For the last year-and-a-half, 70-year-old Bill Janman has studied Canadian tax laws in all their complexity, as he battles the federal government to recoup tax money after losing millions in a Ponzi scheme.
The latest chapter in his fight came Monday, when he presented 700 pages of documents about his case and took the witness stand in Calgary at the Tax Court of Canada.
Janman and his wife lost more than $2 million after investing in Base Finance. They along with hundreds of others collectively lost about $137 million.
Arnold Breitkreutz, his company, Base Finance, and office manager Susan Elizabeth Way were fined and sanctioned in 2019 by the Alberta Securities Commission, which described the case as “among the worst frauds perpetrated in Alberta.” The commission also described Breitkreutz and Way as carrying out “a fraud by deceiving investors and operating a Ponzi scheme.”
Both were arrested by RCMP and face charges of fraud over $5,000 and theft over $5,000 for allegedly using the funds raised to pay off other investors. Their trial is scheduled for next year.
Janman and his wife were never able to recover any of their money and have since tried to amend their tax returns from 2006 to 2011 and 2014 because they included fraudulent T5s from Base Finance. A T5 slip reports the various types of investment income.
Instead of showing an investment return from those years, the T5s should show a loss as a result of the fraud.
Janman knows the millions invested in the scheme are gone, but he wants the Canada Revenue Agency to acknowledge victims of fraud and allow them to make changes to past tax returns.
CRA says couple ‘out of time’
However, the CRA argues that the couple is too late — that the deadlines have passed for the couple to file their notice of objection or apply for an extension of time to do so. The last deadline was in the spring of 2017.
“They are each out of time for all of the tax years,” said Adam Pasichnyk, the federal government lawyer who was representing the CRA, during the hearing.
Going back and amending those tax returns would result in a collective refund of about $200,000, according to Janman. He said the CRA did offer a partial settlement of about half that amount, but he rejected it because Janman said he has done nothing wrong and is entitled to his full refund.
In court, Janman repeated his argument that there was no reason for him or his wife to file an objection with the CRA because it was only in 2018 that authorities began releasing their findings into Base Finance.
WATCH | Bill Janman says most fraud victims give up on their fight with the CRA, but he won’t:
“We are not fortune tellers nor do we have a crystal ball or any ability to see the future. If we had, we would have known that Base was a Ponzi scheme in 2005, not invested any additional money and not be here today,” he said.
“We could not have filed objections in any of the years because we simply did not know that Base was a Ponzi scheme.”
Janman represents an informal group of about 300 other victims who lost money in the fraud case, most of which are seniors.
“There are people like us that quit. I just got angry and decided I would see this through,” said Janman, who represented himself and his wife during the hearing because he said they don’t have the money for a lawyer.
“Our case here today is an insignificant amount to Canada Revenue Agency. To us, it’s a big deal.”
Justice Kathleen Lyons will make a ruling next week on some aspects of the case. Another hearing will be scheduled in the future.
Investors in Base Finance thought their money was secured by mortgages on real estate in Alberta. Instead, it was loaned to a man to buy oil and gas assets in the U.S. or used to buy properties for personal use, according to authorities.
Some investors were paid so-called interest payments in order to maintain the facade of a legitimate investment operation, but the payouts actually came from newer investors’ money.
Base Finance has gone into receivership and the process is still ongoing.