MONTREAL – An RCMP investigation of Canada Revenue Agency employees has resulted in three former auditors being accused of shaking down restaurant owners for cash.
Four charges were filed at the Montreal courthouse Tuesday against Elias Kawkab, 49, of St. Laurent, a former CRA team leader. The charges involve the popular Arahova restaurant on St. Viateur St.
Kawkab is alleged to have extorted $100,000 from the restaurant’s owners some time between June 2007 and August 2008. He is charged with agreeing to accept a bribe, two counts of fraud against the government and breach of trust.
According to a report published last year, the owners of the restaurant were approached by a CRA auditor, who claimed to have found $3 million in undeclared revenues. The auditor offered to solve the restaurant’s problems if the owners paid a $250,000 bribe. The report, quoting from a search warrant, said the owners told police they negotiated the bribe down to $100,000, which they paid by remortgaging a house.
Kawkab and two former auditors, Francesco Fazio, 54, of St. Laurent, and Luigi Falcone, 49, of Laval, have a court date scheduled for June 11. They have to enter a plea on the charges.
“It is just the beginning,” said one official familiar with the investigation in reference to Tuesday’s development.
The probe, which began in 2008, has produced disturbing revelations about the CRA’s Montreal branch.
Court documents already filed in connection with related cases describe an atmosphere, before the investigation began, in which some auditors intimidated fellow employees if questions were raised while they manipulated audits on major Montreal-based companies.
The RCMP’s investigation into CRA employees stemmed from a probe into BT Céramique, a company eventually found guilty of tax evasion for helping Simard Beaudry Inc. – run at the time by construction magnate Tony Accurso – reduce its reported revenue.
Accurso was among 15 people arrested last month in a police crackdown on alleged corruption in water-treatment contracts in Mascouche, north of Montreal.
An affidavit filed in a court case last year states that while BT Céramique was being probed for tax evasion, investigators were startled to find a CRA internal document inside a safe in the office of the company’s owner, Francesco Bruno. The document, a T133, pertained to a shopping mall Accurso owns in Laval. The investigator who prepared the affidavit stated T133s are never supposed to leave CRA’s offices, and its disappearance “benefited” Accurso’s shopping mall.
Since 2008, the investigation has given rise to several allegations against former CRA employees of, among other things, coaching wealthy business owners on how to reduce reported revenues. The employees have since resigned, retired, been fired or suspended.
According to court documents, Kawkab, who was fired in 2011, was arrested by the RCMP on March 30, 2011.
Photos of Kawkab and Falcone partying at a Bell Centre loge during a Canadiens game with several other people being investigated by the RCMP surfaced last year when a person charged in connection with the BT Céramique investigation challenged the legality of a search warrant in court. At the time, the loge was rented by a Montreal construction firm.
The charges against Falcone allege he tried to extort $50,000 from the owner of Restaurant Agostini in N.D.G. between August 2006 and February 2007. According to a release issued Tuesday by the RCMP, Falcone, who resigned in 2009, allegedly made an offer to lower “a bogus tax notice, before even auditing (the owner’s) financial statements, in exchange for $50,000. The restaurant owner refused to pay the bribe.”
Fazio is alleged to have offered to “lower an upcoming tax notice” that the owner of La Belle Place restaurant was about to be hit with in 2005. In exchange, Fazio allegedly demanded $90,000. In that case as well, the owner rejected the offer. According to the RCMP, Fazio was fired in 2011