Trial underway for N.S. women accused in $3.6M fraud case

A Cape Breton family accused in a multi-million dollar tax scheme is working their way through a complex criminal trial with no lawyers at their side. 

A Nova Scotia Supreme Court justice will decide the fate of four women best known for operating a now defunct restaurant on Boularderie Island in Cape Breton known as Spaghetti Benders. 

The judge-alone trial got underway June 17 in Nova Scotia Supreme Court in Sydney, N.S. 

Lydia Saker and her daughters Georgette Young, Nadia Saker and Angela MacDonald have pleaded not guilty to 30 charges including fraud.

The women were charged after a nearly three-year investigation by the Canada Revenue Agency.

According to allegations outlined in search warrant records, the women and 10 companies under their control claimed $56 million dollars in sales on products such as cookbooks, salad dressings, frozen dinners and fur coats.

The defendants are accused of a $3.6-million tax fraud related to GST and HST refunds that the agency alleges was a scheme that escalated in size between January 2011 and July 2015. 

The companies were paid refunds totalling $276,000, according to court records, and were denied $3 million after CRA auditors became suspicious. 

Prosecutors have said eight bankers boxes worth of documents containing information about the companies were collected as part of the case.

Objections raised

During a pre-trial hearing, Justice Robin Gogan underscored the importance and value of obtaining some legal advice. 

Young and Saker told the judge they were given some advice early on, but did not retain counsel. 

All of the women are representing themselves in what is scheduled to be a five-week trial.

The women were sent copies of a criminal law handbook, and Gogan pointed out specific sections to help them on matters such as cross-examinations.

Young, who is facing at least 30 charges — the most of all the women — has raised multiple objections throughout the trial.  

In particular, she asked the judge to consider whether invoices submitted by the Crown were hearsay because the auditor who collected them hadn't yet testified. 

"The time to make an objection is at the moment that you may see the document," said Gogan. "This is described in the information I sent to you." 

Young also said she was concerned about whether the Crown's documents, such as invoices and other bills, were authentic.

"This is hearsay, given to hearsay, told hearsay," said Young. "These papers were supposedly given to somebody else. This person who gave this piece of paper is not here to talk about this."

Gogan said she would accept the exhibits conditionally, until such a time when the Crown introduces evidence from its auditing witness who could speak to where the documents came from.

Gogan also overruled all of Young's objections

The Crown has called a number of witnesses from Nova Scotia's business community in an attempt to prove the women made up sales in order to receive a higher tax return.

Ron Marks, who owns G. Abato and Sons Italian Market on Young Street in Halifax along with his wife, testified he did not recognize invoices from the accused for $287,000 worth of balsamic vinegar, $143,000 worth of olive oil and $71,000 worth of cheese wheels.

An invoice listing his company as "Italian Market" also showed $500,000 in sales for 50 pallets of a product that was illegible.

"The only time I've seen it is when you, the Crown, has showed it to me," Marks testified. "I've never purchased 50 pallets of anything in my life."

When asked if she wished to cross-examine Marks, Young offered only a compliment. 

"I've been to your store and it's an absolute delight," she said. "We're so glad that you joined us today."

Johanna Gallipeau of Sweet Pea Boutique in Halifax told the court she never purchased any products from the accused.

Gallipeau said she had no knowledge of invoices made out to her company, including one for the purchase of $7,800 worth of cookbooks from a business known as Juliette and John. 

Lauchie MacLean, president of Glenora Distillers in Mabou, N.S., said he did do some business with Juliette and John for some sauce products to be sold at his company's gift shop. But MacLean denied his business ever placed an order totalling $1,800.

Brenda Legge, a senior staff member of Salty's Restaurant in Halifax, said her company did purchase balsamic vinegar, but would never spend $32,000 on the product.

The business is listed as the purchaser on an invoice made by Kishk Inc., operated by Young and listed to a Widad Lane in Sydney, N.S.

Gogan is now considering an application made by the defendants that questions the searches of their homes.  

The women claim they were never shown search warrants or described what was happening.

MacDonald testified that during the search of her home in Kentville, N.S., a person believed to be a police officer reached for a gun after she tripped and lost her balance.

MacDonald said investigators followed her upstairs to the bathroom.

Young testified she was hit in the face by a door after trying to keep CRA investigators from entering her home in North Sydney, N.S. The court also heard that as the team made their way inside, Young peed her pants. 

At least one woman claimed investigators placed listening devices that resembled a stethoscope up to her wall, while two of the defendants claimed investigators combed through flour and sugar, along with items belonging to their children.  

Jennifer Jones, a senior CRA investigator, was asked if there were any tense moments or commotion while searching MacDonald's home in Kentville. 

She and other CRA investigators told the court they did not recall any moments where someone may have reached for a gun.

"No, I don't recall anything out of the ordinary," Jones said.

The parties will be back in court on Monday for arguments about the searches. The trial itself will continue into July.