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Billions at Stake in Canadian Tax Shelter Scam Lawsuit

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Regina, SKSeems everybody from the small-time investor right on up to the office of Canada’s Prime Minister got sucked into a convoluted tax shelter scam that is alleged to have bilked Canadian investors out of billions of dollars.

The courts determined in 2015 that a registered charity and purported tax shelter called Global Learning Gifting Initiative (GLGI) was a full-on fraud.

Investors are now lining up to sue GLGI promoters that led investors to believe this was a combination of a good cause and slam-dunk tax shelter. They are also turning their attention to the lawyers and accountants that benefited from their roles as advisers and administrators of GLGI.

Not only that, the class-action suit also targets the Canada Revenue Agency (CRA) for not alerting people to the fact that GLGI consistently failed to meet the requirements of a legitimate tax shelter under Canadian tax laws.

According to lawyer Anthony Merchant, from the Merchant Law Group, at least 2,700 people have joined in the class-action suit so far, with potentially many more to come.

“Our estimate is that 118,000 families may have been hurt by this and the amount of money involved we believe is close to $6 billion,” says Merchant.

Between 2004 and 2011, GLGI promoters invited potential investors to make a $5,000 cash donation to the charity as well as “contribute” computer courseware and licenses valued at a certain amount.

In 2004, the CRA issued GLGI a tax shelter number. For the next seven years, it processed claims by investors.

In 2004, 2005 and 2006, the lead plaintiff in the class-action suit, Lorne Piett, made a $5,000 cash contribution to the charity as well as $15,026 in a courseware contribution.

In 2007, three years after his initial claim, the CRA reassessed his claim and billed Piett $14,720. The following year he made a similar contribution to GLGI. The CRA rejected his claim again for a similar amount and billed him $25,050. The next year, Piett’s claim for yet another, similar contribution was rejected and the CRA billed him $43,399.

Other members of the class have similar stories and some of the amounts involved are quite large.

As investors, some people were invited to be guests at large “computer literacy” functions and received official letters from the office of the Prime Minister of Canada and other elected officials congratulating GLGI on its efforts to “advance computer literacy.”

“Tens of thousands of people got these kinds of letters,” says Merchant. “The Prime Minister (former Prime Minister Stephen Harper) sent these kinds of letters more frequently than anyone.

“It made donors think they were gifting appropriately,” says Merchant. “But the courts have decided things were handled so badly that it was a sham. Issues of negligence loom large here.”

The class-action suit has yet to be certified and allegations in the class action have not been proven in court.

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