http://weeklyintercept.blogspot.com/2011/06/kitco-shocked-by-raid-after-months-of.html Kitco shocked by raid after months of negotiations in gold tax scam
Ross MarowitzThe Canadian Press
MONTREAL — A Montreal company that denies any wrongdoing in an alleged gold-refining tax scam said Friday it was shocked by an early-morning raid this week that came after several months of negotiations with Quebec's tax department.
Kitco Metals Inc. said it was negotiating with Revenu Quebec about its opposition to the tax assessment when agents raided its premises Tuesday.
"We were co-operating with them fully, so this definitely came as a surprise to us," Kitco spokeswoman Sharlene Dozois said in an interview Friday.
Revenu Quebec is probing sales of $1.8 billion by the network, with alleged provincial sales-tax evasion in excess of $150 million. The agency is also investigating evasion of the federal goods and services tax on the same sales.
Kitco asked Thursday for a court-appointed receiver that can supervise the 200-employee business while it addresses the allegations brought by Quebec's revenue department. RSM Richter has been appointed interim receiver.
The Montreal-based company, founded in 1977, says it is one of the largest retailers of precious metals in the world. It also provides specialized refining services.
More than 175 agents conducted raids on homes, offices, accountants and bankruptcy trustees in the Montreal area. The agency said the scam allegedly involved a system of repetitive and false billing in transactions involving more than 125 companies.
Most of the companies are jewelry stores, which have closed.
The department also said false tax returns were prepared for certain companies that provided the fake invoices.
Kitco said it "has never participated in any tax fraud, nor has it ever carried out any fictitious transactions."
"Kitco buys precious metals scrap and pays the suppliers sales taxes on these purchases for which Kitco receives a tax credit. It is the responsibility of these suppliers to pay back the sales taxes to Revenue Quebec."
Revenue Quebec alleges that Kitco and a company called Carmen Industries ran parallel operations.
Carmen Industries couldn't be reached for comment.
Published reports say Revenu Quebec placed liens worth $33.8 million each on two properties owned by company executives Steven and Joseph Chesir.
Nick Macri, vice-president of Carmen Jewelry, which shares the same phone number and operates in adjacent spaces in Montreal, said he hasn't seen the owners of the company in several months.
Although the two companies share similar names, Macri said they are unrelated although he did the accounting for Carmen International and remitted its taxes to government.
"We charged them a fee every month to give them a service and that's how we somehow got implied in this mess," Macri said.
It alleged that several people, including Viken Gebenlian, Haroutioun Dakessian, Oskan Hazarabedian, Benjamin Bensimon and Shadia Khatib created artificial tax declarations for certain companies involved by furnishing them with false invoices.
Those found guilty must pay the evaded funds plus interest, fines and a maximum of five years in prison.