MONTREAL - A lot of residents and businesses in the Montreal area got a nasty surprise yesterday when 175 Revenue Quebec agents came calling.
The agency is investigating what it claims is a network of people and companies that used a massive gold-refining scam to rob the Quebec and federal treasuries.
The alleged network is accused of evading more than 150 (m) million dollars in provincial tax on $1.8 billion in sales revenue -- and also cheating Ottawa out of its GST take.
The operation led to the issuing of over 70 search warrants in the cities of Montreal, Westmount, Mont-Royal, Laval, Pointe-Claire, Rosemere, Brossard, Dorval and St-Bernard de-Lacolle.
Revenue Quebec reports that over 100 companies participated in the scam that allegedly saw phoney invoices issued so that fraudulent tax refunds could be collected.
Possible fines include the full amounts evaded plus interest and penalties. In addition, any offender is liable to fines of between 125 percent and 200 percent of the amount evaded as well as a maximum prison sentence of five years.
The conversion of scrap gold to pure gold and its resale is open to a tax refund -- but in this case, authorities say the transactions never happened.
Anyone found guilty could face heavy financial penalties and possibly jail time, but so far there's no word of any arrests.
Kitco refutes allegations
One company under investigation is Kitco Metals Inc.
It issued a statement early today saying it has never participated in any tax fraud, nor has it ever carried out any fictitious transactions.
Kitco said it vigorously contests the allegations and has mandated a law firm to evaluate all available recourses.
Kitco said it is also seeking to have an interim receiver appointed so it can continue operations under the supervision of an accounting firm.
The company says this action was taken to allow for the time required to vigorously contest Revenue Quebec's "unfounded claims."
Kitco Metals Inc., founded in 1977, says it is one of the largest retailers of precious metals in the world, and a specialized supplier of refining services.
With files from Canadian Press
