Jessoow Fraud

[Dahireeto]

CRA probe finds millions of dollars in potentially bogus deductions and losses, court filing shows



Tax preparer Mohamed Jesow acknowledges he himself owes more than $75,000 to the government. But as for CRA allegations that he falsified the tax returns of possibly hundreds of clients, he says: 'Revenue Canada officers make this up. They're trying to get me.' (Facebook)

Mohamed Ali Jesow is bit of a Renaissance man: He speaks three languages, has an American accounting degree, ran a tax practice in Toronto for 20 years, and designed and built a resort on the outskirts of Mogadishu, where he also raises cattle, runs a vegetable farm and makes his own cheese.

But one thing he is not, he insists, is a tax criminal. "Revenue Canada officers make this up. They are trying to get to me," he said in an interview over the weekend. 

The Canada Revenue Agency believes otherwise, alleging Jesow may be behind one of Canada's biggest tax swindles by a tax preparer in recent years — and if true, it could cost his clients dearly.

Last year, CRA investigators raided the tax-preparation business Jesow had operated for two decades, claiming the 60-year-old father of nine may have committed tax fraud on a huge scale. In a sworn statement filed in court, the agency says that from 2012 to 2014, Jesow prepared and submitted client tax returns replete with bogus or inflated expense deductions, donations and business losses, mostly without his customers' knowledge.

Allegations of 'false expenses'
 

Ads By Google

Investigators tallied at least $361,670 in "false expenses and losses" after closely scrutinizing just 26 of those clients, the court filing says, though the actual totals could be much higher — potentially involving more than 1,400 taxpayers and reaching into the millions of dollars in phoney deductions.

But more than a year after the raid, Jesow has not been charged with any crime. The unproven allegations in the CRA's affidavit have yet to be tested in court.

He vehemently maintains he did nothing wrong and merely filled out the tax returns with information his clients gave him. "All these things they're saying against me, 90 per cent are things that they made up," he said from the Somali capital, Mogadishu, where he now lives full-time.

Jesow moved to Canada in 1989 and ran a tax-preparation business for two decades in Toronto. He returned for good to Somalia in recent years and now runs a farm, raising livestock, growing crops and making cheese. (Facebook)

Uncanny similarities

The CRA probe dates back four years. An auditor noticed an uncanny number of tax returns being filed with similar amounts claimed for "carrying charges and interest expenses" — which is a deduction for costs related to earning investment income. Subsequent investigation found that of 1,473 people who seemed to have hired Jesow to file their taxes, 85 claimed the exact same amount, $903, in carrying charges and interest in 2012; another 74 were all claiming a slightly higher amount, $1,025.

CRA investigator Tetyana Sandford, from the agency's Toronto North office, decided to take a closer look. In the sworn statement filed in court, she says she interviewed 27 of those taxpayers and learned:

* 25 of them confirmed Jesow had prepared their tax returns.
* 22 of the 23 whose tax returns claimed deductions for "carrying charges and interest" said they actually had no such expenses.
* 25 of them filed returns claiming medical expenses, but nine of those people said they incurred no such expenses; a further five taxpayers did have medical expenses but they were "significantly less" than what they'd claimed.
* 20 returns claimed charitable donations, but five of those people said they had made no donations or didn't have receipts, while another six donated "significantly less" than what was being claimed.
* 10 of their returns claimed business losses, but five of them said they did not run any business.

The CRA filing says it all adds up to a "fraudulent scheme" under which "taxes payable were reduced contrary to the provisions of the Income Tax Act."

And the scale could be much bigger than just 27 people. Nearly 1,400 other taxpayers whose returns were seemingly prepared by Jesow claimed $6.6 million in expenses and losses between 2012 and 2014, the court filing says. The CRA agents who initially processed those tax returns rejected $2 million of those deductions — but the remaining $4.6 million that went through "may not have been reviewed" due to the agency's method of only auditing select taxpayers.  

Now those clients could be on the hook for any unpaid taxes, plus interest and penalties.

The tax preparation business was run out of a basement office in west-end Toronto since 2014. The premises were raided by the CRA in March 2017. (Google Streetview)

CRA 'intimidates' clients

Jesow asserts, however, that all the taxpayers the CRA interviewed lied — that they supplied him the numbers reported on their tax returns, but are now throwing him under the bus due to "intimidation" from the agency's investigators.

"I never did anything that these clients didn't know, and this is all coming from pressure on the clients. The way Revenue Canada officers work, they go as far as saying, 'If you admit that Mr. Jesow did this for you, then we will not charge you with criminal charges,' " he told CBC News.

"It's like holding a gun to a guy's head and saying, 'If you do this, I'll let you go.' You  know what I mean?"

In one instance highlighted in the CRA court filing, a taxpayer told investigators she did not run a business even though her tax return claimed a business loss. She said Jesow "told her to say that she is a salesperson and that she sells 'home stuff' if she is asked," the filing says.

"You see again, that's the result of intimidation. They intimidate her," he said, affirming that the taxpayer told him she did in fact have a business.

Asked what that business was, Jesow said: "I don't remember."

Jesow built this resort hotel complex on the outskirts of Mogadishu. He now lives on the adjoining estate. (Flickr)

And what about all those identical carrying charges and interest expenses of either $903 or $1,025 that nearly 160 of his purported clients claimed?

Jesow says his customers are almost all low-income earners, and thus many of them have similar levels of loan or credit card debt. So it's not at all odd that many of them would have incurred the same amount of interest on that debt, he said.

"When clients come and say 'I have $10,000 [in debt],' the carrying charge will mostly be in the same zone," he said. "Given their situation, which is similar, it's not unreasonable."

Owes $75,000 in back taxes

One thing that's not in dispute: Jesow himself is a serious tax delinquent. He acknowledged he owes more than $75,000 in past income tax and GST, but says he just could never pay because "all those years there was a civil war in Somalia and I had all my family to support here."

The CRA would not speak about the case, saying in a statement that it "does not comment on ongoing criminal investigations."

The agency has often gone after tax preparers in recent years who it alleged were falsifying clients' tax returns.

In a notable prosecution, Vaughan, Ont., businesswoman Doreen Tennina began a 10-year prison sentence in 2015 after being found guilty on two counts of fraud for claiming $58.5 million in bogus charitable donations and carrying charges on 4,200 client tax returns.

Last summer, Edmonton tax preparer Chander Mohan Sharma was found guilty of fraud for filing $2.9 million in false or inflated expenses on tax returns.

In Jesow's case, even if the CRA can persuade a prosecutor that charges are warranted, he may never see the inside of Canadian courtroom. After splitting his time between Toronto and Mogadishu for the past few years, he says he's now settled back in Somalia — which doesn't have an extradition treaty with Canada — and has no firm plans to return

[Dahireeto]

He built an empire on fraud. 

[maakhiri1]

I believe when they were caught, they pointed the finger, but these kinda patterns are detected by super computer.

[Yunis]

Dayniile resort built on tax Bililiqo from Toronto.

 

[maakhiri1]

they guy looked he worked hard, and always lazy and jelous people pointing the finger

[Holac]

4 hours ago, maakhiri1 said:

they guy looked he worked hard, and always lazy and jelous people pointing the finger

Jeesoow doesn't look like a hardworking guy.  He was lazy enough not to change the deduction number for different clients.  How could 85 different people have the exact same deductions dollars and further 74 had similar deductions. That is statistically not realistic.  

•  Subsequent investigation found that of 1,473 people who seemed to have hired Jesow to file their taxes, 85 claimed the exact same amount, $903, in carrying charges and interest in 2012; another 74 were all claiming a slightly higher amount, $1,025.

CRA investigator Tetyana Sandford, from the agency's Toronto North office, decided to take a closer look. In the sworn statement filed in court, she says she interviewed 27 of those taxpayers and learned:

• 25 of them confirmed Jesow had prepared their tax returns.
• 22 of the 23 whose tax returns claimed deductions for "carrying charges and interest" said they actually had no such expenses.
• 25 of them filed returns claiming medical expenses, but nine of those people said they incurred no such expenses; a further five taxpayers did have medical expenses but they were "significantly less" than what they'd claimed.
• 20 returns claimed charitable donations, but five of those people said they had made no donations or didn't have receipts, while another six donated "significantly less" than what was being claimed.
• 10 of their returns claimed business losses, but five of them said they did not run any business.