A local man and his oilfield company were found guilty of tax evasion charges Monday.
Judge Karl Bazin presented his decision during Estevan provincial court following a trial for Jerry McCaw and Jake's Oilfield Construction. McCaw was found guilty for not filing $548,044 in taxable income from 2006 to 2008, which resulted in the evasion of $114,924 in federal income taxes.
McCaw was also found to have made false statements through Jake's Oilfield in the employer T-4 tax return from 2006 to 2008, assisting himself in evading the payment of $99,607 in federal income tax.
McCaw's status at the company changed from employee to subcontractor between 2005 and 2009, and that helped him evade tax in those years.
Bazin noted McCaw ascribes to the tax protest ideology and describes himself as a natural person who is not under the authority of the court or tax legislation.
McCaw directed consultants at Cogent Business Consultants to move his shareholder's loan from an asset at the company to a liability. Three employees with Cogent Business Consultants were involved in the preparation of the return and raised concerns with McCaw as to the shareholder loan treatment.
He instructed them to leave it as he directed.
A bookkeeper at Jake's Oilfield noted in her testimony during the trial that McCaw set up a meeting in the spring of 2006 with many people attending, including herself and her husband. The meeting was about the paradigm educational group and natural persons theory. She testified the gist of the meeting was about how to avoid paying tax by being a natural person.
McCaw instructed another bookkeeper to change the status of a number of employees from employees to contractors. They continued to do the same job and the company received no invoices from contractors and they did not charge the company GST.
During the trial, Jason McGillicky, who worked for Jake's Oilfield for some time, testified McCaw convinced him to become a natural person, and his title was switched to a contractor.
Bazin noted Gerald Blerot is alleged to be the paradigm education group educator, who proposes the natural persons philosophy to avoid paying taxes. In a search of Blerot's residence, the CRA found documents relating to McCaw.
McCaw was paying Blerot $595 per month from the beginning of September 2007. It wasn't mentioned what those payments were for.
Bazin noted that while McCaw said he never received any disclosure, the Crown did provide full disclosure and McCaw just refused to accept the documents on the grounds that he didn't have the authority to do so.
"Mr. McCaw, unfortunately like so many others, has fallen for the false ideology associated with the natural person tax protester movement and had actively tried to convince others, with some success, to follow this pattern of thinking," said Bazin.
The matter was adjourned to June 3 for sentencing following the completion of a pre-sentence report.
In other court proceedings, Chris McGillicky pleaded guilty to two counts of break and enter and theft when he appeared in Estevan provincial court on April 18. Some further counts of similar charges were stayed by the Crown.
The Crown suggested McGillicky should be moved to drug court in Regina, alleging that the incidents stemmed from a substance abuse issue.
While he awaits his next court appearance, McGillicky will be on a number of conditions, following the Crown's agreement to release him from custody. As he awaits sentencing, McGillicky will adhere to a curfew between 8 p.m. and 7 a.m., report weekly to the Estevan Police Service and not attend L&C Trucking, the Shand Power Station or Cenovus Energy.
