A woman integral to a Chilliwack group that counselled hundreds of people to be income tax cheats was sentenced to 4.5 years in jail and fined $35,000 in B.C. Supreme Court on Friday.
Defiant to the end, belligerent to the court process, and seemingly oblivious to the fraudulent nature of the scheme she adhered to and foisted on others, Debbie Arlene Anderson said she will appeal her conviction as an educator with Paradigm Education Group.
Anderson was convicted on Nov. 3, 2017 of tax evasion and making false statements under the Income Tax Act (ITA), failure to make GST payments under the Excise Tax Act (ETA), and counselling others to commit fraud under the criminal code.
Paradigm’s found and leader Russell Porisky was sentenced to 5.5 years prison and fined $274,000 following a second trial in 2016.
As part of Paradigm Education Group, which taught the “natural person” theory, Anderson was said to have approximately 100 students who paid seven per cent of their income in order to arrange their affairs to pay no income tax or GST. In all, Paradigm was said to have 800 students.
The basis of the scam is that, according to Porisky and his acolyte Anderson, “income tax is nothing more than an internal federal excise tax which is only mandatory for those who choose to work as a legal representative, under an implied contract of service, for the benefit of a federally created legal (artificial) person known as a ‘taxpayer.’”
The problem is that the Canada Revenue Agency and many B.C. Supreme Court justices say they are wrong. There can be no division of the person either in law or reality, so paying income tax is, quite simply, mandatory.
Anderson’s sentencing hearing, which began March 5, became quite bizarre as rather than enter submissions for her sentence, the 59-year-old continued to argue her case and perpetuate the debunked Paradigm scheme.
Justice Neill Brown exhibited significant patience as Anderson outlined her reasons why she should not have to pay taxes in Canada, why the case against her uses false documents and is a fraud, and why Brown should recuse himself while she complains to the Judicial Council about him.
Anderson earned at least $165,000 over 2005, 2006 and 2007, and declared zero income for the first two years and did not file an income tax return for 2007.
At a sentencing hearing in January, Crown asked for a 4.5-year jail sentence and a fine of $35,000. Anderson was supposed to enter her sentencing submission in court March 5, but instead tried to derail the proceedings and re-argue the case she lost last year.
To start with, Anderson asked that Brown recuse himself and have the case transferred to a clan grandmother of the Métis nation. He denied the request, and even pointed out the woman in question is herself in a conflict with the Canada Revenue Agency.
Then things got really odd.
Anderson repeated her ongoing claim that the court documents that spell her last name all in upper case constituted “false documents” and made the entire case against her a “fraud.” She insists the use of all capitals is a “gloss,” something used to write the symbols down expressed by someone using American Sign Language.
Because there are a mix of upper case and lower case on court documents, Anderson said they are fraudulent.
“I maintain these are two different languages,” she said. “English and French are the two official languages in Canada, not American Sign Language or Latin.”
“I’m of the opinion the case should be set aside,” Anderson said pointing to what she claimed are “false documents.”
“It’s a fraud.”
Anderson also claimed that Crown’s argument that a person cannot “contract out” of paying taxes made no sense because she never contracted in.
“It would be like Walmart dragging me in to shop there,” she said.
Brown politely explained how incorporation works, even beyond private business and with levels of government such as Canada.
Anderson also argued the entire matter was unfair and that she was “impecunious” – essentially, broke.
“I’m the only one in here not being paid,” she said looking around the courtroom.
Brown pointed to how co-operative and conciliatory both Crown and himself had been all along the case, explaining process and simplifying things as best as possible for her to defend herself.
On Friday, as Brown read his sentencing decision that followed Crown’s submission of 54 months in jail and the $35,000 fine, he said she was only slightly less culpable than Porisky.
While it’s hard to nail down exactly how much the collective fraud cost taxpayers, about $11.5 million is the estimate.
As aggravating factors in sentencing, Brown pointed to the real need for specific deterrence as Anderson has not expressed any remorse or admitted her harm by not paying taxes, or the harm to her students by defrauding them, many of whom have also received sentences.
“She pushed this [scheme] in the face of the fact that courts have consistently rejected this,” Brown said.
Anderson’s charisma and intelligence was also addressed by Brown, something hard to square with her steadfast denial of the reality in front of her.
As three sheriffs stood in the courtroom preparing to handcuff her to take her to jail, Anderson still seemed oblivious to her circumstances, asking to further discuss the details of the Crown’s forfeiture application.
“I guess because these men are standing, I’m supposed to be going with them?” she asked before being handcuffed and taken away.
Anderson promised she would begin the appeal process as quickly as possible.
In a statement issued a day after the sentence, the Canada Revenue Agency (CRA) warned Canadians to beware of beware of “tax protesters” who try to convince you that people that income tax is optional.
“Canadian courts have repeatedly and consistently rejected arguments made in these tax protester schemes,” the statement said. “For those involved in tax protester schemes, the CRA will reassess income tax and interest, and charge penalties. In addition, if convicted of tax evasion, the court may fine them up to 200 per cent of the tax evaded and sentence them for up to a five-year jail term. More information on tax protester schemes is available at Canada.ca/tax-alert.”