CRA tax auditor convicted of soliciting a bribe

Seven more Canada Revenue Agency officials have yet to stand trial

Francesco Fazio, one of eight Canada Revenue Agency auditors charged in a lengthy RCMP investigation into alleged corruption at the agency’s Montreal office, has become the first to be convicted in connection with the probe.

On Friday, Quebec Court Judge Manon Ouimet said she simply did not believe Fazio, 57, a now-former auditor with CRA, when he claimed that the reason he stopped auditing Stamatis Argiroudis’s restaurant in 2005 was because Argiroudis had threatened him. During the trial, which started on June 8, Fazio testified that he dropped the audit because Argiroudis claimed he knew former Hells Angels leader Maurice (Mom) Boucher and members of street gangs, and therefore had underworld connections that could put an end to a nasty CRA audit.

In 2005, Argiroudis owned La Belle Place, a restaurant on Ontario St. E. Fazio was assigned to do a forecast audit of the restaurant’s potential revenue because its reported revenue appeared low. The audit involved more than a dozen visits to the restaurant to see how many clients it handled over a fixed period of time, and Fazio went over all of its receipts. At the end of the audit, Fazio told Argiroudis the restaurant would owe $600,000 in taxes based on Fazio’s estimate of the restaurant’s undeclared revenue from the sale of beer and food.

While summarizing the evidence she heard, Ouimet said Argiroudis was shocked the amount, and that the auditor then offered to discuss the matter privately in the restaurant’s disabled bathroom. Fazio searched carefully for any cameras in the bathroom, and then made Argiroudis an offer.

Argiroudis testified that Fazio told him: “If you give me $90,000 I can come back with a more favourable evaluation.”

The restaurant owner said that he was shocked by how much of a bribe Fazio was seeking, and asked him why it was so high. He testified that Fazio replied: “I have to take care of people in my office.”

The exchange occurred in 2005, and much has transpired since. Argiroudis said he consulted two friends, including well-known Montreal businessman Peter Sergakis, and asked them whether they thought he should pay the bribe. He said both men advised him not to pay it. When Fazio returned, Argiroudis testified, he turned him down and mentioned his meeting with Sergakis and the other businessman. He said Fazio insisted on being paid a bribe and suggested Argiroudis “find the money.”

Argiroudis testified that he assumed Fazio eventually backed out of his file because Sergakis is wellknown public figure.

The auditor who took over the Argiroudis file testified that Fazio was noticeably disappointed when the audit was transferred to her. She said Fazio claimed it was because he had put a lot of work into it.

The company that owned La Belle Place during the audit went bankrupt in 2007, and the restaurant has since changed owners. Argiroudis moved to Greece and never filed a complaint with the police. The second auditor in La Belle Place’s file ultimately determined the restaurant owed more than $100,000 in taxes from undeclared revenue. But by then, Argiroudis’s company was bankrupt.

In 2008, the RCMP launched Project Coche, an investigation into the CRA’s offices in downtown Montreal, as an extension of an investigation into two companies owned by 63-year-old (now former) construction magnate Antonio Accurso. The companies used fake invoices to decrease their reported revenues, and the RCMP started Project Coche because CRA employees allegedly provided guidance in the scam. The scale of the probe gradually widened and targeted other alleged forms of corruption, including Fazio’s request for a bribe in 2005.

The RCMP contacted Argiroudis in 2011 and by the following year, Fazio wascharged with bribery, government fraud and breach of trust.

During the trial, he said he never asked for a bribe, yet Ouimet found Fazio guilty on all three counts.

Ouimet said that while she is convinced Argiroudis was capable of tax evasion, she believed the restaurateur’s account because he had nothing to gain from Fazio being convicted of a crime a decade later. Ouimet also noted that Fazio often looked to the ceiling of the courtroom while testifying, and had difficulty looking directly at her when asked.

During the trial, Argiroudis said that he did know Boucher, because the notorious Hells Angel used to dine at his restaurant before being convicted, in 2002, of ordering the murders of two provincial prison guards. But Argiroudis testified that while he did mention this acquaintance to Fazio, it had not been intended as a threat.

The case returns to court in July to set a date for a sentence hearing.

In February last year, the RCMP announced that Project Coche had come to an end. In all, eight former CRA employees, including Fazio, were charged in a variety of cases. The trials of the other seven have not yet begun.