OTTAWA: The first Canada Revenue Agency auditor to be convicted following a police investigation into alleged corruption at the agency’s Montreal office is expected to learn later this month whether he will serve time behind bars for soliciting a bribe from a restaurant owner.
On Thursday, Crown prosecutor Catherine Legault recommended that Francesco Fazio, 58, serve a three-year prison term for having asked Stamatis Argiroudis for a $90,000 bribe while he was auditing the man’s restaurant in 2005. At the time, Argiroudis owned La Belle Place, a restaurant on Ontario St. E., along with members of his family. Fazio was assigned to do a forecast audit of the restaurant’s potential revenue because its reported revenue appeared low. As the audit neared its end, Fazio told Argiroudis the restaurant would owe at least $600,000 in taxes based on a calculation of what Fazio estimated the restaurant made in undeclared revenue, over a certain period of time, from the sale of beer and food.
During Fazio’s trial last year, Argiroudis testified he was shocked by Fazio’s claims and that the auditor then pulled him aside and solicited the $90,000 bribe in exchange for a more favourable audit. In response, Argiroudis claimed he knew people in organized crime, and sought advice from two other Montreal business owners on whether he should pay the bribe. When Argiroudis said he was advised not to pay the bribe, Fazio turned the restaurant’s file over to a colleague. The auditor never actually received money from Argiroudis.
Fazio’s attempt at a bribe went unreported to police but it was uncovered when the RCMP launched a major investigation, dubbed Project Coche, in 2008. It was an extension of an investigation into how two companies that were owned by (now former) construction magnate Antonio Accurso used fake invoices to decrease their revenues. Fazio and seven other Canada Revenue Agency (CRA) auditors were fired during the investigation and were eventually charged with crimes.
In 2012, Fazio was charged with soliciting a bribe through extortion, government fraud and breach of trust. On June 12, last year, Quebec Court Judge Manon Ouimet found him guilty of all three charges.
On Thursday, Legault said Fazio’s sentence should serve as a deterrent to others because “the public has to have confidence in the Canadian tax system.” The prosecutor also said another aggravating factor that merits a prison term for Fazio was how he intimidated Argiroudis. She referred to Argiroudis’s testimony at trial where he quoted Fazio as saying: “CRA, we scare people. We are going to freeze assets even if you are clean.”
Defence lawyer Pierre L’Ecuyer disputed whether Argiroudis actually felt as victimized as the Crown claims. L’Ecuyer recommended his client receive an 18-month conditional sentence where Fazio would serve no time behind bars and perform 240 hours of community service. Despite a caution from Ouimet to not turn the sentence hearing into a trial of Argiroudis, L’Ecuyer argued the restaurant owner was hardly a victim in what happened. He pointed out that Argiroudis “never paid a cent in taxes” when the audit was finished, by the second auditor, because he declared bankruptcy. L’Ecuyer also pointed out that the audit was initially ordered because it appeared impossible for Argiroudis and his family to make an actual living off the restaurant’s reported revenues. Meanwhile, L’Ecuyer said, Argiroudis and his family “were driving around in fancy cars.”
The defence attorney also argued that Fazio’s findings — that the restaurant owed at least $600,000 — was accurate and not inflated, as the Crown has alleged.
“A conditional sentence imposes a lot more (responsibilities) on a person (compared to a prison term),” L’Ecuyer said while arguing his client is a smart person who can contribute more to society by performing community service than serving time in a penitentiary. “Criminalized people don’t want a conditional sentence.”
Ouimet said she hopes to have a decision on the sentence by Jan. 19.
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