AlanBaggett@volcanomail.com   
      
   Quebec Court shoots down Canada Revenue Agency's 'highly reprehensible'   
   investigation : CRA SOTW   
      
   Paul Cherry, Montreal Gazette   
   Published on: November 3, 2015 | Last Updated: November 3, 2015 5:58 PM EST    
      
   Several criminal cases that stemmed from a Canada Revenue Agency investigation   
   into tax evasion by construction companies appear to be in jeopardy because a   
   Quebec Court judge has ruled the original probe was conducted illegally.   
      
   Judge Dominique Larochelle delivered her decision on Friday at the Laval   
   courthouse and the written version was made public on Tuesday. The decision   
   specifically touches on 10 cases pertaining to four accused including Laval   
   resident Francesco Bruno, 54.    
   His company, B.T. Céramiques, was used to inflate the expenses of other   
   companies, through false billing, to help them reduce their reported revenues.   
   Companies owned by construction magnate Tony Accurso during the probe were   
   heavily fined as a result of    
   the same investigation.   
      
   As part of her decision, Larochelle determined the evidence produced to charge   
   Bruno and Rodolfo Palmerino, 53, a B.T. Céramiques administrator, was obtained   
   illegally because Revenue Canada overstepped the boundaries between its   
   ability to make    
   auditorial verifications and a criminal investigation. Bruno's wife, Gisella   
   Palmerino and Alfredo Magalhaes, another B.T. Céramiques administrator, face   
   possible fines for failing to pay taxes on revenue from the same company. The   
   cases against both    
   were also part of Larochelle's decision.   
      
   In one case, Bruno faces 14 charges alleging that, between 2005 and 2007, he   
   helped Hyprescon Inc. and Simard-Beaudry Construction Inc. (companies owned by   
   Accurso at the time) make false declarations on taxes.   
      
   While Larochelle declared the evidence in the cases against the four accused   
   was obtained illegally she also refused a request to have the charges stayed,   
   which means the ten cases are still pending. They return to court on Dec. 18   
   where the Crown is    
   expected to announce its next step.   
      
   Christopher Mostovac, one of the defence lawyers who filed the motion that   
   resulted in Larochelle's decision, said he presumes that in December the Crown   
   will ask that the case be postponed while it files an appeal. The attorney   
   called Larochelle's    
   decision "rare" in how it criticizes the prosecution.   
      
   No one with the Crown was willing to comment on the decision on Tuesday, in   
   part, because the case is technically still not over. Because Larochelle's   
   decision touches on the very origin of an investigation that branched off into   
   many others, several    
   defence lawyers are likely to scrutinize it carefully to see if it can be   
   applied to cases involving clients who still face criminal charges. Mostovac   
   said other defence lawyers involved in other cases that emerged from the   
   original investigation have    
   already expressed interest in the decision.   
      
   When the Montreal Gazette obtained its copy of the decision, a clerk at the   
   Laval courthouse said the 55-page document was in heavy demand and that a   
   photocopier had been running all Tuesday morning to satisfy requests for   
   copies.   
   In the decision, Larochelle characterizes Canada Revenue Agency's conduct as   
   "highly reprehensible." She noted the agency has the power to make   
   verifications on the revenues of an individual, or a company, and abused it to   
   conduct the type of police    
   investigation where, for example, warrants would have to be authorized by a   
   judge.   
      
   "(The Income Tax Act) accords it broad powers in terms of its application and   
   execution. The corollary is the obligation to use it judiciously, in a   
   transparent way and with respect to the Constitution," Larochelle wrote in her   
   decision. "The case    
   demonstrates that the investigation (conducted) under the cover of   
   verification lasted for a year. Despite the red flags that were raised and the   
   availability of resources, the case was not reoriented towards an   
   investigation that respected the rules."   
      
   Several pages of the decision describe how verifications made on B.T.   
   Céramiques in 2007 eventually became Project Legaux in April 2008. On April   
   17, 2008, officials with CRA asked RCMP for assistance because they   
   anticipated search warrants would have    
   to be carried out. As part of its motion, the defence argued that before the   
   RCMP was involved  two different CRA divisions, one that handled criminal   
   investigations and another to investigate fiscal matters, worked closely   
   together, shared the same    
   office and blurred the lines between verifications and an investigation. From   
   the outset, Larochelle determined, the CRA investigator who started the probe,   
   Jean-Pierre Paquette, knew what he was looking into involved allegations of   
   corruption among CRA    
   auditors.   
      
   One part of Project Legaux eventually became Project Coche, an RCMP   
   investigation that produced charges against eight CRA auditors based in   
   Montreal. One of the auditors was convicted, on June 12, on charges of breach   
   of trust and extortion for having    
   solicited a bribe from a restaurant owner. The now former auditor, who is   
   appealing his conviction, is scheduled to be sentenced this month. A different   
   case, involving three former CRA auditors, is currently at the preliminary   
   inquiry stage at the    
   Montreal courthouse.   
      
   pcherry@montrealgazette.com   
   twitter.com/PCherryReporter   
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