Court File and Parties

Date: March 6, 2020

Ontario Court of Justice

Between:

Her Majesty the Queen in Right of Ontario as represented by the Ministry of Finance

— and —

1375923 Ontario Inc. o/a Le Jardin Banquet and Conference Centre Inc., aka Le Jardin Special Event Centre Inc., aka Le Jardin Conference and Event Centre Inc., aka 622192 Ontario Ltd. o/a Chateau Le Jardin Conference and Event Venue, aka Chateau Le Jardin Inc., aka Chateau Le Jardin Catering Inc., and Carlo Parentela aka Carmelo Parentela

Before: Justice of the Peace R. S. Shousterman

Sentencing Submissions Heard on: September 11, October 4, November 1 and December 6, 2019

Reasons for Sentence released on: March 6, 2020

Counsel:

• D. Ferland, Counsel for the Ministry of Finance
• C. Argiropoulos and G. Falletta, Counsel for the Defendants

JUSTICE OF THE PEACE SHOUSTERMAN

Introduction

[1] On July 5, 2019 I found the defendants 1375923 Ontario Inc. o/a Le Jardin Banquet and Conference Centre Inc., aka Le Jardin Special Event Centre Inc., aka Le Jardin Conference and Event Centre Inc., aka 622192 Ontario Ltd. o/a Chateau Le Jardin Conference and Event Venue, aka Chateau Le Jardin Inc., aka Chateau Le Jardin Catering Inc. (collectively referred to as "Le Jardin") and Carlo Parentela aka Carmelo Parentela guilty of the following offences:

i. 69 counts each under the Employer Health Tax Act, R.S.O. 1990, c. E.11 ("EHTA") consisting of the following:

• (a) 5 counts of failing to deliver annual returns under s. 32,
• (b) 63 counts of failing to deliver statements and remittances under s. 35, and
• (c) 1 count of wilfully evading tax under s. 31(5);

ii. 62 counts each under the Retail Sales Tax Act, R.S.O. 1990, c. R. 31 ("RSTA") consisting of the following:

• (a) 1 count of wilfully evading tax under s. 32(4)(d),
• (b) 28 counts of making false or deceptive statements in returns under s. 32(4)(a),
• (c) 1 count of failing to remit tax collected under s. 13(2),
• (d) 1 count of vendor failing to collect sales tax under s. 44(2), and
• (e) 31 counts of failing to file returns within the required time period under s. 41(1).

[2] I also found Le Jardin Conference and Event Centre Inc. and Mr. Parentela guilty of the following 2 counts under the RSTA:

• (a) 1 count of operating without a vendor permit under s. 5(7), and
• (b) 1 count of wilfully failing to register as a vendor under s. 32(4)(d).

[3] The amount of tax evaded was in excess of $1,675,000.00.

[4] Sentencing commenced September 11, 2019, with the Crown making her submissions. Both the Crown and the defence had previously provided me with their casebooks. On that date I asked counsel to see if they could agree on the calculations of the fines and to provide me with that information in advance of the next date being October 4, 2019. I received the fine calculations from the Crown on September 30, 2019.

[5] I received the pre-sentence report on October 1, 2019.

[6] On October 4, 2019 the defendants were to give their sentencing submissions.

[7] Instead, I was met with an oral application by Mr. Argiropoulos, counsel for the defendants, in which he sought to be removed as counsel. Mr. Parentela was not in court and did not attend on that date.

[8] Mr. Argiropoulos advised he could no longer represent the defendants as Mr. Parentela had instructed him to engage in conduct that he disagreed with and that as an officer of the court he could not countenance. As there was an obvious breakdown in the solicitor-client relationship, and as I was told that the defendants were in agreement that Mr. Argiropoulous remove himself as their counsel, the motion was granted. Since Mr. Parentela chose to absent himself from court, the time set aside for sentencing was lost as it could have continued once Mr. Argiropoulos had been removed from the record. Sentencing was adjourned to a previously arranged date of November 1, 2019.

[9] On November 1, 2019, new counsel appeared for the defendants. He advised he had just been retained and requested an adjournment. Letters in support of Mr. Parentela which had been provided to the court on October 4, 2019 were formally filed as was Mr. Easter's correspondence dated September 6, 2019. The defendants agreed to waive their rights under s. 11(b) of the Charter until March 6, 2020.

[10] On December 6, 2019 the defendants gave their sentencing submissions. Mr. Parentela testified. The crown gave her reply and I reserved my decision on sentence until March 6, 2020.

The Evidence of Nicole Burley

[11] Ms. Burley is a senior forensic accounting investigator with the Ministry of Finance. She investigates allegations of tax evasion. She was the lead investigator on this matter.

[12] At paragraph 425 of my trial decision I stated as follows:

425 I found all of the witnesses to be polite and engaged. I found all of the witnesses did their best to answer the questions asked of them. Although at times I found Mr. Joslin to be overtly partisan thereby bringing into question his ability to act as an expert, nonetheless I do not find that any witness was less than candid with the Court. Each witness made a concerted effort to answer questions helpfully and truthfully. Each witness admitted what he/she did not know. Each witness acknowledged difficulties in their testimony where difficulties existed.

[13] Specifically dealing with Ms. Burley's evidence at trial, I stated at paragraph 438:

438 Ms. Burley's evidence was straight forward. It was detailed and somewhat clinical as she described how she had reviewed every document seized and how she had put together similar documents and constructed charts listing each document. She described how she had correlated each document as against each chart where possible. She described how she ordered each document in terms of its importance and where there were conflicting documents which one she relied upon in coming to her conclusion(s). She detailed the methodology she utilized in calculating taxes owing where invoices showed zero tax collected and compared them to other business records so as to corroborate her findings.

[14] Ms. Burley testified that in advance of the sentencing hearing she conducted searches of the defendants in which she discovered the following:

i. there were numerous related companies operating at 8440 Highway 27, Woodbridge or at 125-5 Marine Parade Drive, Etobicoke. The former is the address for Le Jardin and the latter Mr. Parentela's home address;

ii. Mr. Parentela was listed as the sole officer and director of those companies; and

iii. throughout the investigation, the court proceedings and the trial, Le Jardin continued to file false EHTA returns.

I will deal with each matter, below.

The Corporations

(a) 622192 Ontario Ltd.

[15] 622192 Ontario Ltd. was incorporated April 25, 1985. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[16] On December 5, 2016 it registered the business name Chateau Le Jardin Conference and Event Venue. This was a new registration for the business name as the initial registration of the business name took place May 31, 2011 and ceased after five years.

[17] Mr. Parentela is the sole officer and director of the corporation.

(b) Parentela Holdings Ltd./ 27 Developments Inc.

[18] Parentela Holdings Ltd. was incorporated July 17, 1998. It changed its name to 27 Developments Inc. on September 14, 2018. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[19] Parentela Holdings Ltd. was the owner of the property located at 8440 Highway 27, Woodbridge. It sold the property for notional consideration of $2.00 to 27 Developments Inc. on September 17, 2018.

[20] Mr. Parentela has been the sole officer and director of the corporation since December 22, 2009; prior to that his parents Giuseppe and Teresa Parentela were the officers and directors from July 17, 1998 – December 22, 2009 and Mr. Parentela was the treasurer. Mr. Parentela remained treasurer after assuming the roles of sole officer and director on December 22, 2009.

[21] On October 31, 2016 Mr. Parentela relinquished his positions as officer and director. Aurora Akash became an officer and director of the corporation on October 31, 2016 until December 20, 2016 when Mr. Parentela resumed those positions.

[22] Karl Nodel became an officer of the corporation on June 16, 2017.

(c) 1375923 Ontario Inc.

[23] 1375923 Ontario Inc. was incorporated September 17, 1999. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[24] 1375923 Ontario Inc. operated under the registered name Le Jardin Banquet and Conference Centre Inc. until December 16, 2004 when it changed its name to Le Jardin Special Event Centre Inc. On July 22, 2010 the corporation changed its name to 1375923 Ontario Inc.

[25] Mr. Parentela was the sole officer and director of the corporation, its successor company and that company's successor (1375923 Ontario Inc.) until September 17, 2010 when Orlando Catala was appointed officer and director. Mr. Parentela was appointed general manager July 13, 2011.

(d) Apres Noir Holdings Inc./Parentela International Inc.

[26] Apres Noir Holdings Inc. was incorporated May 3, 2018. It changed its name to Parentela International Inc. on July 17, 2018. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[27] Mr. Parentela is the sole officer and director of the corporation.

(e) Apres Noir Inc.

[28] Apres Noir Inc. was incorporated January 17, 2018. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[29] Mr. Parentela is the sole officer and director of the corporation.

(f) Hotel V Inc./ Hotel Vie Inc.

[30] Hotel V Inc. was incorporated July 19, 2018. It changed its name to Hotel Vie Inc. on June 6, 2019. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[31] Mr. Parentela is the sole officer and director of the corporation.

(g) Chateau Le Jardin Event Venue Inc.

[32] Chateau Le Jardin Event Venue Inc. was incorporated December 7, 2016. It is an active corporation. The address registered to the corporation is 125-5 Marine Parade Drive, Etobicoke. This is Mr. Parentela's residence.

[33] Mr. Parentela is the sole officer and director of the corporation.

(h) Long Valley Hospitality Inc.

[34] Long Valley Hospitality Inc. was incorporated May 12, 2017. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[35] On August 3, 2018 the business names of Yo Amo Tacos Bar 'N Grill and Chateau Le Jardin Hospitality were registered to the corporation.

[36] Mr. Parentela is the sole officer and director of the corporation.

(i) Soverato Food Sales Inc./Yo Amo Tacos Inc.

[37] Soverato Food Sales Inc. was incorporated May 16, 2011. The corporation changed its name to Yo Amo Tacos Inc. on June 19, 2012. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[38] On July 18, 2017 the business name of Yo Amo Tacos was registered to the corporation.

[39] Mr. Parentela is the sole officer and director of the corporation.

(j) Chateau Le Jardin Inc./Chateau Le Jardin Catering Inc./2266089 Ontario Inc.

[40] Chateau Le Jardin Inc. was incorporated December 3, 2010. On June 28, 2011 the corporation changed its name to Chateau Le Jardin Catering Inc. On July 31, 2015 the corporation changed its name to 2266089 Ontario Inc. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[41] Mr. Parentela is the sole officer and director of the corporation.

(k) Le Jardin Conference and Event Centre Inc./2160394 Ontario Inc.

[42] Le Jardin Conference and Event Centre Inc. was incorporated January 15, 2008. The corporation changed its name to 2160394 Ontario Inc. on July 31, 2015. It is an active corporation. Its business address is 8440 Highway 27, Woodbridge. This is the address of Le Jardin.

[43] Mr. Parentela is the sole officer and director of the corporation.

The Business Searches

[44] Ms. Burley testified she also conducted searches of the ONBIS system. She described this system as recording business names of companies.

[45] Ms. Burley testified she discovered almost twenty active business names associated to Mr. Parentela as well as eleven active corporations associated to him.

The Websites

[46] Ms. Burley testified she conducted internet searches on Parentela International Inc., Apres Noir Inc. and Hotel Vie. All three entities had websites.

[47] Ms. Burley googled the name Parentela International Inc. She found an article by Mr. Parentela in which he listed some of the the numerous companies and businesses in which he had an interest: Chateau Le Jardin Event Venue, Hunter's Glen Golf Club Food and Beverage Division, Iceland Sports Bar, Yo Amos Tacos Bar 'n Grill, The Capitol Event Theatre, Toronto's Bridal Show, and the Last Bride Standing television show. The article stated that Parentela International Inc. was working with the Marriott to build and develop condominium type office suites, a hotel, spa, and private member's wine club to be known as Hotel Vie and to be situated "alongside the existing Chateau Le Jardin Event Venue". Food and beverages for the new venue were to be operated by yet another related company, Long Valley Hospitality.

[48] Of some note is that although the Parentela International Inc. website describes 27 Developments Inc. as a property management and land development company involved in the development of the Hotel Vie, as well as two assisted living developments in Woodbridge, an article written by Mira Miller indicated that "Parentela International Inc. is the property management and land development company behind the hotel".

[49] Chateau Le Jardin is described on the website as a conference and event venue catering to over 3,000 persons per week.

[50] Après Noir is described as a monthly supper club.

[51] Ms. Burley googled the name Apres Noir Inc. and discovered its website. Numerous published articles described the membership structure for persons wishing to join the supper club (Après Noir) with the most current membership fees ranging from $14,500.00 per person at the low end to $29,500.00 per person at the top end.

[52] In an article published in the Toronto Star on May 13, 2018, Mr. Parentela stated he had personally borrowed $4,000,000.00 to hire Drake to perform at the supper club.

[53] Ms. Burley testified she also searched Hotel Vie. Excerpts from its investment sales advertisement are set out in Tab 4 of Exhibit 1 of the Crown's Sentencing Book Volume II. Of interest is the fact that Chateau Le Jardin Conference and Event Venue is depicted as a Long Valley Hospitality Inc. company. This is not consistent with the information in the corporate search.

The Income Tax Information

[54] Ms. Burley testified she requested Mr. Parentela's T1 and T4 information for the 2013 – 2018 tax years. The information disclosed the following:

i. in 2013 Mr. Parentela's T4 disclosed employment income of $87,040.00. The employer was Chateau Le Jardin Catering Inc. with an address of 8440 Highway 27, Woodbridge. The corporation's business number was 835438805RP0001;

ii. in 2014 Mr. Parentela received two T4s. The first T4 does not have an employer name however the business number was that of Chateau Le Jardin Catering Inc. being 835438805RP001. This first T4 disclosed employment income of $70,750.00. The second T4 was from 622192 Ontario Ltd. with an address of 8440 Highway 27. It disclosed employment income of $30,000.00. The corporation's business number was 106460314RP001;

iii. in 2015 Mr. Parentela's T4 disclosed employment income of $72,000.00. The employer was 622192 Ontario Ltd. with the same address in Woodbridge and the same business number as (ii) above;

iv. in 2016 Mr. Parentela's T4 disclosed employment income of $104,000.00. The employer was 622192 Ontario Ltd. with the same address in Woodbridge and the same business number as (ii) and (iii) above;

v. in 2017 Mr. Parentela's T4 disclosed employment income of $104,000.00. The name of the employer is not shown however the business number was that of 622192 Ontario Ltd. being 106460314RP001; and

vi. in 2018 Mr. Parentela's T4 disclosed employment income of $88,000.00. The name of the employer is not shown however the business number was that of 622192 Ontario Ltd. being 106460314RP001.

The MPAC Searches

[55] Ms. Burley conducted MPAC searches on Mr. Parentela's residence at 125-5 Marine Parade Drive and on 8440 Highway 27, Woodbridge.

[56] The results of the MPAC searches indicated the following:

i. the residence at 125-5 Marine Drive is owned by Mr. Parentela. Its 2016 assessed value was $926,000.00; and

ii. the 2016 assessed value of 8440 Highway 27, Woodbridge was $15,558,000.00. Parentela Holdings Ltd. transferred the property to 27 Developments Inc. on September 17, 2018 for nominal consideration of $2.00.

The MTO Searches

[57] Ms. Burley searched Ministry of Transportation records and learned the following:

i. a 2017 Tesla motor vehicle was registered to Long Valley Hospitality Inc. o/a Le Jardin Conference and Event Venue. The purchase price of the motor vehicle was $189,153.85. Mr. Parentela applied for the electric vehicle incentive program rebate although the $14,000.00 rebate cheque was made payable to the corporation. The vehicle documentation noted that the purchase was for personal use; and

ii. a 2013 Bentley motor vehicle was registered to Apres Noir Inc.

The Corporate T4 Summaries

[58] Ms. Burley testified she compared the EHT remunerations made by 622192 Ontario Ltd., Chateau Le Jardin Catering Inc. and Yo Amo Tacos Inc. to the T4 summaries filed with the Canada Revenue Agency ("CRA") for the time post charge period. As Ms. Burley indicated, the purpose of this was to ascertain whether Mr. Parentela was continuing to file incorrect EHT returns post 2012 or, if in fact, the information remitted to the federal and provincial governments was the same. It was not.

[59] Ms. Burley prepared a number of charts which are set out in Tab 7 of the Crown's Sentencing Book Volume II. In a nutshell the charts indicate the year, the remuneration disclosed on the T4 summaries provided to the CRA, the remuneration reported to the Ministry of Finance, the reported difference and the number of employees who received T4 slips. On the basis of the material she received from the Ministry and the CRA, Ms. Burley concluded as follows:

i. with respect to 622192 Ontario Ltd. for the years 2014 – 2018 there was a discrepancy of $433,547.00 between the amounts shown on employees' T4 slips and recalculated by the CRA compared to the remuneration reported to the Ministry of Finance;

ii. with respect to Chateau Le Jardin Catering Inc. (2266089 Ontario Inc.) there was a discrepancy of $35,493.00 between the amounts shown on employees' T4 slips and recalculated by the CRA compared to the remuneration reported to the Ministry of Finance; and

iii. neither 622192 Ontario Ltd. nor Chateau Le Jardin Catering Inc. reported and remitted EHT to the Ministry in 2013. Chateau Le Jardin Catering Inc. did, however, produce 49 T4 slips that year for a total remuneration calculated by the CRA of $1,136,138.00.

[60] Based on her review of the information received from the CRA and the Ministry of Finance, Ms. Burley also concluded that 622192 Ontario Ltd. would have been filing returns and remittances between 2013 – 2018. Between 2014 – 2017 the number of T4s produced by both 622192 Ontario Ltd. and Chateau Le Jardin Catering Inc. was consistent with the under reporting of employees seen during the trial. She further concluded that the disclosure of 118 employees for 622192 Ontario Inc. in 2018 was a more accurate portrayal of the number of employees required for the banquet hall.

[61] The cheques written to the Ministry of Finance for payment of EHT post charge period were written on two different bank accounts, one for an account in the name of Chateau Le Jardin Event Venue Inc. and the other in the name of 622192 Ontario Ltd. Mr. Parentela signed the cheques.

[62] Ms. Burley testified that 622192 Ontario Ltd. is considered to be the employer. She testified that as of September 11, 2019 (the date she testified) the last instalment made was July 2019.

[63] Ms. Burley testified that 622192 Ontario Ltd. no longer holds the liquor licence. On February 15, 2019 the liquor licence was transferred to Long Valley Hospitality Inc.

The Evidence of Carlo Parentela aka Carmelo Parentela

[64] Mr. Parentela testified that he is a caterer. On cross-examination he was asked to review the statement on page 4 of the Pre-Sentence Report ("PSR") in which he described his occupation as the CEO of a catering company. He was asked why he did not discuss any of his numerous corporate and business interests including the new venture with the Marriott with the probation officer. Mr. Parentela simply indicated he had not done so.

[65] He testified that three of his four adult children as well as his sister Rosemary work or worked for Le Jardin and/or one of its associated or successor companies and/or businesses. He testified that without him the business would fail. He claimed the business has lost money every year.

[66] Mr. Parentela testified the land Le Jardin is located on is worth twenty nine million dollars. He said the land was subject to a mortgage.

[67] Mr. Parentela testified that it was his fault for not paying attention to what was going on at Le Jardin. That notwithstanding, he:

i. denied receiving notices to pay from the Ministry,

ii. denied receiving notices of assessment from the Ministry,

iii. denied receiving telephone messages from representatives of the Ministry requesting to meet with him, and

iv. denied telling Ms. Burley there were no business records at Le Jardin's premises when Ms. Burley and her team executed the search warrant upon the Le Jardin's premises.

[68] Mr. Parentela testified he paid Orlando Catala $5,000.00 per month and it was his expectation that Mr. Catala and Ms. Vanin would deal with the Ministry. He claimed he had no knowledge of EHT not being remitted post 2006.

[69] Mr. Parentela said he tried to ensure cheques were sent to the Ministry for tax remittances however he denied the signature on the cheques was his. He later admitted signing cheques for the tax remittances.

[70] Mr. Parentela testified he has a lien on his condominium. He said he had to pay one million dollars to a creditor, not the Ministry. He admitted he has made no payments to the Ministry.

[71] He testified Mr. Nodel lent money to Parentela International Inc. for the purchase of the Tesla motor vehicle. When asked why he did not use this money to pay down the taxes owed to the Ministry Mr. Parentela replied that he "wanted to look good for the customers". He acknowledged that he had leased two Ferraris during the time of the investigation and the charges; the implication was that he diverted the monies that should have been paid to the Ministry by using them for car payments.

Letters of Reference

[72] Three letters of character reference were provided: one from a neighbour and two from professional friends. All the letters speak highly of Mr. Parentela however none deal with the issues that brought him before the court and/or the possibility of incarceration.

The Pre-Sentence Report

[73] Information was provided about Mr. Parentela through the PSR.

[74] Mr. Parentela is 59 years old. He was born in Italy and immigrated to Canada when he was one year old. He is separated from his spouse. They have four children; the youngest child is still in university. He has siblings.

[75] There is nothing in the PSR that indicates Mr. Parentela had an unusual and/or abusive upbringing. Instead, he appears to have had a loving childhood. He was the "golden child" according to one of his sisters. He did well in school. He is a civil engineer.

[76] According to the author of the PSR, Mr. Parentela presented well. He does not suffer from mental illness. In a discussion about the issues that brought him before the court, Mr. Parentela:

…initially stated that they are "100 percent my fault" and acknowledged that he "wasn't paying attention". However, he also alleged that his former bookkeeper was at fault, stating things such as "[she] was not doing the paperwork", and "I don't know if money was being stolen.": page 4, PSR report.

[77] At pages 5 – 6 of the PSR the author wrote:

Although the subject has verbally accepted responsibility for his actions, he conversely appears to continue to place blame on the actions (or inactions) of his former bookkeeper. It is of concern to this writer that the subject appears to lack insight as to the impact his actions may have had, and reverted to negatively characterizing his bookkeeper by calling her abilities into question. Furthermore, the subject also alluded to the fact that the same bookkeeper may have been involved in other illegal activities.

[78] The recommendation in the PSR is for inter alia community supervision which I take to mean a conditional sentence and/or probation, along with community service, restitution and counselling.

The Legislation

(a) Retail Sales Tax Act

[79] Sections 5(1) and (7) of the RSTA state:

(1) No vendor shall sell any taxable tangible personal property or sell any taxable service or own or operate any place of amusement the price of admission to which is taxable unless the vendor has applied for, and the Minister has issued to the vendor, a permit to transact business in Ontario and the permit is in force at the time of such sale.

(7) Every vendor who fails to comply with this section is guilty of an offence and on conviction is liable to a fine of not less than $100 for each day or part of a day on which the offence occurs or continues.

[80] Section 13 of the RSTA states:

(1) All taxes and all amounts collected as or on account of tax by a vendor under this Act shall, subject to subsections 2(16) and (16.3), be remitted to the Minister at the time or times and in the manner prescribed by the regulations.

(2) Every person who contravenes subsection (1) is guilty of an offence and is liable on conviction to one or both of the following penalties in addition to any penalty otherwise provided by this Act:

1. A fine that is,

   • i. a minimum of $100 or 25 per cent of the amount of tax and amounts collected as, or on account of, tax under this Act that were not remitted, whichever is greater, and
   • ii. a maximum of double the amount of tax and amounts collected as, or on account of, tax under this Act that were not remitted, if the maximum so calculated is greater than $100.

2. Imprisonment for a term of not more than two years.

[81] Section 32(1) of the RSTA states:

Every vendor who fails to deliver a return as required by this Act and the regulations shall pay a penalty of an amount equal to 10 per cent of the tax collectable by the vendor and 5 per cent of the tax payable by the vendor for the period in respect of which the return should have been delivered.

[82] Sections 32(4) and (4.1) of the RSTA state:

(4) Every person is guilty of an offence who has,

(a) made, or participated in, assented to or acquiesced in the making of, false or deceptive statements in a return, certificate, statement or answer, delivered or made as required by or under this Act or the regulations;

(b) to evade payment of a tax imposed by this Act, destroyed, altered, mutilated, secreted or otherwise disposed of the records or books of account of the vendor, purchaser or registrant;

(c) made, or assented to or acquiesced in the making of, false or deceptive entries or omitted, or assented to or acquiesced in the omission, to enter a material particular in records or books of account of a vendor, purchaser or registrant;

(d) wilfully, in any manner, evaded or attempted to evade compliance with this Act or payment of taxes imposed by this Act; or

(e) conspired with any person to commit any offence described in clauses (a) to (d).

(4.1) A person convicted of an offence under subsection (4) is liable to one or both of the following penalties in addition to any penalty otherwise provided by the Act:

1. A fine that is,

   • i. a minimum of $1,000 or 50 per cent of the amount of tax that should have been remitted as collected or payable or that was sought to be evaded, whichever is greater, and
   • ii. a maximum of double the amount of tax that should have been remitted as collected or payable or that was sought to be evaded, if the maximum so calculated is greater than $1,000.

2. Imprisonment for a term of not more than two years.

[83] Section 41(1) of the RSTA states:

Every person who has failed to deliver a return as and when required by this Act or the regulations is guilty of an offence and on conviction is liable to a fine of not less than $50 for each day during which the default continues.

[84] Section 43(1) of the RSTA states:

Where a corporation has failed to collect tax or has collected tax and failed to remit the tax or has failed to pay any interest or penalty relating thereto, the directors of the corporation at the time the corporation was required to collect or remit the taxes or to pay the interest or penalty relating thereto, are jointly and severally liable, together with the corporation to pay such amounts.

[85] Sections 44(1) and (2) of the RSTA state:

(1) Subject to subsection (2), any person who contravenes this Act or the regulations is guilty of an offence and, upon conviction, is liable, where no other penalty is provided for the offence, to a fine of not less than $50 and not more than $5,000.

(2) Every person who fails to collect the tax imposed by this Act is guilty of an offence and is liable on conviction to a fine equal to the amount of the tax that should have been collected as determined under subsection (3) and, in addition, an amount not less than $50 and not more than $2,000.

[86] Section 44(8) of the RSTA states:

Where a fine provided for in this Act is imposed on any person as the result of the person's conviction for the commission of an offence against this Act, a sentence of imprisonment for not more than one year in default of payment of the fine may also be imposed on such person.

(b) Employer Health Tax Act

[87] Sections 31(1), (5) and (7) of the EHTA state:

(1) Every person who makes, participates in, assents to or acquiesces in the making of false or deceptive statements in a return, certificate, statement or answer or other document delivered or made as required by or under this Act or the regulations is guilty of an offence.

(5) Every person who wilfully in any manner evades or attempts to evade compliance with this Act or payment of the tax imposed by this Act is guilty of an offence.

(7) Every person who is guilty of an offence under subsection (1), (2), (3), (4), (5), or (6), in addition to any other penalty, is liable on conviction to,

(a) a fine of not less than the greater of $500 and 25 per cent of the amount of the tax that should have been shown to be payable or that was sought to be evaded and not more than double the amount of the tax which should have been shown to be payable or which was sought to be evaded;

(b) imprisonment for a term of not more than two years; or

(c) both a fine under clause (a) and imprisonment under clause (b).

[88] Section 32 of the EHTA states:

Every person who fails to deliver a return at the time and in the manner required by this Act or the regulations, or who fails to supply information or fails to produce material as required by section 15, is guilty of an offence and is liable on conviction to a fine of not less than $50 and not more than $500 for each day or part of a day on which the offence occurs or continues.

[89] Section 35 of the EHTA states:

Every person who contravenes or fails to comply with any provision of this Act or the regulations is guilty of an offence and on conviction, where no other fine is provided in this Act, is liable for each day or part of a day on which the offence occurs or continues to a fine of not more than $5,000.

The Joint Submission

[90] On September 11, 2019 I asked counsel whether they could agree on the calculations of the fines pertaining to sections 5(7) and 41(1) of the RSTA and sections 32 and 35 of the EHTA.

[91] On December 6, 2019, I was advised by counsel that they had come to an agreement with respect to certain of the fines. Since I had initially raised the issue as to whether an agreement could be reached as to whether the minimum fines should be calculated as at the date of arraignment, the date that the trial commenced or the date of conviction and since the joint position put forward by counsel was one of the time periods I had initially mentioned being the date of arraignment, I accepted the joint submission.

[92] The parties agreed to the following fines being imposed as against Mr. Parentela:

(a) with respect to s. 5(7) of the RSTA, there would be a fine imposed of $89,800.00 for operating without a vendor permit;

(b) with respect to s. 41(1) of the RSTA, there would be a fine imposed of $887,950.00 for the nine RST returns that had not been filed;

(c) with respect to s. 41(1) of the RSTA, there would be a fine imposed of $103,550.00 for the twenty two RST returns that had been filed late;

(d) with respect to s. 32 of the EHTA, there would be a fine imposed of $495,600.00 for the five EHT annual returns that had not been filed; and

(e) with respect to s. 35 of the EHTA, there would be a fine imposed of $6,433,350.00 for the sixty-three EHT monthly instalments that had not been filed.

[93] The defence also joined in the crown's submission that, in light of the corporation's bankruptcy, there be a suspended sentence as against the corporation. Accordingly, I am suspending sentence as against Le Jardin. The remainder of this decision will deal with the sentence that I am imposing on Mr. Parentela.

The Position of the Parties: The Kienapple Principle

[94] The Crown submits that the Kienapple principle is alive for the convictions under ss. 5(7) and 32(4)(d) of the RSTA pertaining to operating without a vendor permit and having failed to register as a vendor. She submits that, as a result, one of the convictions should be stayed.

[95] The rule against multiple convictions forbids more than one conviction for a single wrong: R v Kienapple.

[96] The defendants neither joined in this submission nor made any submissions. As previously indicated, they did, however, join in with the Crown in consenting to the imposition of a fine against Mr. Parentela in the amount of $89,800.00 for the conviction under s. 5(7) of the RSTA. As a result, and at the request of the Crown, the conviction under s. 32(4)(d) on Information 13 0164 is stayed.

The Position of the Parties: Not a Joint Submission

[97] The penalty for failing to remit tax under s. 13(2) of the RSTA is a fine or imprisonment for a term of not more than two years or both.

[98] The penalty for making false or deceptive statements in a return under s. 32(4)(a) of the RSTA is a fine or imprisonment for a term of not more than two years or both.

[99] The penalty for tax evasion under s. 32(4)(d) of the RSTA and s. 31(5) of the EHTA is a fine or imprisonment for a term of not more than two years or both.

[100] The Crown submits incarceration and the imposition of a fine is the appropriate sentence as Mr. Parentela is one of the worst offenders in one of the worst cases of evading remitting RST and EHT. She submits this warrants a sentence of both fine and imprisonment close to the maximum under the legislation. She further submits that in order to address the sentencing objectives of general and specific deterrence as well as denunciation, the court should impose the following sentence:

(a) under the RSTA:

• s. 13(2): incarceration for 20 months and a fine of $1,380,635.39
• s. 32(4)(d) and (a): incarceration for 20 months concurrent
• s. 44: a fine of $344,407.53

(b) under the EHTA:

• s. 31(5): incarceration of 4 months consecutive and a fine of $294,998.65

[101] The Crown seeks a term of probation during which Mr. Parentela would be obligated to pay. The time to pay would run with the probation order.

[102] Finally, in accordance with s. 44(8) of the RSTA, the Crown also seeks an order that Mr. Parentela be sentenced to imprisonment for one year in default of payment of the fines ordered under the RSTA.

[103] Mr. Parentela took no position on the amounts of the fines sought by the Crown under ss. 13(2) and 44 of the RSTA and under s. 31(5) of the EHTA.

[104] He does, however, submit that incarceration is neither appropriate nor warranted. He submits that should he be incarcerated the business will fail. He submits that the appropriate sentence was what was recommended in the PSR, namely a conditional sentence and/or probation along with community service, restitution and counselling as directed by the probation officer.

[105] A conditional sentence is not available under the Provincial Offences Act, R.S.O. 1990, c. P. 33, as amended ("POA"). Restitution is not available under the RSTA or EHTA. In this case I am limited to the following penalties: the imposition of a fine and/or a term of incarceration or both and/or probation. I will consider the recommendations of the author of the PSR in light of the available legal sentences.

[106] The Crown submits the essence of tax evasion is deceit. She submits this is apparent from the language used to describe the offence of tax evasion as being the illegal non-payment or under payment of tax.

[107] She submits this is analogous to the Criminal Code offence of fraud which uses the same or similar language and therefore tax evasion should be treated as fraudulent conduct.

[108] Mr. Parentela submits this is not a case under the Income Tax Act. He submits he was not charged with fraud, that the offences are not fraud related and furthermore that there was no direct evidence of fraud.

[109] Black's Law Dictionary, 11th Ed., Thomson Reuters: 2019, contains several relevant definitions, as follows:

Civil fraud. (18c) 1. FRAUD (3). 2. Tax. An intentional -- but not willful -- evasion of taxes. * The distinction between an intentional (i.e. civil) and willful (i.e. criminal) fraud is not always clear, but civil fraud carries only a monetary, noncriminal penalty. Cf. criminal fraud, TAX EVASION.

Criminal fraud. (18c) Fraud that is illegal by statute and may subject an offender to criminal penalties such as fines and imprisonment. * An example is the willful evasion of taxes accomplished by filing a fraudulent tax return. Cf. civil fraud; larceny by trick under LARCENY.

Tax fraud. See TAX EVASION.

Tax evasion. (1922) The willful attempt to defeat or circumvent the tax law in order to illegally reduce one tax's tax liability. * Tax evasion is punishable by both civil and criminal penalties. – Also termed tax fraud. Cf. TAX AVOIDANCE.

[110] The Oxford Canadian Dictionary, 2nd. Ed., Oxford University Press Canada, Toronto: 2006, also offers the following definitions:

Fraud n. 1. the action or an instance of deceiving someone in order to make money or obtain an advantage illegally. 2. a person or thing that is not what it is claimed to be. 3. a dishonest trick.

Tax evasion n. the illegal nonpayment or underpayment of income tax. Tax evader n.

[111] Section 380 of the Criminal Code states:

(1) Every one who, by deceit, falsehood or other fraudulent means, whether or not it is a false pretence within the meaning of this Act, defrauds the public or any person, whether ascertained or not, of any property, money or valuable security or any service,

(a) is guilty of an indictable offence and liable to a term of imprisonment not exceeding fourteen years, where the subject-matter of the offence is a testamentary instrument or the value of the subject-matter of the offence exceeds five thousand dollars; or

(b) is guilty

• (i) of an indictable offence and liable to imprisonment for a term not exceeding two years, or
• (ii) of an offence punishable on summary conviction

where the value of the subject-matter of the offence does not exceed five thousand dollars.

(1.1) When a person is prosecuted on indictment and convicted of one or more offences referred to in subsection (1), the court that imposes the sentence shall impose a minimum punishment of imprisonment for a term of two years if the total value of the subject-matter of the offence exceeds one million dollars.

[112] Section 380.1 of the Criminal Code lists additional aggravating circumstances for fraud:

(1) Without limiting the generality of section 718.2, where a court imposes a sentence for an offence referred to in section 380, 382, 382.1 or 400, it shall consider the following as aggravating circumstances:

(a) the magnitude, complexity, duration or degree of planning of the fraud committed was significant;

(b) the offence adversely affected, or had the potential to adversely affect, the stability of the Canadian economy or financial system or any financial market in Canada or investor confidence in such a financial market;

(c) the offence involved a large number of victims;

(c.1) the offence had a significant impact on the victims given their personal circumstances including their age, health and financial situation;

(d) in committing the offence, the offender took advantage of the high regard in which the offender was held in the community;

(e) the offender did not comply with a licensing requirement, or professional standard, that is normally applicable to the activity or conduct that forms the subject-matter of the offence; and

(f) the offender concealed or destroyed records related to the fraud or to the disbursement of the proceeds of the fraud.

(1.1) Without limiting the generality of section 718.2, when a court imposes a sentence for an offence referred to in section 382, 382.1 or 400, it shall also consider as an aggravating circumstance the fact that the value of the fraud committed exceeded one million dollars.

(2) When a court imposes a sentence for an offence referred to in section 380, 382, 382.1 or 400, it shall not consider as mitigating circumstances the offender's employment, employments skills or status or reputation in the community if those circumstances were relevant to, contributed to, or were used in the commission of the offence.

(3) The court shall cause to be stated in the record the aggravating and mitigating circumstances it took into account when determining the sentence.

[113] I agree with the Crown. While this is not a case of tax evasion under the ITA and while the defendants were not charged with fraud under the Criminal Code, nonetheless tax evasion is a type of fraudulent conduct. Both tax evasion and fraud involve depriving a victim, in this case the provincial government, of money. I also agree with the Crown's submission that whether provincial or federal tax evasion, it is still tax evasion. It is still the same type of illegal behaviour.

[114] In R v Witen, 2012 ONSC 4151, Hambly J. quoted from paragraph 4 of Feldman J.'s decision in R v Griffin, [1992] O.J. No. 4005 as follows:

Income tax evasion is a fraud not only on the government but on all members of our society who must each bear their fair burden and who depend on their fellow taxpayers to do so. Tax evasion is not a sport; it is a crime: para. 18

[115] The defendants submit there is no direct evidence of fraud. They submit there is and was no scheme to defraud. I disagree. As I stated at paragraph 536 of my trial decision:

536 On the basis of the evidence I heard, I find that Mr. Parentela engaged in a course of conduct that was deceptive. The deceptive conducted resulted in a course of ongoing tax evasion intended to minimize the amount of tax paid to the Ministry. I say this for the following reasons:

i. Mr. Parentela operated the business under two names at the same time for a period of time;

ii. Mr. Parentela did not obtain a vendor permit for Le Jardin Conference and Event Centre Inc.;

iii. Mr. Parentela did not notify the Ministry of Finance of the change in name of the corporation;

iv. Mr. Parentela did not cooperate with the auditors. Specifically he failed to produce the books and records requested for the purpose of the audit;

v. Mr. Parentela did not enable Ms. Vanin, Mr. Catala or Mr. Walsh to access the correct sales numbers from Sales Logix;

vi. Mr. Parentela did not enable Ms. Vanin or Mr. Walsh to access information pertaining to cash sales;

vii. Mr. Parentela lied to Ms. Burley when he told her there were no records pertaining to 1375923 Ontario Inc. on the premises of Le Jardin as some were found on site; and

viii. Mr. Parentela instituted a payroll system whereby only a portion of Le Jardin employees received T4 slips.

Sentencing Principles

[116] The POA does not contain sentencing guidelines. That being said the caselaw is clear, namely, that the sentencing guidelines set out in ss. 718, 718.1 and 718.2 of the Criminal Code, R.S.C. 1985, c. C-46, as amended (the "Criminal Code") apply to regulatory offences: R v Kirk (c.o.b. B.A. Holdings), 2005 ONCJ 352, [2005] O.J. No. 3316 at para. 16.

[117] The purpose of sentencing is described in s. 718 of the Criminal Code as follows:

718 The fundamental purpose of sentencing is to contribute, along with crime prevention initiatives, to respect for the law and the maintenance of a just, peaceful and safe society by imposing just sanctions that have one or more of the following objectives:

(a) to denounce unlawful conduct and the harm done to victims or to the community that is caused by unlawful conduct;

(b) to deter the offender and other persons from committing offences;

(c) to separate offenders from society, where necessary;

(d) to assist in rehabilitating offenders;

(e) to provide reparation for harm done to victims or to the community; and

(f) to promote a sense of responsibility in offenders, and acknowledgement of the harm done to victims and to the community.

[118] The principles that the court is to apply in attempting to carry out the purpose and objectives of sentencing are listed in ss. 718.1 and 718.2, below:

718.1 A sentence must be proportionate to the gravity of the offence and the degree of responsibility of the offender.

718.2 A court that imposes a sentence shall also take into consideration the following principles:

(a) a sentence should be increased or reduced to account for any relevant aggravating or mitigating circumstances relating to the offence or the offender, and, without limiting the generality of the foregoing,

• (i) evidence that the offence was motivated by bias, prejudice or hate based on race, national or ethnic origin, language, colour, religion, sex, age, mental or physical disability, sexual orientation, or gender orientation or expression, or on any other similar factor,
• (ii) evidence that the offender, in committing the offence, abused the offender's spouse or common-law partner,
• (ii.1) evidence that the offender, in committing the offence, abused a person under the age of eighteen years,
• (iii) evidence that the offender, in committing the offence, abused a position of trust or authority in relation to the victim,
• (iii.1) evidence that the offence had a significant impact on the victim, considering their age and other personal circumstances, including their health and financial situation,
• (iv) evidence that the offence was committed for the benefit of, at the direction of or in association with a criminal organization,
• (v) evidence that the offence was a terrorism offence; or
• (vi) evidence that the offence was committed while the offender was subject to a conditional sentence order made under section 742.1 or released on parole, statutory release or unescorted temporary absence under the Corrections and Conditional Release Act;

shall be deemed to be aggravating circumstances;

(b) a sentence should be similar to sentences imposed on similar offenders for similar offences committed in similar circumstances;

(c) where consecutive sentences are imposed, the combined sentence should not be unduly long or harsh;

(d) an offender should not be deprived of liberty, if less restrictive sanctions may be appropriate in the circumstances; and

(e) all available sanctions other than imprisonment, that are reasonable in the circumstances and consistent with the harm done to victims or to the community should be considered for all offenders, with particular attention to the circumstances of Aboriginal offenders.

[119] In its simplest form, the objectives of sentencing are denunciation, general and specific deterrence, separation of offenders, rehabilitation, making reparations (generally by way of restitution) and the promotion of a sense of responsibility in the offender.

[120] In order to carry out the objectives of sentencing, the court is required to apply the principles set out in ss. 718.1 and 718.2 of the Criminal Code. The proportionality principle set out in s. 718.1 requires the court to give full consideration to the gravity of the offence and the degree of responsibility of the offender. The more serious the crime and its consequences, or the greater the offender's degree of responsibility, the heavier the sentence. Section 718.2 directs the court to have regard to whether there are any aggravating and/or mitigating circumstances and then to have regard to the following:

i. to the principle that like offenders should be treated alike,

ii. to the totality principle,

iii. to the principle of restraint, and

iv. to the principle that incarceration should be seen as a last resort especially for Aboriginal offenders.

Aggravating Factors

[121] The aggravating factors that suggest a term of incarceration is appropriate are the seriousness of the offence, Mr. Parentela's moral blameworthiness, the need for general deterrence and prior sentences in cases of large scale tax evasion.

[122] Tax evasion is a serious crime. In R v Knox Contracting, [1990] 2 S.C.R. 338 (S.C.C.), Cory J. held that the offence of income tax evasion is criminal in nature:

17 It is fitting and appropriate that the s. 239 offences be considered as criminal law. The Income Tax Act is a major source of funds for the federal government. Its provisions are applicable to most adult Canadians. The vast majority pay their income tax by way of payroll deduction with little or no opportunity for evasion or misstatement. Those who do evade the payment of income tax not only cheat the State of what is owing to it, but inevitably increase the burden placed upon the honest taxpayers. It is ironic that those who evade payment of taxes think nothing of availing themselves of the innumerable services which the State provides by means of taxes collected from others.

18 The entire system of levying and collecting income tax is dependent upon the integrity of the taxpayer in reporting and assessing income. If the system is to work, the returns must be honestly completed. All taxpayers have the right to know that it is a criminal violation to commit any of the offences described in s. 239. The Act imposes a public duty. A breach of that fundamentally important public duty should constitute a criminal offence.

[123] It does not matter that this offence has been prosecuted under provincial legislation as the victim here is the Province of Ontario as opposed to the Government of Canada.

[124] Mr. Parentela submits this is a victimless crime as the victim is the government. The Crown submits that had taxes been remitted, they could have gone towards infrastructure, schools and health care, all of which are in the purview of the provincial purse. I agree. This is not a victimless crime. All residents of Ontario suffer when money that should be paid to the government is not paid. Taxes are raised to cover shortfalls. Wages are not increased. Services are decreased.

[125] In discussing the issue of breach of trust, Quon J.P. stated at paragraphs 128 and 129 in R v Hayward, 2013 ONCJ 668:

[128] In addition, Hayward had breached the trust that the Ontario government puts on vendors to collect retail sales tax on goods or services the vendor provides and then to report and remit the proper amount of retail sales tax collected to the Ontario government.

[129] Moreover, there are many honest vendors who do collect retail sales tax from its customers and then remit the proper amount of taxes to the Ontario government. However, those honest vendors would not be competing on an even playing field with vendors that keep the collected taxes or who fail to remit the proper amount of taxes collected to the Ontario government. Therefore, when Hayward had wilfully failed to report and remit the proper amount of retail sales taxes that had been collected or that should have been collected by the corporate defendant to the Ontario government, then the burden for providing public services would be increased on those who honestly collect, report, and remit the proper amount of taxes to the Ontario government. It also puts the honest vendors at a disadvantage in terms of cash flow and in carrying more of the burden to pay for public services.

[126] In Hayward the defendants failed to remit the amount of $240,866.42 in RST.

[127] In this case the defendants failed to remit in excess of $1,675,000.00 dollars in RST and EHT. Like Ms. Hayward, Mr. Parentela personally profited from the failure to remit the taxes that were due and owing to the province. This amounts to a breach of trust.

[128] I have previously found that Mr. Parentela was not a dupe. He was not taken advantage of by his employees. In fact, I found that Mr. Parentela was the author of the scheme to evade tax by withholding relevant and pertinent information from those persons whom he had tasked with preparing the tax remittances. I found that Mr. Parentela was well aware of the obligations to collect, file and remit both RST and EHT and he chose not to do so. I found that Mr. Parentela deliberately chose to characterize Le Jardin's employees as both employees and casual contract workers so as to minimize the amount of EHT owing to the Province. Mr. Parentela was the person who received cash. While he may have utilized the cash to pay on-going expenses for the business and thus not have personally benefitted from same, nonetheless there was no evidence suggesting that this was in fact correct.

[129] At the end of the day Mr. Parentela engaged in a scheme to evade the payment of tax. His degree of responsibility for the offences, indeed his degree of moral blameworthiness, is very high.

[130] As previously indicated, the RST and EHT evaded was for a very substantial amount.

[131] Ms. Burley testified that no payments were received for the EHT owing from 2007 – 2012. She testified there were no EHT filings between 2007 – 2012.

[132] Ms. Burley also testified that no payments were received for RST owing since the last series of cheques were issued between 2011 and 2012.

[133] Mr. Parentela's actions took place over a lengthy period of time involving repeated acts of evasion. Ms. Burley testified that with respect to EHT the evasion continued throughout the 2017 tax year as it was only in 2018 that the corporation filed what can only be viewed as being a more honest return regarding the number of employees. What this means is that the evasion continued throughout the investigation, the charge period, the court proceedings and much of the trial. This is shocking.

[134] Ms. Burley also testified that in or about July 2019 the Ministry requested a review of the EHT monthly instalments for 622192 Ontario Ltd. for 2018. The Ministry asked the company to complete a review within thirty days. The Ministry requested Mr. Parentela provide authorization for them to speak with an accountant, Mr. Hussain. Yet again no response was ever received.

[135] There were thousands of fraudulent transactions involving Le Jardin's casual and full time employees as well as people and companies who paid to hold events at Le Jardin. These transactions were deliberate and calculated. They were deceptive. They were intended to minimize Le Jardin's tax obligations.

[136] Mr. Parentela lied to Ms. Vanin, to Mr. Catala and to Mr. Walsh. He was well aware of Le Jardin's obligation to keep records and file RST and EHT returns. He signed the paycheques. He provided cash to pay Le Jardin's hourly employees. He signed the cheques for the incorrect returns that were filed. Even post offence he knew that the returns filed with the Ministry of Finance were inconsistent with those filed with the CRA and he continued to file incorrect returns. As I indicated in my trial decision, there is and was significant planning and deceit involved in this case.

[137] I can only conclude that greed was the motivation. Mr. Parentela testified that he chose to lease two Ferraris during the charge period and paid for those leases; the implication being that he favoured the leases over payment of taxes. He testified that post charge he asked Karl Nodel to loan one of the numerous corporations money which he then took and applied to purchase a Tesla. The purchase of the Tesla was done through another related company, not the one that Mr. Nodel had ostensibly loaned monies to. Based on the evidence I heard, I can only conclude that Mr. Parentela did whatever he could to put forward an image of success so that people would hold events at Le Jardin, buy into the lifestyle of Après Noir and invest in Hotel Vie.

[138] R v Maghera, [2016] A.J. No. 77, is a sentencing decision of Alberta Court of Queen's Bench. The offences in question dealt with the receipt of deposit monies by Mr. Maghera aka Mr. Shipra for homes to be built by his company, Modena Homes. The contracts misrepresented Modena Homes' participation in a National Home Warranty Program. Mr. Shipra was sentenced to jail. In dealing with the issue of personal benefit, the Court stated:

35 As for Shipra not offending for personal benefit, I also disagree. This was not altruistic behaviour; he was not giving the deposits to charity. These supported his business interests, for his personal advantage. The funds appear to have been dissipated into either his own pockets or the business which was a mere extension of himself.

[139] The same can be said for Mr. Parentela.

[140] While Mr. Parentela was motivated by greed, as I indicated in my trial decision, I could not find that he utilized the money to solely benefit himself. I heard little evidence regarding his lifestyle. He owns the same condominium in Etobicoke that he owned at the commencement of trial. The business continues to supply him with expensive motor vehicles for his personal use. On the basis of the evidence I heard at trial, I could only conclude that Mr. Parentela re-injected some of the money back into the business.

[141] Mr. Parentela expressed no remorse. He did not accept responsibility for what happened.

[142] The PSR indicates that Mr. Parentela continued to blame others even going so far as to suggest that some of his employees engaged in criminal activities which ostensibly victimized him. Nothing could be further than the truth.

[143] In terms of general deterrence, the caselaw is clear that general deterrence is the most important sentencing principle in major frauds and that when general deterrence is "particularly pressing" the preferable sanction is incarceration: R v Bogart, [2002] O.J. No. 3039 (Ont. C.A.), at para. 29.

[144] As the Court of Appeal for Ontario held in Ontario (Labour) v New Mex Canada Inc., 2019 ONCA 30 ("New Mex"), the principle of moral blameworthiness is a relevant sentencing consideration for serious regulatory offences. It follows from the application in regulatory offences of the fundamental sentencing principle of proportionality, as set out below:

[64] For its part, the criminal law recognizes a loose continuum of moral blameworthiness according to these categories that can affect the sentence imposed. The underlying notion is that those with guiltier minds tend to deserve or require greater punishment. This same principle applies to regulatory offences.

[145] In this case, a conditional sentence is not an option. It is not provided for in the POA and thus not available. In my view, probation alone would be demonstrably unfit. It would send the wrong message to all residents of Ontario namely that one can fail to remit taxes in excess of $1,675,000.00 dollars as well as mischaracterize the nature of someone's employment relationship so that the employer can gain an advantage and not suffer any serious consequences. That is not acceptable.

[146] The same analysis can be applied to the imposition of a fine. This was more than a simple error. This was not an isolated event. The evasion took place over five years.

[147] Mr. Parentela's actions vis-à-vis EHT continued until 2018. While the evidence is clear that EHT started to be remitted while the trial was ongoing nonetheless the inconsistencies between the T4 information provided to the CRA and the EHT remittances provided to the Ministry did not stop. Further, when the Ministry contacted Mr. Parentela in July 2019 to deal with yet another issue he ignored them.

[148] Finally, Mr. Parentela has not made any payment towards the outstanding taxes. Instead, according to Mr. Easter's letter dated September 6, 2019, Mr. Parentela filed a Notice of Intention to file a Proposal under the Bankruptcy and Insolvency Act, R.S.C. 1985, c B-3, on July 31, 2015 and a Division 1 Proposal on August 28, 2015. A creditors meeting was scheduled for September 19, 2019; I did not receive an update as to what happened at that meeting. Suffice it to say, Mr. Parentela is not bankrupt.

[149] No remorse was shown. No acknowledgement of wrong doing was ever admitted. Mr. Parentela has not accepted responsibility for what he has done. In fact, the PSR states that Mr. Parentela continued to blame others and even suggested that those other individuals may have acted in a criminal manner.

[150] I have carefully considered the principle of restraint as described in paragraph 76 of New Mex before imposing a custodial sentence on a first-time offender. I have also considered the context of the circumstances of this case, and the sentencing objectives of general and specific deterrence as well as rehabilitation. In my opinion Mr. Parentela must receive a term of incarceration because the extraordinary facts of this case call out for nothing less. The question is the duration of that term.

Mitigating Factors

[151] Mr. Parentela testified the business does not run and function without him. He submits that if incarcerated the business will cease. He further submits that an intermittent sentence would not be appropriate as the business runs on the weekend and he needs to be present. I did not hear any evidence which suggests Mr. Parentela is required to be on site. I did not hear any evidence which suggests the business would fail if Mr. Parentela was incarcerated. This type of pronouncement is speculative at best.

[152] Mr. Parentela testified Le Jardin and its successor companies are a legacy business which he would like to continue from generation to generation. Mr. Parentela's adult children work and/or have worked in the business in different capacities. His sister Rosemary works in the business. On the basis of his own admission, the legacy is in place.

[153] Mr. Parentela does not have a criminal record nor is there a record of prior provincial offences convictions.

[154] The letters filed in support of Mr. Parentela show someone who has, on occasion, held events at Le Jardin to benefit the community. I did not hear any evidence regarding Mr. Parentela's philanthropic endeavours other than what is set out in the letters of support.

[155] As previously noted, the potential mitigating factor of genuine remorse is missing in this case.

[156] While he appears to be a person of good character there is nothing especially mitigating about Mr. Parentela's personal circumstances to warrant any leniency.

Mr. Parentela's Ability to Pay a Fine

[157] As previously indicated, where there was not a joint submission the Crown seeks imposition of the following fines as against Mr. Parentela:

i. for the offence of failing to remit RST collected under s. 13(2) of the RSTA the amount of $1,380,635.39,

ii. for the offence of failing to collect RST under s. 44(2) of the RSTA the amount of $344,407.53, and

iii. for the offence of tax evasion under s. 31(5) of the EHTA the amount of $294,998.65.

[158] Section 13(2) of the RSTA provides that on conviction the fine to be imposed is a minimum of $100.00 or 25 percent of the amount of tax and amounts collected as, or on account of, tax that was not remitted and a maximum of double the amount of tax if the maximum is greater than $100.00. In my trial decision I found that the amount of RST not remitted was $1,315,118.82.

[159] The amount of $1,380,635.39 was the amount of tax I found to have been evaded.

[160] The fines of $344,407.53 and $294,998.65 set out in (ii) and (iii) above are 100 percent of the amounts I found the defendants guilty of failing to collect in (ii) and evading in (iii). In order to be consistent with these figures I am going to impose a fine of $1,315,118.82. Mr. Parentela took no position on the imposition of the fine.

[161] Section 44(2) of the RSTA provides that on conviction a fine equal to the amount of tax that should have been collected is to be imposed. In my trial decision I found that the amount of sales tax not collected was $344,407.53. The Crown seeks a fine in this amount as well. This amount is 100 percent of the amount of sales tax not collected and is within the range of permissible fines under the section. Mr. Parentela neither objected to nor consented to the imposition of a fine in this amount as he acknowledged this was the amount found at trial.

[162] Section 31(7) of the EHTA provides for a fine of not less than the greater of $500 and 25 percent of the amount of the tax that should have been shown to be payable or that was sought to be evaded and not more than double the amount of the tax which should have been shown to be payable or which was sought to be evaded. In my trial decision I found that the amount of EHTA evaded was $294,998.65. The Crown seeks a fine in this amount as well. This amount is 100 percent of the amount of the tax evaded and is within the range of permissible fines under the section. Mr. Parentela neither consented to nor objected to the imposition of a fine in this amount as he acknowledged this was the amount I had found evaded at trial.

[163] Mr. Parentela has the ability to pay a fine. I say this for the following reasons:

i. he is and has been gainfully employed for numerous years,

ii. he has significant assets including but not limited to:

• (a) real estate,
• (b) corporate investments, some of which are involved in significant business ventures attracting investment of millions of dollars,
• (c) business ventures including but not limited to a bridal show, restaurants and night clubs,

iii. he has the ability to borrow significant amounts of money as can be seen from the loan from Mr. Nodel, and

iv. he has no one whom he is obligated to support other than himself.

[164] The PSR indicates that Mr. Parentela has a mortgage on his personal residence and some credit card debt. He also indicated there is a lien in the amount of $4,500,000.00 dollars; it is unclear whether that lien was registered on title to his residence or is a construction lien relating to Le Jardin and/or its successor companies. Suffice it to say that should Mr. Parentela's proposal under the BIA succeed, his credit card debt will be gone.

[165] I therefore find that, on a balance of probabilities, Mr. Parentela has the ability to pay a fine.

[166] Mr. Parentela did not dispute the fines sought by the Crown.

Disposition

[167] In coming to my conclusion as to disposition, I must have regard to what is a fit sentence having regard to all the principles applicable to sentencing and to the facts of this particular case.

[168] As previously indicated, Mr. Parentela is 59 years old. He is separated. His children are grown, with three out of the four employed on a full-time basis. He has no one whom he is obligated to support other than himself. He does not have a record for the same or similar offences.

[169] Mr. Parentela submits a fine as well as probation is sufficient. I disagree. The imposition of such a sentence would not, in my opinion, be commensurate with the gravity of the offences and with Mr. Parentela's moral blameworthiness.

[170] Income tax evasion is a serious offence. Under the provincial legislation it attracts a maximum sanction of two years in jail. In terms of the amount evaded and the duration of the evasion for which the defendants were found guilty, this matter ranks as one of, if not, the largest scale tax evasion ever committed under the RSTA and EHTA. The charge period was for a period of five years however the significant under-reporting of T4s continued until the 2018 tax year. The amount of tax evaded was in excess of $1,675,000.00 dollars and involved thousands of fraudulent transactions.

[171] I previously found that Mr. Parentela committed a pre-meditated, protracted and extensive fraud in order to evade the payment of tax. I say this for the following reasons:

i. Mr. Parentela knew that he was not providing Ms. Vanin, Mr. Catala or Mr. Walsh with the correct documents for them to prepare tax remittances,

ii. Mr. Parentela knew that Ms. Vanin had stopped working on the EHT returns post 2006,

iii. Mr. Parentela argued with Ms. Vanin and Mr. Walsh about the amount of taxes that needed to be remitted,

iv. Mr. Parentela knew that he was mischaracterizing the nature of his employees' employment so as to minimize EHT,

v. Mr. Parentela was the person who signed the paycheques and who paid other employees with cash that was deposited into a safe room to which only he had access. The amounts of cash deposited into the safe room were never disclosed to Ms. Vanin or Mr. Walsh. When Ms. Vanin questioned the amounts of cash received, she was reprimanded by Mr. Parentela,

vi. Mr. Parentela continuously incorporated new companies and operated new businesses. These new companies and businesses often changed names thereby making it difficult for the Ministry's investigators to discover the extent of the non-payment of tax,

vii. Mr. Parentela was aware of the assessment. He failed to cooperate with the auditors. As a result of his conduct, substantial time and resources were spent investigating Le Jardin,

viii. Mr. Parentela was present at Le Jardin's premises when the search was conducted. He lied to Ms. Burley about business records kept on site at Le Jardin's premises, and

ix. Mr. Parentela attempted to utilize insolvency proceedings to continue operating in the way he had without suffering any consequence.

[172] Mr. Parentela is without remorse. His pre-sentence report indicates he continues to blame others for the situation in which he finds himself. Mr. Parentela had options. Despite the fact that his accountant, Mr. Walsh, and later his expert witness, Mr. Joslin, found that taxes were owing nonetheless he chose not to remit the taxes owing and instead to keep the money for himself and/or to inject it back into Le Jardin. The Crown characterized this as a $1,675,000.00 interest free loan. While this may be somewhat harsh I cannot find this to be incorrect.

[173] Mr. Parentela required the Crown to prove the case beyond a reasonable doubt. He did not agree to anything. There is no doubt that this long trial could have been shortened had there been agreement on the simplest things such as the relationship of the numerous corporations, the number of RST returns that had been filed late, and the number of RST and EHT returns that had not been filed. These simple issues are not and should never have been contentious and they took up days of trial. While Mr. Parentela has a constitutional right to a trial nonetheless there was no agreement on the simplest matters.

[174] The fact that someone requests a trial is not an aggravating factor. Every accused has a right to a trial and the exercise of that constitutional right is not and can never been seen to be an aggravating factor no matter how much time the case consumes. Although a plea of guilty may be taken into account in mitigation of sentence, an increased sentence is not justified because the accused has pleaded not guilty, maintained his innocence and conducted a trial. I do not consider Mr. Parentela's trial conduct to be an aggravating factor; that said, the possible mitigation regarding a plea of guilty is absent here.

[175] Mr. Parentela has the means to pay a fine. That being said, the imposition of a fine and probation for tax evasion in excess of $1,675,000.00 dollars is, in my opinion, woefully inadequate. In other words, the imposition of a fine and probation does not have sufficient denunciatory value.

[176] This is a case where general deterrence is demanded by the nature of the case and by the findings of guilt previously made. I find that the imposition of a fine and incarceration is the least intrusive sentence that complies with the overall principles of sentencing.

[177] I have read all of the cases provided by the Crown and by defence counsel. The cases submitted identify a range of penalty whereby incarceration is the norm.

[178] The defence submits that the cases provided are not on point as they deal with offences committed under the Income Tax Act and/or under the Criminal Code, or they deal with different statutes such as the (now repealed or spent) Business Practices Act, R.S.O. 1990, c. B.18.

[179] I disagree. The Crown provided the Court with a number of cases involving similar fact situations. Both the defence and the Crown provided the Court with a number of cases which set out the governing principles relating to sentencing. The cases provided reiterate that incarceration is the norm in cases of tax evasion or, for example, in unfair business practices, all of which contain elements of fraud. Neither party provided any cases in which probation was given for an offence of this magnitude in similar circumstances nor was I able to find any.

[180] For example, in R v Leo-Mensah, 2010 ONCA 139, Mr. Leo-Mensah pled guilty to one count of fraud and two counts of tax evasion pertaining to his income tax return preparation business. He was sentenced to one day in jail, having received 22 months credit for time served and was ordered to pay a fine of $145,766.00. On appeal, the Court of Appeal found that the sentencing judge had erred in three respects:

i. first, she failed to consider, as an aggravating factor, that the value of the fraud was in excess of one million dollars;

ii. second, she placed considerable emphasis on Mr. Leo-Mensah's childcare obligations despite there being little to no evidence of same; and

iii. third, the sentence fell below the range established by the Ontario Court of Appeal for large scale fraud cases: para. 8 – 11.

[181] In varying the sentence to provide for a further two years incarceration, Gillese J.A. stated, in part, at paragraph 11:

…The amount and duration of the fraud perpetrated by the respondent is significant, amounting to almost $3.28 million over a three-year period and involving hundreds of fraudulent tax returns. In R v Bogart (2002), 61 O.R. (3d) 75 (C.A.) leave to appeal to S.C.C. refused, [2003] 1 S.C.R. vi, [2002] S.C.C.A. 398, this court established that a penitentiary sentence is the norm, not the exception, in cases of large-scale fraud and in which there are no extraordinary mitigating circumstances.

[182] In R v Dyck, 2018 MBCA 33, Mr. Dyck appealed his sentence on two counts of tax evasion under the Income Tax Act and the Excise Tax Act, R.S.C. 1985, C. E-15 ("Excise Tax Act"). Mr. Dyck was found guilty of not remitting $2.2 million dollars in unpaid income tax and $166,367.00 in unremitted GST. Mr. Dyck was sentenced to three years' incarceration concurrent on each count and fined.

[183] The Manitoba Court of Appeal reviewed sentences for tax evasion and for fraud and concluded that a sentence of three years' incarceration was not demonstrably unfit. In coming to this conclusion the Court of Appeal indicated that the magnitude of the amount of money at issue was significantly different from other cases of tax evasion. The Court of Appeal found that Mr. Dyck's behaviour was a fraud and therefore it was open to the lower court to look at the jurisprudence under both tax evasion and fraud in determining the proportionate sentence, para. 28 - 29:

25 The scheme in this case, on its facts, is the same as large-scale major frauds that are charged under section 380(1) of the Criminal Code, those facts being: a sophisticated and planned scheme resulting in over $1,000,000.00 in losses that involved multiple transactions over a lengthy period of time. In the end the 325 contributors who entrusted their funds to the accused lost significant amounts of money and the CRA spent a significant amount of time and resources to investigate this matter and to recover the unpaid taxes and interest from the contributors. The accused played a pivotal role in setting up and running the scheme, which was in operation for three years.

26 The jurisprudence holds that, for such schemes leading to a conviction for fraud, the most important sentencing principle is that of general deterrence. Mitigating factors and even rehabilitation become secondary. The fact is that most major frauds are committed by well-educated people of previously good character. For these offences, absent unusual mitigating circumstances, a penitentiary sentence will be the norm.

[184] R v Wilm, 2017 ONCJ 97 ("Wilm"), is a sentencing decision. Mr. Wilm was convicted at trial of tax evasion. Both crown and defence agreed that a custodial sentence was required however the crown sought incarceration and Mr. Wilm sought a conditional sentence. Kenkel J. sentenced Mr. Wilm to twenty months imprisonment and to pay a fine of 100% of taxes evaded.

[185] At paragraph 12 of his decision, Kenkel J. listed a number of cases where a term of incarceration was imposed in cases of major tax evasion:

12 Cases of major-scale evasion including amounts similar to the $500,000.00 evaded in this case tend to result in custodial sentences ranging from 12 months to 3 years:

• R v Mahmood, 2016 ONCA 75 – Tax evasion over four years resulted in $358,588 income tax evaded and GST evaded of $116,412. He was sentenced to 12 months imprisonment with a fine of 150% of tax evaded. The Crown argued on appeal that a penitentiary sentence was required, but the Court of Appeal found that it was a "close call" but the 12 month sentence was not "manifestly unfit".

• R v Mori, (Unreported) St. Catharines 25 July 2016 Ontario Court of Justice S12-4624 Nadel J. – False statements were made in income tax returns over three years evading tax to a total of $223,313. After conviction at trial the accused was sentenced to a twelve month term of imprisonment with a fine of 75% of tax owing. He fully cooperated with the audit and cooperated with a focused trial.

• R v Wang, 2015 BCPC 302, affirmed 2016 BCCA 390 – The accused ran an immigration fraud scheme. For 5 years he failed to report his income. He evaded $730,837 in income taxes. The trial court identified the range of sentence as 2 years less 1 day to 3 years. The two year sentence imposed was upheld on appeal.

• R v Witen, 2012 ONSC 4151, affirmed 2014 ONCA 694, leave refused [2015] SCCA No. 287 – An accountant tax preparer ran a scheme which resulted in false returns for clients over 9 years. There was $1.13 million total evaded from which Mr. Witen made $448,000 in profit. Three years imprisonment and a 100% fine were imposed.

• R v Leo-Mensah, 2010 ONCA 139 – A tax preparer filed false returns for others, failed to report income, evaded tax of $145,766 and failed to file a return for the 2006 tax year. His one day sentence imposed after guilty plea was varied by the Court of Appeal to two years imprisonment with a 100% fine.

• R v Loosdrecht, 2009 BCPC 196 – The offender was convicted after trial for failing to report income for 4 years to a total evasion of $98,211. Given a prior history of non-compliance, the offender was sentenced to 20 months in prison and a fine of 100% of taxes evaded.

• R v Sydel, 2007 BCPC 486, leave refused [2011] SCCA No. 191 – Tax evasion by a dentist over five years totalled $253,089. She was sentenced after trial to a term of 18 months with a fine of 75% of taxes owing.

• R v Bulua, 2006 BCSC 1234 – The offender was convicted of tax evasion by failing to report income where $400,000 in tax was evaded after two years. Thirty months imprisonment was imposed along with a fine of 100% of tax evaded.

• R v Alexander Street Lofts, 2007 ONCA 309, leave refused [2007] SCCA No. 378 – Fraudulent GST rebates totalling $671,279 with more attempted resulted in 30 months imprisonment with a 100% fine.

• R v Valley Heavy Equipment Inc., 2005 BCPC 32 – Fourteen false GST returns were filed resulting in a profit of $500,000. Two years and six months imprisonment was ordered on conviction after trial with a fine of 100% of the amount.

[186] The unreported appeal decision of Minard J. in R v Collymore et al, dated November 22, 2007 and found at Tab 12 of the crown's Sentencing Brief of Authorities dealt with an investigation of an automobile brokerage business operating in Thornhill. The business was not registered as a vendor under the RSTA. Retail sales tax was collected from the purchasers of the motor vehicles but was never remitted to the Ministry.

[187] Collymore and Hayward are the only two decisions that dealt with RST. Neither case dealt with the failure to remit EHT. Both cases dealt with smaller amounts of tax evasion and in both cases Messrs. Collymore and Soviak, as well as Ms. Hayward, were sentenced to periods of incarceration.

[188] In conclusion, for cases involving large scale tax evasion, incarceration is inevitable. The maximum sentence under the RSTA and EHTA is two years.

[189] Considering the circumstances of the offences, the lack of remorse, the fact that the offences took place over a five year period, and Mr. Parentela's personal circumstances including the fact that he is a first-time offender, I am sentencing Mr. Parentela to imprisonment as follows:

(a) for the offence of failing to remit tax collected under s. 13(2) of the RSTA I sentence Mr. Parentela to a term of incarceration of 18 months,

(b) for the offences of tax evasion under s. 32(4)(d) and making false or deceptive statements in a return under s. 32(4)(a) of the RSTA I sentence Mr. Parentela to a term of incarceration of 18 months concurrent, and

(c) for the offence of tax evasion under s. 31(5) of the EHTA I sentence Mr. Parentela to a term of incarceration of 3 months consecutive.

[190] For greater clarity the total time of incarceration will be 21 months.

[191] Mr. Parentela is ordered to pay the following fines under the RSTA:

(a) for failing to remit tax collected under s. 13(2) $1,315,118.82

(b) for operating without a vendor permit under s. 5(7) $ 89,800.00

(c) for the 9 returns that were not filed under s. 41(1) $ 887,950.00

(d) for the 22 returns that were filed late under s. 41(1) $ 103,550.00

(e) for failing to collect sales tax under s. 44(2) $ 344,407.53

[192] Mr. Parentela is also ordered to pay the following fines under the EHTA:

(a) for tax evasion under s. 31(5) $ 294,998.65

(b) for failing to deliver annual returns under s. 32 $ 495,600.00

(c) for failing to deliver statements and remittances under s. 35 $6,433,350.00

[193] I now turn to the issue of time to pay the fines. Neither the Crown nor the defence made any submissions regarding what they thought would be an appropriate time to pay. In light of the fact that Mr. Parentela will be incarcerated for a period of time, I am giving him a period of two years from the date of his release from prison to pay the fines and any surcharges. I am further ordering Mr. Parentela to one year imprisonment should he default in payment of the fines that I have ordered him to pay under the RSTA.

[194] Finally I am sentencing Mr. Parentela to probation for two years following his release from jail. This term of probation is necessary to ensure Mr. Parentela's full rehabilitation.

[195] I find that this sentence is the least restrictive sentence that is proportionate to the gravity of the offence and the degree of responsibility of Mr. Parentela. While he is not the worst offender, he comes quite close.

R. S. Shousterman J.P.