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Monday 4 March 2013

Police investigation of DSC a matter of life or death, says former member Dale Barrett from Barrett Tax Law speaks at the Caboto Club in Windsor on Wednesday, February 27, 2013. Barrett offered advice to those who have found themselves with tax problems.                   (TYLER BROWNBRIDGE / The Windsor Star) Dale Barrett from Barrett Tax Law speaks at the Caboto Club in Windsor on Wednesday, February 27, 2013. Barrett offered advice to those who have found themselves with tax problems. (TYLER BROWNBRIDGE / The Windsor Star)
About two weeks ago, former DSC Lifestyle member Brian Barker spent the better part of a day at the RCMP’s Windsor detachment, poring over the documents that show how much of his money has disappeared.
Barker said the officers listened to his story and the story of a fellow investor he brought with him. They made notes and thanked them for their time.
Barker is taking every action he can think of to get the authorities to do something about the personal finance company that has shattered his financial security and that of people across the country and the region, refusing to give back the money people invested and leaving clients to deal with hefty penalties from the Canada Revenue Agency after referring them to tax preparers who have since been criminally charged. But he said he’s not optimistic.
“The RCMP is saying, well, we’ve got bigger things. But they don’t realize how big this is,” Barker said. “There are a lot of people who are on the verge of jumping off cliffs, jumping off buildings. And it’s going to happen.”
Barker’s story is now sadly familiar – a Ford employee who believed the company’s promised high returns would help him weather some tough financial times, he’s now delaying retirement instead after tens of thousands of dollars he invested disappeared. He said he’s been pressing the many fellow DSC members he works with to do what he’s doing – complain to police, complain to the Ontario Securities Commission, consider filing a lawsuit, go public with their stories.
Most are reluctant to do so. The vast majority of the 33 families who have contacted The Star since the publication of the first article about the personal finance company have said they don’t want their names and stories published because they’re too ashamed.
Even Barker declined to have his picture published, saying people remember faces longer than they remember names.
Det. Glenn Gervais of the Windsor police financial crimes branch said the publication of every story in The Star prompts more DSC members to pick up the phone and ask police for help. But none of them have come to the station to give a statement, he said, and at this point Windsor police are not actively investigating.
Instead, Gervais said he’s been referring people to the RCMP or suggesting they consider filing a civil lawsuit. The Windsor detachment of the RCMP confirmed officers are aware of the situation, but refused to say how many complaints they have received and whether they are launching an investigation.
“It’s upsetting, at times, to talk to these people when you realize they’re out their money. Sometimes it’s money they worked for their entire life. But sometimes it’s upsetting from our standpoint when we realize, you know what, in this particular case, there’s not much I can do to help you,” Gervais said. “In some cases, even if we were to lay a criminal charge, that’s not going to get the people their money back.”
Gervais said if the RCMP or another police agency does decide to investigate, it will be expensive, complicated and time-consuming – and not necessarily successful.
Roger Blair, left, and Jeff Eshun of DSC Lifestyle Services.
Roger Blair, left, and Jeff Eshun of DSC Lifestyle Services.
In order to secure a conviction, the prosecutor would have to prove beyond a reasonable doubt that the accused intended to defraud investors. If the accused argues in court that he fully intended to pay investors the promised returns but was unable to do so when things didn’t go as planned, that can be enough to clear him, Gervais said.
Losing a client’s money on a poor, but honest, investment isn’t illegal, but selling investments without a licence is. DSC co-directors Ingram “Jeff” Eshun and Roger Blair are not licensed to sell investments in Ontario and neither is Roger’s brother Bruce Blair, who is still promoting personal finance services in Windsor.
Provincial securities commissions are the organizations responsible for protecting investors by enforcing laws about trading stocks and selling investments. Two months ago, the British Columbia Securities Commission fined and permanently banned Eshun and his West Coast associate Maisie Smith after ruling they sold securities to 81 investors without being licensed to do so.
The order only bans Eshun and Smith from operating in British Columbia, however, and emails to clients obtained by The Star suggest Eshun has since left the country for Dubai. Not long after Barker complained to the Ontario Securities Commission and forwarded the articles about DSC published in The Star, the organization issued a notice that it plans to hold a hearing on Wednesday to seek an order to ban Eshun and Smith from selling investments in Ontario as well, based on the findings of the investigation in British Columbia.
The order wouldn’t stop Bruce and Roger Blair from continuing to operate, however. Smith appealing the British Columbia Securities Commission’s decision and neither Smith nor Eshun have made any payments on the almost $7 million in fines and repayment orders they owe the commission and investors.
Gervais said a successful civil case against the DSC agents who convinced people to invest money that later went missing might result in a court order to pay the money back. But just like the British Columbia Securities Commission found, ordering someone to pay restitution or fines is one thing and getting them to actually do it is another, especially if the accused has left the country, hidden his assets or declared bankruptcy.
The ultimate lesson is buyer beware, Gervais said. Investors have a responsibility to ensure they’re getting involved in legal, legitimate, licensed deals.
“I’ve literally had people on the phone almost in tears, saying, ‘I need you to get my money back.’ And that’s not something the police do,” Gervais said. “We can’t function as a collection agency for people who make investments. All we can do is lay charges if charges are warranted and allow the courts to deal with it.”
On Wednesday evening, about 30 people whose finances have been affected by DSC Lifestyle came to a meeting hosted by tax lawyer Dale Barrett at the Caboto Club.
Barrett is representing about 40 people from the Windsor region and about 200 people across the country who are fighting hefty repayment orders and gross negligence penalties from the Canada Revenue Agency after they allowed a group known as the Fiscal Arbitrators prepare their taxes. Associates of the organization and the DSC agents who referred clients to them told people the tax preparation method, which initially triggered huge refunds for many people, was based on a legitimate legal loophole.
The CRA disagreed, reassessing participants and charging two Fiscal Arbitrators with defrauding the Canadian government.
Barrett gave a presentation with general tax tips and methods for recognizing illegitimate schemes, but people in attendance had heated questions and comments for Barrett and each other about their financial problems and the people who got them into them. Barrett’s appeal on behalf of a large group of clients is expected to go to tax court in several months.
%name Police investigation of DSC a matter of life or death, says former member
Simple Tips To Avoid Being Scammed
 Dale Barrett from Barrett Tax Law speaks at the Caboto Club in Windsor on Wednesday, February 27, 2013. Barrett offered advice to those who have found themselves with tax problems.                   (TYLER BROWNBRIDGE / The Windsor Star)
Dale Barrett from Barrett Tax Law speaks at the Caboto Club in Windsor on Wednesday, February 27, 2013. Barrett offered advice to those who have found themselves with tax problems. (TYLER BROWNBRIDGE / The Windsor Star)
 Dale Barrett from Barrett Tax Law speaks at the Caboto Club in Windsor on Wednesday, February 27, 2013. Barrett offered advice to those who have found themselves with tax problems.                   (TYLER BROWNBRIDGE / The Windsor Star)
Group promoted to get DSC members out of tax trouble has tax problems of its own Bruce W. Blair of Value Concepts Consulting Inc. at his Ouellette Avenue office, January 31, 2013. (NICK BRANCACCIO/The Windsor Star)Bruce W. Blair of Value Concepts Consulting Inc. at his Ouellette Avenue office, January 31, 2013. (NICK BRANCACCIO/The Windsor Star)
The day after The Star exposed the plight of DSC Lifestyle members whose investments have disappeared, regional director Bruce Blair emailed his clients to promote a new venture.
“Limited seating and deadline,” reads the email obtained by The Star. “Tax information session with regards to past and current issues. How to resolve and benefits.”
At least some of those “past and current issues” would be the massive reassessments and penalties that dozens of local members of the personal finance company are facing after DSC referred them to the “Fiscal Arbitrators” to prepare their taxes.
The Canada Revenue Agency alleges the Fiscal Arbitrators used an illegal tax preparation method that claimed false business losses to trigger fraudulent refunds and has charged three members of the organization: Larry Watts, Carlton Branch and Muntaz Rasool.
In emails sent by Blair from an account associated with Value Concepts Consulting, the new name of his personal finance business, clients were invited to attend an information session at the Caboto Club on Wednesday to learn all about British Columbia-based DeMara Consulting and how it can make their tax problems go away.
“With the knowledge of qualified tax specialists, this private not-for-profit donation-based membership society provides tax solutions for their members,” reads a promotional pamphlet from DeMara emailed to people who signed up for the Caboto Club meeting and obtained by The Star. “What is known as ‘the remedy,’ tax returns are filed in a special long-proven way.”
What the promotional materials don’t mention is that DeMara Consulting and its clients are facing significant tax problems of their own. And after Vancouver Sun columnist David Baines reported on some of those problems and The Star started making inquiries, Blair abruptly cancelled the Caboto Club meeting on Friday, emailing people who had registered to say “it will be postponed  with other items being put in place to share with you being completed.”
The CRA raided the offices of DeMara Consulting in March 2012, alleging that Donna Marie Stancer and her colleague Deanna LaValley fraudulently claimed about $1.5 million in business losses for themselves and their clients between 2001 and 2010. The court document laying out the CRA’s case for obtaining the search warrant alleges that DeMara promotes an illegal tax protester scheme, the same allegation the CRA makes against  Fiscal Arbitrators.
So far, the raid has not led to charges. The allegations have not been contested in court. No one responded to voicemails and emails requesting comment sent to DeMara’s office and Bruce Blair.

Stancer markets herself in promotional material to clients as a former CRA employee who knows the ins and outs of the organization. That’s true – but it leaves out a lot of history.
In 1989, Stancer and her husband Malcolm Stancer were convicted of 54 counts of making false statements in tax returns filed for clients who were told they were participating in a legal tax shelter program, with the Crown staying an additional 15 charges. Stancer was a former seasonal employee of the CRA and the judge found that she had used confidential knowledge from her position to keep the agency from detecting the scheme, according to an article in the Vancouver Sun that was published at the time.
According to bankruptcy documents, Stancer and her husband have since obtained pardons for those convictions.
In addition to tax preparation services, Stancer markets herself online as a gem therapist, aromatherapist, holistic pet therapist and practitioner of vibrational medicine. She is also the “Overseer” of the unincorporated church Serenity Bound Society, which was named as a director of DeMara Consulting for a period of time, according to the CRA’s information to obtain a search warrant.
Public records show Stancer has filed for bankruptcy twice. In October, her bankruptcy was discharged despite the objections of the CRA and the fact she is a known adherent to a philosophy that uses pseudolegal arguments to claim freedom from tax obligations, according to the judge’s findings.
The document outlining the CRA’s investigation leading to the raid on DeMara’s offices alleges the organization uses a variation of the approach employed by the Fiscal Arbitrators. The CRA alleges clients of DeMara obtained a business number and issued a T5 statement to every company that sent them a bill, allowing them to fraudulently claim personal expenses as capital and business losses.
Clients of Bruce Blair who signed up with DeMara were asked to compile credit card statements, loan statements, utility bills, mortgage documents and vehicle loan statements, expenses that are “claimable” under the “remedy process,” according to a document obtained by The Star. Another email obtained by The Star reminds clients of a deadline for filing T5 statements.
In January, Blair forwarded a newsletter to clients from DeMara playing down the CRA’s raid the previous spring, claiming it was “an audit — a very common occurrence around tax season.” In fact, it was a criminal search warrant.
In case DSC members who filed their taxes through the Fiscal Arbitrators are looking for advice from a different source, they can go see Toronto tax lawyer Dale Barrett in a different room of the Caboto Club on the same date and at the same time as Bruce Blair’s DeMara meeting was originally scheduled — 6:30 p.m. in the Marconi Hall. Barrett asked anyone interested in attending to email consultation@fightthecra.ca – and unlike Blair, he doesn’t require a non-disclosure agreement.
DSC clients have received emails discouraging them from retaining lawyers in general and Barrett in particular, leaving many of them unsure what to believe. Barrett said he knows he won’t be able to convince everyone, but hopes the facts will speak for themselves.
“At the end of the day, are you going to trust… someone who’s been criminally investigated, or are you going to trust someone who’s been licensed?” he said.
“Take the track that leads to tax court. If you’re going to take the track that leads through these people with these questionable schemes, who run these, quote-unquote, non-profit organizations that are there to help you, you’re just going to keep getting in trouble.”
 
CRA charges tax preparers who led Windsorites to financial ruin Lori Wright, left, and her boyfriend Matthew Pare, shown here Feb. 19, 2013, are fighting an order to pay the Canada Revenue Agency more than $120,000 after filing their taxes through the Fiscal Arbitrators. They were referred to the discredited tax organization after signing up with DSC Lifestyle Services, a personal finance company that owes millions to investors in Windsor and across the country. (NICK BRANCACCIO/The Windsor Star)Lori Wright, left, and her boyfriend Matthew Pare, shown here Feb. 19, 2013, are fighting an order to pay the Canada Revenue Agency more than $120,000 after filing their taxes through the Fiscal Arbitrators. They were referred to the discredited tax organization after signing up with DSC Lifestyle Services, a personal finance company that owes millions to investors in Windsor and across the country. (NICK BRANCACCIO/The Windsor Star)
After signing up with a company that promised “wealth without sacrifice,” Lori Wright and her common-law partner Matthew Pare are facing financial ruin.
Copies of cheques show the Chrysler workers paid $1,000 each to sign up with the personal finance company DSC Lifestyle Service in 2009, at the advice of the many friends, family and co-workers who were also involved. Wright, 45, and Pare, 37, said the company seemed like any other financial firm and they wanted to learn more about investments and money management.
The couple said they started attended meetings, where local DSC regional director Bruce Blair and, occasionally, his Toronto-based brother and DSC director Roger Blair would promote the programs and investments they said would make their clients wealthy. At one of those meetings, Wright and Pare said Bruce Blair suggested members file their taxes through a group calling themselves the Fiscal Arbitrators, showing off the tax returns of clients who had received huge refunds and claiming the tax preparation method allowed ordinary people to receive the same tax breaks that wealthy people take advantage of.
The couple did it, and Pare’s bank records show a $16,000 refund, although Wright’s was denied. It turned out she was lucky – the Canada Revenue Agency reassessed the couple and slapped them with a total of $125,000 in gross negligence penalties and the amount of Pare’s refund, saying the couple should have known the tax preparation method was illegal since they had filed their returns normally in the past.
Even though Wright didn’t get a refund, the CRA is still sending her bills for about $46,000 as a penalty for attempting to evade taxes. Pare owes the penalty on top of his refund, with the CRA demanding about $79,000.
Lori Wright, left, and her boyfriend Matthew Pare, shown here Feb. 19, 2013, are fighting an order to pay the Canada Revenue Agency more than $120,000 after filing their taxes through the Fiscal Arbitrators. They were referred to the discredited tax organization after signing up with DSC Lifestyle Services, a personal finance company that owes millions to investors in Windsor and across the country. (NICK BRANCACCIO/The Windsor Star)
Lori Wright, left, and her boyfriend Matthew Pare, shown here Feb. 19, 2013, are fighting an order to pay the Canada Revenue Agency more than $120,000 after filing their taxes through the Fiscal Arbitrators. They were referred to the discredited tax organization after signing up with DSC Lifestyle Services, a personal finance company that owes millions to investors in Windsor and across the country. (NICK BRANCACCIO/The Windsor Star)
Interest is compounding daily on that amount. Wright and Pare are just one of dozens of families across the Windsor region and hundreds of people across Canada who filed their taxes through the Fiscal Arbitrators and are now staring down the possibility of asset seizure, bankruptcy and total financial ruin.
“The CRA could go after our house,” Wright said. She said when she questioned Bruce Blair about the reassessments, his response was not to worry, that “CRA’s trying to put a scare into you,” said Wright. “I said, well, it’s working.”
But while the CRA was aggressively going after participants in the program, it was also building a case against the Fiscal Arbitrators themselves and the DSC Lifestyle agents who took a cut for promoting them. The Fiscal Arbitrators are now in trouble with the Canada Revenue Agency – just like the people whose returns they prepared.
Lawrence “Larry” Watts and Aurelius Carlton Branch, two of the Fiscal Arbitrators who – it’s alleged -  told clients they could help them take advantage of a legal loophole that would entitle them to huge refunds, were charged with defrauding the Canadian government of more than $5,000 on Nov. 27 following a CRA raid on their offices. A third man, Muntaz Rasool, was also arrested and charged separately in connection with the investigation and was released with bail conditions along with Watts, according to the Public Prosecution Service of Canada.
According to a public document filed with the courts spelling out the CRA’s reasons for requesting the search warrant, the CRA also asked for permission to raid the Woodbridge office of DSC Lifestyle Services, the Windsor-linked organization that has put the life savings, mortgages and financial security of investors across the region and the country in jeopardy. It’s not clear whether the raid on DSC took place and the CRA refuses to comment, saying it’s before the courts.
Watts is scheduled to make his next court appearance in Newmarket on March 1, Rasool is scheduled to appear in court in Toronto on Feb. 28 and Branch has not yet appeared in court.
Alex Di Mauro, an associate of the Fiscal Arbitrators who has allegedly given Windsor clients advice on dealing with their CRA reassessments, said “no comment” and hung up when reached by phone Friday afternoon. Bruce Blair, and DSC Lifestyle co-directors Roger Blair and Jeff Eshun did not respond to requests for comment.
The Windsor Star has written about the plight of former DSC regional director Michael Laforet, who said his retirement savings are tied up in investments that the company has failed to return to him despite his demands, and other DSC clients across the region who are facing penalties so steep after filing their taxes through Watts and his associates that they might be driven to bankruptcy if they are unable to fight them in court. The response to two stories published in the Star has been overwhelming, with 33 families getting in touch to share stories of lost savings and shattered financial security.
According to a document produced by the Fiscal Arbitrators and sent to clients, which was obtained by The Star,  the theory behind their tax preparation method is that because the Income Tax Act defines a business as an “undertaking of any kind whatever,” all Canadian taxpayers are technically business owners. The Fiscal Arbitrators took that as justification for claiming personal expenses as business losses to trigger refunds and even recommended clients argue this interpretation of the act in court if challenged by the CRA, according to emails and documents obtained by The Star.
“The [Income Tax Act] is extremely vague and definitely open to interpretation,” the Fiscal Arbitrators’ explanatory document reads. “It has always been acceptable practice for a taxpayer to arrange their affairs in such a manner as to reduce or eliminate the taxes otherwise payable as long as it is lawful and complies.”
The CRA begs to differ.
Investigator John Di Rito was assigned to probe the Fiscal Arbitrators in 2011 and compiled a document outlining his case against them in November of that year in order to obtain a search warrant. The 46-page document, which later became publicly available when it was filed in court,  reveals that DSC Lifestyle Services and Eshun have been scrutinized by the CRA for their role in promoting the tax preparation service.
According to the CRA’s information to obtain a search warrant, which contains allegations that have not been contested in court, the Fiscal Arbitrators were promoting an illegal National Tax Protestor scheme. There are many variations of this concept going by different names, but they share the basic tenet that people have the right to be free from taxation.
CRA investigators obtained bank records for Fiscal Arbitrator Larry Watts and scrutinized the tax returns of about 50 people who made cheques out to him. According to the investigators’ case laid out in court documents, all of the tax returns contained false business losses that fraudulently reduced their income.
Lori Wright, left, and her boyfriend Matthew Pare, shown here Feb. 19, 2013, are fighting an order to pay the Canada Revenue Agency more than $120,000 after filing their taxes through the Fiscal Arbitrators. They were referred to the discredited tax organization after signing up with DSC Lifestyle Services, a personal finance company that owes millions to investors in Windsor and across the country. (NICK BRANCACCIO/The Windsor Star)
Lori Wright, left, and her boyfriend Matthew Pare, shown here Feb. 19, 2013, are fighting an order to pay the Canada Revenue Agency more than $120,000 after filing their taxes through the Fiscal Arbitrators. They were referred to the discredited tax organization after signing up with DSC Lifestyle Services, a personal finance company that owes millions to investors in Windsor and across the country. (NICK BRANCACCIO/The Windsor Star)
CRA investigators also allege that DSC Lifestyle Services acted as a promoter for the Fiscal Arbitrators,  taking a percentage of the 20 per cent commission charged on each client’s tax refund. They found that DSC and the Trem Dy Group, the DSC-linked company that Wright and Pare made their cheques out to, made payments to Watts or the Fiscal Arbitrators in the amount of $236,505, with a notation on one cheque suggesting the payments were for preparing tax returns for at least 84 DSC clients.
The CRA raid on Fiscal Arbitrators came as news to many DSC clients  The Star has spoken to. Emails obtained by The Star show Bruce Blair continues to advise them to deal with their tax problems through him, without communicating with lawyers or the CRA.
Wright and Pare said Blair would refer to the CRA reassessments as part of “a process,” but if they had known what the process involved, they would have never signed up. Pare said if the CRA believes the Fiscal Arbitrators filed people’s taxes improperly, it should go after them for the money.
“They should be freezing their accounts, Bruce’s and everybody else, and paying people’s debts off.”
 
Windsor DSC Lifestyle investors slapped with huge tax penalties Bruce W. Blair of Value Concepts Consulting Inc. at his Ouellette Avenue office, January 31, 2013. (NICK BRANCACCIO/The Windsor Star)Bruce W. Blair of Value Concepts Consulting Inc. at his Ouellette Avenue office, January 31, 2013. (NICK BRANCACCIO/The Windsor Star)
Dozens of people across the Windsor region are facing hefty penalties by the Canada Revenue Agency after participating in a tax filing program administered by a company with local ties.
Toronto tax lawyer Dale Barrett says he’s helping about 200 people across the country, including about 40 from the Windsor region, fight gross negligence penalties imposed by the CRA after they allowed agents of the personal finance company DSC Lifestyle to file tax returns for them under an arrangement known as the “fiscal arbitrators program.”
DSC agents filed participants’ taxes as if they ran businesses, claiming false losses that triggered huge refunds, often tens of thousands of dollars.
Those participants have been reassessed by the CRA and now face penalties equal to half of the tax the government agency determined they avoided. Barrett said some people who participated in the program for years have been slapped with orders to pay the CRA hundreds of thousands of dollars.
“There are hundreds, thousands of people across the country who are losing their retirement savings and losing their homes. It’s a nightmare,” Barrett said. “They just didn’t understand. They weren’t trying to do anything greedy or anything that they thought was wrong.”
On Saturday, The Windsor Star exposed a series of investment programs promoted in the Windsor region and across Canada that have put the retirement dreams of former Windsor resident Michael Laforet at risk. The British Columbia Securities Commission has fined and permanently banned two DSC Lifestyle promoters and the B.C. and Alberta securities commissions have issued cease-trade orders against an affiliated speculative land deal that Laforet invested in.
Barrett estimated the financial security of hundreds of Windsor and Essex County residents has been threatened by this tax program. This matches the estimate made by Laforet, who said he had dozens of people working under him or investing through him as one of six local DSC Lifestyle regional directors.
Barrett said he represents between one-third and one-half of the affected people in Ontario who have retained a lawyer. Windsor lawyer Bruck Easton confirmed he is representing several local residents, but declined to comment on the details of the cases.
It’s impossible to know exactly how many people have been affected because there are almost certainly many more people who haven’t retained a lawyer, Barrett said. “You’ve got to understand most people haven’t come forward. Whatever clients I have is the tip of the iceberg.”
In fact, the same group of people behind DSC Lifestyle – directors Jeff Eshun and Roger Blair, along with Roger’s Windsor-based brother Bruce Blair – is warning people facing CRA penalties against retaining traditional legal counsel and are promoting another affiliated program instead, Barrett said. Many people the Star has spoken with since the publication of the story have said the same thing: the promoters are suggesting the best way to deal with their tax woes is to refile through affiliated west coast company Demara Consulting.
Roger Blair, left, and Jeff Eshun of DSC Lifestyle Services.
Roger Blair, left, and Jeff Eshun of DSC Lifestyle Services.
Barrett said if 1,000 people participated in the fiscal arbitrators tax program – what he called “a really conservative number” – DSC Lifestyle agents would have collected millions. The people administering the program charged a $500 signup fee and 20 per cent commission on the tax returns.
But the organization that really stands to gain is the CRA, Barrett said. He estimated the government agency has issued tens of millions of dollars in penalties and repayment orders.
“I’m not going to say that the CRA’s doing it to generate profit, but at the end of the day, they’re making a fortune from whatever they’re doing,” Barrett said.
Gross negligence is the most serious accusation the CRA can make. If challenged in tax court, the government agency has to demonstrate the taxpayers knew or should have known what they were doing was wrong.
Barrett said most of his clients are factory and plant workers with little or no post-secondary education or financial knowledge. Most of them were pressured into getting involved by friends, family and co-workers and believed promoters who said the tax preparation method was legitimate, he said.
The CRA has taken harsh action against participants in the fiscal arbitrators program, but there is little to suggest the agency is doing anything to stop or punish the promoters who profited.
Mylene Croteau, a spokeswoman for the CRA, would not answer how many people have been reassessed and slapped with gross negligence penalties and did not answer a question about how much the agency stands to collect. She also would not say whether promoters of the program are under investigation.
“The confidentiality provisions of the Income Tax Act prevent the CRA from commenting on specific cases.  Additionally, the CRA does not comment on investigations it may or may not be undertaking,” she said in an emailed statement.
According to Section 14 of the Taxpayers’ Bill of Rights, taxpayers have “the right to expect the CRA to warn you about questionable tax schemes in a timely manner.” The CRA issues tax alerts on its website that warn taxpayers about similar illegal programs in general terms, but does not name the promoters or affiliated companies.
Kimberley Boyer, a spokeswoman for taxpayers’ ombudsman Paul Dube, said his office is conducting an investigation into how the CRA handles tax schemes after receiving complaints from the public. The taxpayers’ ombudsman, a position created in 2007, acts as an independent CRA watchdog.
“Article 14 of the Taxpayer Bill of Rights entitles taxpayers to be warned about questionable tax schemes in a timely fashion. Our systemic investigation will look into whether the article was respected. If necessary, the ombudsman will make recommendations for corrective actions to the Minister of National Revenue,” Boyer said in an emailed statement.
Barrett said the CRA may be assembling a case against the promoters and waiting until its investigation is complete before going public with a warning and enforcement action. But there’s no way to know for sure.
“This huge case may or may not be in progress,” he said. “There are other people losing their livelihoods, losing their retirement and everything else, meanwhile.”
 

Empty Dreams: Promised millions in return, investors still waiting for the payout

Michael Laforet is pictured in Windsor, Ont., Saturday, January 12, 2013. (DAX MELMER/The Windsor Star)Michael Laforet is pictured in Windsor, Ont., Saturday, January 12, 2013. (DAX MELMER/The Windsor Star)
Michael Laforet was promised a life of wealth, comfort and ease for trusting his life savings to DSC Lifestyle Services, but much like his investments, those promises haven’t paid out.
Laforet, a 51-year-old former Windsor resident and Ford pipe fitter who now works as a plumber in the greater Toronto area, invested his Ford pension, retirement savings and thousands of additional dollars into various programs and investment deals promoted by Bruce Blair, a former co-worker at Ford, and his brother Roger Blair, a life insurance salesman based in the Toronto area. Returns came in as promised at first and Laforet started working on commission marketing the program to friends, eventually being named a “regional director” of the personal finance company.
In 2009, about three years after Laforet first got involved, things started going wrong. Laforet said he stopped getting paid for the promotional work he was doing for them and promised interest payments on the tens of thousands of dollars he invested in various programs over the years became spotty.
Laforet has dreamed of retiring at 55 since he was a teenager. Four years away from that deadline, all of his retirement savings and his Ford pension are on the line, along with tens of thousands more in promised commission he had counted on to pay off debts before hanging up his hat.
But Laforet points out that at least he’s still working, unlike other Windsorites who lost money. One woman who contacted The Star and did not give permission to be identified said her elderly parents lost her father’s Chrysler buyout to investments promoted by the Blairs, with her father falling seriously ill soon after.
“We just recently found out that he’s developed stomach cancer and I think it’s from the stress. He’s one of your typical European men that just keeps everything bottled inside. This was their little nest egg,” the woman said. “The last time I went to speak with Mr. [Bruce] Blair, he wanted me to sign one of those confidentiality papers where you can’t go anywhere else. I lost it… I was like, are you kidding me? You want me to be all hush hush, because you don’t want anyone else to know, and you messed up my parents? I took the paper and I left in a huff after a couple of choice words.”
Laforet and other Windsor residents appear to have fallen victim to the same illegal investment deal that has cost Canadians across the country millions of dollars, according to a ruling from the British Columbia Securities Commission. Jeff Eshun, one of the principal promoters and a director of many of the affiliated companies and organizations, and his west coast associate Maisie Smith were recently found guilty of selling investments without a licence and ordered to repay $5.7 million along with fines totalling $1.25 million.
After several emails and phone calls to Bruce Blair over the course of two weeks were met with silence, The Star caught up with him at his Ouellette Avenue office. Bruce declined to answer specific questions about where the missing money is and why investors haven’t received it, but said he has total confidence that the programs he promoted are legal and legitimate.
“The void gets you wondering, frustrated, is it going to happen or not? That’s normal,” he said. “I’m not going to dramatize and create some negative aura… I don’t want to add to the pot or slow anything down.”
%name Empty Dreams: Promised millions in return, investors still waiting for the payout
Bruce Blair of Value Concepts Consulting

Roger Blair and Eshun did not respond to multiple requests for comment sent over two weeks. Roger Blair sent an email on Jan. 25 asking for more details about Laforet’s allegations, but never replied after The Star provided the information.
Instead, Roger Blair and Eshun contacted Laforet through text messages and emails, urging him not to go public and claiming they were on the verge of turning things around – a story Laforet has heard before.
“We are not running away from the obligations to the base,” Eshun wrote in an email forwarded to The Star. “We are at the positive turning point in the drama and the good news is coming.”
But Laforet has waited long enough. And so have the people he convinced to invest their money as well.
“We have clients who didn’t have a mortgage – now they have a mortgage. Because they took the money out and it never got put back again. They’re retired now. It just kept snowballing and snowballing,” he said. “I’m angry. Somebody’s got to do something about this. This is just getting way out of hand.”
Promotional powerpoint presentations obtained by The Star that Laforet and other salespeople were given to market DSC Lifestyle Services in 2007 include a picture of Eshun and Roger Blair standing side by side, with the caption “The Founders.” Five years later, Eshun and his west coast associate Maisie Smith would admit to the British Columbia Securities Commission that they were selling investments without a licence, with the commission finding the two were dishonest to investors about where the money was going in a Jan. 9 decision.
The commission charged Eshun and Smith after the publication of a six-part series of articles by Vancouver Sun reporter David Baines. Baines wrote about a grocery cashier in Burnaby, B.C., whose story is very similar to Laforet’s – she moved her life savings into questionable investments promoted by Eshun and Roger Blair and became a regional director with DSC Lifestyles until the money suddenly stopped flowing.
The B.C. securities commission found that Eshun and Smith told 81 investors they would purchase “consumer secured notes” with their money through the company JV Raleigh, raising $5.7 million between July 2006 and January 2009. Instead, they funnelled it into companies that Eshun, Smith and Roger Blair are directors of, with Eshun also writing himself  cheques totalling about $150,000.
The commission found that transfers totalling $1.5 million went from JV Raleigh to DSC Lifestyles Services, whose directors are Eshun and Blair.
“The respondents took $5.7 million from 81 investors on false pretences. There is no evidence that the investors have any hope of recovering any part of their investment. The respondents have shown no contrition,” the commission’s findings say.
The commission found Eshun and Smith guilty of securities violations, permanently banning them from selling investments. The commission also ordered them to repay $5.7 million collected from 81 investors and fined them $750,000 and $500,000, respectively.
As of Friday, Maisie and Smith have not paid those fines or made any payments on the $5.7 million they owe investors, the commission confirmed. Eshun did not appear before the commission and appears to have left the country for Dubai, according to emails sent to clients by Roger Blair and obtained by The Star.
It’s difficult to say for sure how many Windsorites invested money and never got it back.
A 2010 email from Roger Blair to the “Windsor leadership team” was sent to four people besides Bruce Blair and Laforet. Laforet said as a regional director, he had dozens of clients and salespeople working underneath him.
Laforet said he hasn’t heard from the other regional directors since his relations with Eshun and the Blairs started to sour. He said he came to the Star after months of meetings and phone calls with former clients who are furious and want to take action, but don’t want their financial woes aired in public, so he volunteered to attach his name and face to the story.
Bruce W. Blair of Value Concepts Consulting Inc. at his Ouellette Avenue office, Thursday January 31, 2013. (NICK BRANCACCIO/The Windsor Star).
Bruce W. Blair of Value Concepts Consulting Inc. at his Ouellette Avenue office, Thursday January 31, 2013. (NICK BRANCACCIO/The Windsor Star).
The programs promoted by Eshun, the Blairs and Laforet himself when he was a regional director promise everything from free “wealth grants” to relief on taxes in exchange for hefty monthly payments and large investments. Over the years, Laforet said he and his ex-wife forked over $11,700 with the promise of quadrupling their money through a Caribbean-based foundation, $5,700 for what they were told was a property investment in Turks and Caicos that would pay out one per cent in interest per month and $11,500 that accumulated in an account linked to a life insurance policy through the well-established insurance company Industrial Alliance.
The Laforets never got the money they invested back, let alone the promised interest and payouts, from the two Caribbean deals. They lost $8,650 from the life insurance-linked account – three quarters of the amount that had accumulated over the years – after agreeing to let DSC Lifestyles make a withdrawal to help the company weather the struggling market for six months under a promise to repay it with interest, Laforet said.
Fed up with the lack of answers and missing money, Laforet stopped promoting the deals and started sending demand letters and emails asking for his and other investors’ money back, along with tens of thousands in promised commission payments, in 2010.
The arrangement with Industrial Alliance seemed to be the most solid and bolstered the company’s legitimacy by its association with an established company. But it may also have helped Eshun and the Blairs get around a problem – a search through the Ontario Securities Commission website reveals none of them are registered to sell investments in Ontario.
Roger Blair, however, was registered to sell life insurance until Jan. 16, 2012, according to the Financial Services Commission of Ontario.
Bruce Blair sent his clients an email in February of 2012 informing them that Solutions 21 Financial – a company whose directors are Eshun and Roger Blair, according to Industry Canada’s online database – was no longer doing business with Industrial Alliance because it was “in the process of restructuring.” In fact, a spokesman for Industrial Alliance confirmed the company fired Solutions 21 Financial and reported it to the Financial Services Commission of Ontario in response to multiple customer complaints.
“Industrial Alliance suspended its MGA contract with Solutions 21 Financial on November 11, 2011 after receiving several complaints from clients. When Solutions 21 Financial failed to respond to the complaints, Industrial Alliance terminated the contract,” said spokesman Pierre Picard in an emailed statement.
Laforet still holds out hope he’ll get his money back from a speculative land deal in Whitby, the biggest investment he made, once the land is sold through power of sale. According to mortgage documents, the land was purchased for $8.5 million in October of 2008.
Bank statements show that Laforet moved $25,000 out of his pension money Ford gave him when he retired and an RRSP to invest in a mortgage on the agricultural land that investors were told would increase in value once Highway 407 was extended nearby. According to Laforet’s contract, he was supposed to receive quarterly interest payments totalling 10 per cent of his investment per year, with an additional five per cent per year payable at the end of a five-year term.
Pace Savings and Credit Union foreclosed on the mortgage on Oct. 19, according to a letter sent to Laforet by the bank’s lawyer. At about the same time, Solutions 21 stopped making promised interest payments to Laforet, with his bank statements showing no quarterly payments after April of 2012.
If and when the land is sold, the proceeds will go to pay the $3.5 million owed to Pace Savings first and investors like Laforet second, if there’s any money left over.
Most people probably think they’re too savvy to get involved in something like this – a group of unregistered personal finance consultants asking for your life savings, promising sky high returns and free money. Laforet said it worked in Windsor because the Blairs were a couple of local boys from Tilbury, who built relationships and convinced their clients to market the scheme to people close to them.
“Because of the way everything was promoted, you build up a trust,” Laforet said.
In fact, Bruce Blair is still promoting personal finance programs in Windsor through an organization called Value Concepts Consulting, although Bruce said it’s unaffiliated with Roger Blair, Jeff Eshun and their various companies and organizations.
Value Concepts Consulting stands out from the medical and accounting offices that share a mid-rise building at Ouellette Avenue and Ellis Street, just south of the downtown core. A gleaming, poster-sized etched glass and metallic plaque sports the company name and logo –  three gears with hands like a clock emblazoned with dollar signs.
The Star visited his offices four times over the course of two weeks. The first three times when the Star visited during regular business hours, his office door was locked and the blinds were drawn.
The fourth time, just after 5 p.m. on a Thursday, he was there with a client.
Bruce said he couldn’t get into details about where everyone’s money is and why they haven’t received it because his brother Roger Blair was preparing a statement to send to The Star, but said he was confident the programs they promoted are legal and legitimate. The Star never received such a statement from Roger Blair.
Bruce said he, too, invested more than $100,000 through the various programs that he’s waiting to receive, just like everybody else. He wouldn’t confirm how many people in Windsor are in the same position, referring the question to Roger Blair again.
“I’m staying neutral. It’s got to be answered from the right source. I’m not the company,” he said. “I’m no different from Michael Laforet. I have funds that I’m on standby to wait to collect as well.”
Bruce said he wasn’t concerned about the fact he had invested his own money and encouraged others to do the same through a man with a record of selling illegal and misleading investments. He said there’s another side to the story in British Columbia – which he wouldn’t elaborate on – and suggested Maisie Smith may have been to blame.
Laforet’s fight to get his and his clients’ money back is going to be difficult because of the fractured way white collar crime enforcement works in Canada. Laforet said he and his former clients and associates have been exploring their options when it comes to filing a lawsuit or a police complaint, but came to The Star first, hoping that going public would help their case.
Following its investigation into Eshun and Smith, the British Columbia Securities Commission referred a portion of the file to the RCMP, who in turn passed it on to the OPP and the Peel Regional Police. RCMP spokesman Duncan Pound said the federal commercial crimes section of the agency decided its resources would be better put to use on other files.
“Unfortunately, we had higher priority matters that we had to assign our resources to,” he said. “We had higher fraud amounts with more victims with a greater likelihood of successful investigation leading to charges.”
The Peel Regional Police and OPP appear to have made the same decision. Spokesmen for the Peel Regional Police and OPP both said they are not actively investigating the matter, with Sgt. Joe Paolini of the Peel Regional Police saying he believes the force decided not to because the British Columbia Securities Commission was already involved.
Det. Glenn Gervais of the Windsor Police financial crimes branch said police in Windsor have not received any complaints related to the Blairs or the investment programs they promoted.
Both the British Columbia and Alberta securities commissions have issued cease-trade orders against the Whitby land deal, but Ontario, where the land and promoters are based, has not. Alison Ford, a spokeswoman for the Ontario Securities Commission, said the organization does not comment on complaints or open investigations.
Diane Urquhart, an independent financial analyst and advocate for stronger, more effective enforcement of white collar crime, said Laforet’s story is an example of what’s wrong with the system in Canada. She said it’s typical for police agencies and provincial securities commissions to consider the matter settled once one body launches an investigation and lays charges, like the British Columbia Securities Commission did in this case.
Police and local fraud squads “find excuses to not cover them, ranging from there’s no resources to there’s no crime, without doing any kind of in depth investigation,” Urquhart said. “We have a problem in the country. It’s a pretty serious and shocking problem.”
 

David Baines

 

In late 2005, Donna Mulder, a part-time grocery store cashier from

 
 

 

Second of a series
In late 2005, Donna Mulder, a part-time grocery store cashier from
Burnaby, joined DSC Lifestyle Services, an Ontario company that claims to "build wealth without sacrifice."
She paid $5,450 in various fees to become a member, which entitled her to attend financial workshops, participate in certain investments and to earn commissions by recruiting other members.
At the workshops, she met Jeffrey Eshun of Toronto, founder and president of DSC, and his close associate, Maisie Smith of Langley, who worked as a regional director for DSC in B.C.
Neither Eshun nor Smith are licensed to sell securities in Ontario or B.C., but they are certified as "registered financial consultants," which allows them to put the initials "RFC" behind their names.
As noted in Saturday's column, the RFC certification is awarded by the International Association of Registered Financial Planners in the United States. Eshun and his partners at DSC, Roger T. Blair and Bernadette Bowman, run the Canadian chapter.
It is unusual -- unique in my experience -- to have one group control an organization like this. In my view, it raises questions about its credibility.
Smith is also certified as a "Certified Business Mentor," which entitles her to use the initials "CBM" behind her name.
The designation is awarded by Robin J. Elliott, who runs a Coquitlam firm called DollarMakers. Elliott told me the CBM program takes five days and attendees do not have to take an exam. He says he charges $20,000 per person, a huge amount for a program like this. When I asked what academic or professional credentials he has, he refused to answer, but insisted he is a financial expert.
The only person in this mix who does not profess to be a financial expert is Mulder. She has no financial training and negligible investment experience. After paying more than $5,000 to join DSC, she was prepared to listen to whatever Eshun and Smith and other DSC reps told her.
Their advice proved disastrous. She obtained a line of credit against her home, which "freed up" $325,000 in cash. She could borrow that money at any time and pay interest only.
In May that year, she made her first investment. On Smith's recommendation, Mulder loaned $40,000 to a B.C. numbered company, 755720 B.C. Ltd.
According to the B.C. registrar of companies, the numbered company had been incorporated just one month earlier. Its sole directors are listed as Eshun and Smith.
"Jeff told me he was busy back east, so he set up the numbered company so Maisie could run it," Mulder recalled.
(The numbered company later changed its name to J.V. Raleigh Superior Holdings Inc. Raleigh is the town in Newfoundland where Smith was born.)
According to loan documents, Mulder's money would be used to purchase "high-yield consumer-secured notes" through an unnamed third party. The notes would earn 12 per cent annually, and all her capital would be repaid within 18 months.
I have never heard of "consumer secured notes," and neither has Google. The loan documentation didn't say how the notes were to be secured, or how the loan would be repaid. These are questions that Mulder, who had no investment experience, didn't think to ask.
In ensuing months, Mulder increased her total investment to $100,000, once again at Smith's urging. When the loan matured, Mulder asked for her money back. Surprisingly, given the dubious nature of the investment, the numbered company repaid every cent of principal and interest.
But even before she was paid out on that investment, Mulder loaned the numbered company another $140,000, once again to buy "high-yield consumer-secured notes."
Smith signed the loan agreement on behalf of the numbered company. Her close associate, Glenda Hynes -- who also worked as a regional director for DSC and "compliance officer" for J.V. Raleigh -- witnessed her signature. (Smith and Hynes would pop up in other equally sketchy investments).
Mulder received monthly payments for the 24-month term of the note, but when the principal came due in January 2009, she got some bad news.
"Maisie said that, because of the financial crash, they didn't have the money at the moment," Mulder recalled. "She asked whether it would be okay to pay interest for now. I got a few more payments, then they stopped."
On July 12 this year, Mulder sent Smith an e-mail threatening legal action. Smith asked her to be patient.
"We are very close to finalizing the transaction here to start the payouts," she replied in an e-mail. "No one is running with the funds and the firm is working to complete the process to make this unpleasant situation much better for all that is involved."
I called Smith on Monday to try to determine where the money was invested, how it was secured, and what the holdup is, but she refused to answer. She said she would consult her lawyer and get back to me later in the day, but didn't. I also left several messages for Eshun, but he didn't respond either.
While Mulder waits for her money, Smith and her pal Hynes have moved on to other investments. They have created a business called Utopia Concierge Club, which is selling two-day seminars in financial literacy and, not incidentally, residential building lots in Costa Rica.
"Maisie has a vision and a cause to help people and is quite passionate about it," she says on the club's web-site. "With her experience at economic facilitation and wealth building she can help people reach their full potential and help them to retire with dignity and respect."
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NEXT: Before moving to sunnier deals, Smith introduces Mulder to a complex investment scheme that purportedly allows her to utilize her RRSP to borrow money and invest in a 10-year bond. Roger Blair, chief executive officer of DSC, pitches her on a charitable donation tax-shelter investment that supposedly allows investors to donate $5,000 and get a $35,000 tax receipt. Both are disallowed by Canada Revenue Agency.
dbaines@vancouversun.com