Mastermind behind Canadian tax fraud scam gets 12 years in prison
SEATTLE - A California man convicted of drawing hundreds of Canadians into a tax fraud scheme in the U.S. has been sentenced to 12 years in prison.
Ronald Brekke's sentence was handed down Friday in a courtroom in Seattle, Wash.
Brekke was also ordered to pay more than US$6 million in restitution for conspiracy and wire fraud.
According to a statement from the U.S. Department of Justice, judge John Coughenour said Brekke "fundamentally failed" to grasp the country's laws.
U.S. Attorney Jenny Durkan added that Brekke used his knowledge to exploit "vulnerabilities in the tax system, to loot tax dollars.”
"He used citizens of the U.S. and Canada to hide his dirty work, and now will pay with a lengthy prison term," Durkan said in a release.
Brekke's trial heard he masterminded a scheme that saw nearly a thousand people in three countries file fraudulent tax refunds totalling $763 million.
IRS officials have said about 630 Canadians were roped into the scheme, which paid out $14 million before it was discovered in 2010.
Authorities said Brekke told his victims the U.S. Treasury would pay out tax refunds equal to their personal debt — a deception known as "1099 OID'' fraud, after the form used to claim the refund.
A government trial brief says the ploy earned Brekke more than $400,000 between February 2009 and his arrest in November 2010.
The scam started to fall apart after two of Brekke's co-conspirators, both Canadians, tried to cash refund cheques worth more than $350,000 each at a bank in Bellingham, Wash.
Donald Mason of Fort Saskatchewan, Alta., and John Chung of Kelowna, B.C., were arrested in October 2009 and the investigation led authorities to Brekke, whose promotional materials were found in Mason's hotel room. They were convicted of fraud in connection with the case.
"The promotional material made clear that Brekke was the mastermind of the scheme,'' American court documents read.
Emails obtained by IRS investigators showed at least two others organized seminars in Canada to draw more people into the scam, the documents read.
The IRS special agent in charge of the Pacific Northwest used Brekke's sentencing on Friday to emphasize that even those who live outside the U.S. aren't beyond the reach of the country's justice system.
"The American tax system is designed to provide vital government services to our people. It is not a slush fund for thieves and fraudsters," Kenneth J. Hines, said in a statement.
"Those who illegally target our nation’s tax dollars for personal financial gain, along with others who assist them, could face criminal prosecution and lengthy prison sentences. The foreign nationals residing in other countries who participated are not shielded from prosecution, as a few Canadians who participated in this scheme learned the hard way."