Scams and shams — September 2015

The creator of Beanie Babies narrowly escapes conviction, while a desperate Saskatchewan entrepreneur turns to crime to save her floundering business.


No jail for Beanie Babies billionaire

Ty Warner, creator of Beanie Babies, will not go to prison for his 2014 tax evasion conviction, the US Court of Appeals has ruled. The court upheld the probation sentence previously given to Warner for failing to report more than US$24 million in income, even though prosecutors wanted to see the Chicago-based entrepreneur do jail time as a deterrent to other tax cheats. Since the case began, Warner has paid US$80 million in back taxes, penalties and fines to the federal government.  


So that's why BMWs are so expensive

Red BMW 

An accountant who stole millions from the BMW plant where he worked was sentenced to more than five years in jail. Johannes Franken, 60, of Worcestershire, UK, diverted nearly £6 million ($12 million) of the luxury carmaker’s funds into his own bank account by falsifying 59 payments to fake suppliers from 2011 to 2014. He spent the money on jewelry, a diving school in Mauritius and three top-of-the-line BMW cars and a BMW motorbike (of course). Following the fraud, BMW has introduced new procedures to prevent a similar breach in future, the company said in a statement.


Okanagan tax preparers gave bad medicine

A tax evasion scheme marketed to clients as “the remedy” is causing major ills for both its victims and perpetrators. Kelowna, BC, tax advisers Donna Marie Stancer and Deanna Lynn Lavalley illegally filed nearly $192 million in false expenses on behalf of hundreds of clients and themselves, generating nearly $10 million in refunds (although the CRA issued payment on only about $52,000). Clients are now facing penalties for unpaid taxes and some have been forced to declare bankruptcy. Stancer and Lavalley were found guilty on six counts of fraud and were awaiting a sentencing date at press time.


Don't mess with the IRS

Sahil Patel, 36, will serve 14 years in prison for organizing a massive fraud and extortion ring in which US taxpayers were threatened with calls allegedly from the IRS and FBI. The Pennsylvania man pleaded guilty to leading the US side of the scam, run through call centres in India, which bilked US$1.2 million from victims.


Saskatchewan business winner turned to crime

A former young entrepreneur-award winner received a two-year suspended sentence after defrauding another small business out of more than $40,000. Toni Lee Huyghebaert, 28, got the award from the Regina chamber of commerce in 2012 for the success of her company Slice Athletic Wear. But when the business soured in 2014, she pilfered funds from the animal clinic where she worked. The judge says he was lenient because she paid back the funds and is unlikely to reoffend.