West Vancouver businessman must serve 29-month jail sentence for tax evasion, court rules

A 29-month jail sentence for a West Vancouver businessman convicted of real estate tax evasion has been upheld.

Michael Curt Helmut Scholz was sentenced in February 2021 after being convicted of two counts of uttering forged documents and three counts of tax-related offences under the Excise Tax Act, according to a news release issued Tuesday by the Canada Revenue Agency.

Scholz appealed his sentence to the B.C. Court of Appeal, which dismissed the case last month and ordered him to serve the time, according to the CRA.

The charges against him stemmed from a CRA investigation that found Scholz had submitted forged documents to obtain benefits related to the construction of a home in West Vancouver.

"Mr. Scholz forged a bare trust agreement to conceal the property’s true ownership and to support his claim of ineligible input tax credits related to the costs for the residence’s construction and design," the CRA said in its release.

"Mr. Scholz also forged a lease agreement to decrease the CRA’s assessed value of the property in an attempt to reduce taxes owed."

In addition to his 29-month sentence, Scholz was ordered to pay a total fine of $644,975.71, representing 100 per cent of the taxes he evaded, according to the CRA.

THE APPEAL COURT'S DECISION

While the revenue agency did not provide any additional details on the case, more can be found in the judges' reasons for dismissing the appeal, which are posted online. 

Writing for the three-judge panel, Justice Sunni Stromberg-Stein noted several grounds on which Scholz sought to appeal his sentence.

He argued that the sentencing judge had erred "in principle" by failing to impose a conditional sentence – which would have allowed him to serve his time in the community – as well as in assessing his personal circumstances and in assessing the impact of COVID-19 if he were imprisoned.

Stromberg-Stein considered and rejected these grounds, agreeing with the trial judge that a conditional sentence was not available to Scholz because a sentence longer than two years was warranted.

A sentence of that length was necessary, according to the court documents, because of the "sophisticated way" in which the crimes were committed, Scholz's personal background as a corporate lawyer with 23 years of experience and the owner of multiple businesses with a total of 160 employees, and his "moral culpability" for the crime, as well as various legal principles and case law.

"His crimes were motivated by greed and the judge found Mr. Scholz thought he was smart enough to get away with it," Stromberg-Stein wrote in her summary of the sentencing.

The appeal judge characterized much of Scholz's case as a matter of him disagreeing with the trial judge's findings and the weight placed on various aggravating and mitigating factors.

Scholz argued, for example, that his forgeries were created in a "slap dash fashion" that did not suggest a great deal of planning or sophistication went into the crimes, according to Stromberg-Stein's decision.

The appeal judge did not find this argument persuasive.

"That Mr. Scholz made poor use of his knowledge and skills in committing the offences and got caught does not make it an error for the sentencing judge to consider his expertise as a relevant aggravating factor," she wrote, before ultimately concluding that the sentence of 29 months was "entirely fit in the circumstances."

TAX EVASION STATISTICS

The CRA said a total of 23 people across the country were convicted of evading a total of more than $4.4 million in federal taxes between April 1, 2021 and March 31 of this year.

Of those 23 convictions, 10 resulted in jail time, with convicted individuals serving a combined total of 15.3 years, the CRA said.

"In addition to the court imposed fines and/or jail sentences, convicted taxpayers have to pay the full amount of tax owing, plus related interest and any penalties assessed by the CRA," the agency said.