One Million Dollar Judgment Against Canada Revenue Agency Tossed Out

Hal Neumann had a great life with a succesful business in Saanich British Columbia until Canada Revenue Agency investigators showed up at his home one morning with two police officers and a search warrant.

Mr. Neumann was the President of Vantage Equipment Company Ltd., a company that bought and sold used mining and construction equipment. He had an office in Duncan BC and a home office.

One of Vantage’s good customers was Ms. B. who was being investigated by CRA for tax evasion. Taxation investigators learned through a routine audit of Vantage that Mr. Neumann’s company had paid commissions of $400,000 to Ms. B. A criminal investigation was also instigated.

Mr. Neumann alleged he suffered post-traumatic stress disorder and depression as a result of CRA’s search and seizure of documents from his home. In a jury trial, Neumann made claims for unreasonable search and seizure pursuant to Canada’s Charter of Rights and Freedoms and “negligent investigation” by CRA, a novel action that relied on a 2007 Supreme Court of Canada case, where it was decided that a botched police investigation may give rise to a negligence claim on behalf of a suspect wrongly convicted of a crime.

Psychiatrist Dr. Lohrasbe, testified that Neumann’s stress disorder and depression were legitimate and caused Mr. Neumann’s life and business to suffer. He also opined that Neumann’s childhood in communist Germany and his escape to West Germany at the age of four, compounded his fear and contributed to his mental impairment.

The jury hearing Mr. Neumann’s case awarded him damages of $1.3 million, an extraordinary verdict against CRA. However, in Reasons for Judgment released today (Neumann v. Canada 2011 BCCA 313) by British Columbia’s Court of Appeal, Mr. Neumann lost his case and the money.

A unanimous Court granted CRA’s appeal and dismissed Mr. Neumann’s actions. The Appeal Court considered whether CRA was under a duty to Mr. Neumann to carry out the least intrusive search that was possible in the circumstances.

Neumann’s lawyer argued that CRA ought first to have approached Mr. Neumann for a voluntary release of the documents they needed to prove tax evasion and fraud against Ms. B. CRA explained that given the volume of business between Mr. Neumann and Ms. B. they could not take the chance their business relationship would not cause Mr. Neumann to take steps to protect Ms. B.

Neumann’s lawyer also complained that in obtaining the search warrant, CRA failed to advise the judge who granted the warrant,that Vantage’s place of business was Mr. Neumann’s home and that Neumann had fully cooperated in the earlier audit of Vantage, which constituted “material non-disclosures”.

CRA investigator, George Hodgson testified that he was not aware that Vantage’s office was in Neumann’s home and the Court of Appeal noted that at trial, Neumann’s lawyer advised the trial judge his client was not challenging the validity of the warrant.

The Appeal Court ruled there was no evidence of negligence in respect to the search warrant and no breach of the Charter. However, CRA was not awarded costs against Mr. Neumann, the court finding that in hindsight, Crown lawyers ought to have asked the trial judge to dismiss the lawsuit before beginning their case.

A very sensible outcome and perhaps yet another example of jury bewilderment.

Lawdiva Updates on Recent Stories

CONRAD BLACK is back in the news again and will be resentenced tomorrow in a Chicago courtroom. You may recall that the United States Supreme Court struck down the law referred to as “honest services fraud” and set aside Lord Black’s convictions on those counts. What remained was the conviction for obstruction of justice (his removal of boxes of documents from his office) and another count of fraud.

Black has been out of prison on bail since his honest fraud convictions were struck. He and his attorneys hope for a ruling that will end his previous sentence of six and a half years, of which he served two years, before being bailed out last year.

One of the issues that will take centre stage at the resentencing is whether Mr. Black has acted as an arrogant dilettante in prison, as the prosecutors argue, or as a contrite educator and mentor to his fellow prisoners. For previous stories on Lord Black go to posts on July 8, July 19 and November 2, 2010.

GREG FULTZ, the disgruntled ex- boyfriend, who used a billboard on the main street of his town in New Mexico to accuse his former girlfriend (unnamed) of killing his baby when she had an abortion, was ordered by the court to immediately remove the sign. Fultz’s ex-girlfriend sued him for harassment and violation of privacy.

Fultz’s lawyer said his client’s right to free speech was ignored and he intends to appeal the ruling. His view is that the statement on the billboard is an anti-abortion message, which he has the right to promulgate. Fultz says he is willing to go to jail if necessary. Read the original story posted on June 7, 2011.

Lawdiva aka Georgialee Lang

Legal Chutzpah

Marc Dreier is another convicted white-collar crook, and he’s today’s example of legal “chutzpah”.

In 2009, about the time Bernie Madoff was exposed, Marc Dreier’s world came crashing down. Dreier was a lawyer in New York City who founded a major law firm. He was the sole partner and his 250 plus lawyers and staff were well paid, but did not participate in the firm’s profits.

Dreier was successful, but he wanted to be a billionaire, not just a millionaire.

One of his most audacious acts was to borrow $100 million from a hedge fund on behalf of a wealthy client. Dreier impressed the hedge fund manager and after the manager reviewed Dreier’s forged documents, the hedge fund loaned the money, without ever speaking to Dreier’s client. Dreier used the funds to prop up his over-extended law firm and to indulge in the finer things of life, including a large beach house in the Hamptons and an opulent yacht.

One day Dreier got a call from the hedge fund manager. Dreier’s client had defaulted on a payment. Dreier assured the manager that all his client needed was a short extension of time and all would be well.

Dreier suggested that the hedge fund manager come to his client’s lavish Wall Street office, to meet with him and his client and sort things out.

Here’s where the chutzpah comes in! Dreier called his client and asked if he could use a boardroom at his office. Not a problem.

Dreier showed up with an actor hired to impersonate his wealthy client and convinced the hedge fund manager that everything was under control. Dreier bought himself a little more time before his Ponzi scheme collapsed in ruins. He was arrested in Toronto, in the midst of another scam.

Dreier escaped the media scrutiny that Madoff couldn’t avoid, mainly because Dreier’s fraud only amounted to $400 million, while Madoff’s was $65 billion. As well, Dreier turned himself in two days before Madoff was arrested and thereafter, Madoff took centre stage.

Dreier is where he belongs, serving 20 years. He gets my vote today for legal chutzpah!

Lawdiva aka Georgialee Lang

Internet Scams

I received an email the other day from a woman in Japan who wanted to retain me to assist her to collect a large sum of money from her ex-husband who happened to live in Vancouver. She asked me to begin by writing to her ex to determine if he would pay the sum he owed voluntarily or whether it would be necessary to commence a court action.

From the get-go it smelled like a scam, so in return I sent her an email advising her that in British Columbia we had “know your client” rules which required that she provide picture ID to show who she was.

Not a problem. Within a day I received a copy of a passport and an official ID card in her name with a photo of her. Her emails were all unfailing polite and to a less suspicious individual she appeared to be an ideal client as she informed me that upon my successful collection of the monies owed I would be paid my legal fees in a generous amount.

At this point her scam was no longer amusing to me and I ended the email conversation. She contacted me several times thereafter wondering why her Vancouver lawyer had not been in touch.

Had I carried on with her she would have excitedly told me that my letter had served its intended purpose and that I should expect to receive a large cheque from her ex and would I kindly deposit it to my trust account and send her my trust cheque for the monies, less my generous fee.

Had I complied, she would have received her money from my account and I would be left owing my bank a large sum of money once it became obvious that the deposited cheque was worthless. The financial consequences to me would pale in comparison to the humiliation of being so thoroughly scammed.

This scenario is just one of the hundreds of internet swindles floating through cyberspace.

Have you heard of the “grandma” scam where a young adult posing as your grandchild, obtains enough information from Facebook and other social sites to pepper her email solicitation with accurate family information. She is in trouble and needs money to either get out of jail or purchase an airline ticket to fly home to escape a dangerous situation.

The “Nigerian” scam is so old it is truly surprising that it still nets internet crooks millions of dollars a year. If you could only send money to this Nigerian diplomat, he could obtain millions of dollars that belong to his family and share it with you!

The FBI reports that between 2000 and 2009 internet fraud accounted for $1.7 billion in financial losses to unsuspecting consumers. The best way to avoid being the victim of internet fraud is to assume that every email overture concerning money involves a criminal looking for a victim. Don’t let it be you.

Lawdiva aka Georgialee Lang

Canada To Make It Tougher For White-Collar Criminals

Canada’s minority Conservative government has persuaded the Bloc Quebecois, a French-Canadian party holding 49 seats, to get on board with their parole amendments for non-violent first offenders.

The House of Commons will vote today on a bill that is intended to abolish accelerated parole, a law that has allowed fraudsters and Ponzi scheme devotees to serve only one-sixth of their sentences before they are eligible for parole.

Stung by the massive fraud committed in Quebec by Norbourg founder and CEO Vincent LaCroix, the Bloc rarely sees eye-to-eye with government, however, Mr. LaCroix’s early parole is a significant motivating factor.

LaCroix ran a trust fund company that ripped off 9200 Quebec investors before it ceased operations in 2005. A year later Mr. LaCroix filed for personal bankruptcy. The investigation that followed revealed a pattern of funds diverted to LaCroix’s personal coffers, with false receipts and fraudulent reports.

Convicted of securities violations, Mr. LaCroix was sentenced to five years in prison but served less than two years. The securities hearing was followed in January 2008 by a 58 day criminal trial where he was convicted of 51 charges and sentenced to 12 years in prison and a $255,000.00 fine. The sentence was reduced on appeal to five years.

In June 2008 a further 922 charges of fraud, conspiracy and money laundering were levied against Mr. LaCroix and six others, including a high-level public servant. LaCroix plead guilty and received a 13 year prison sentence to run consecutively with his earlier punishment.

Now living in a Montreal half-way house, LaCroix served one-sixth of his sentence. His victims are outraged although their anger was slightly assuaged when they learned that each of them would be fully reimbursed for their losses.

LaCroix will be free to leave the half-way house when he has served one-third of his sentence.

Prime Minister Harper campaigned on criminal justice issues and will likely bring forward further legislation to advance his Conservative agenda. His parole bill once passed in the House of Commons will go to Canada’s Conservative-majority Senate for approval.

Lawdiva aka Georgialee Lang

Judge Spends Foster Care Payments at Spas and Casinos

An Oklahoma judge and her husband are charged with 36 counts of fraud and perjury in relation to their fostering and adoption of three year-old twins.

Judge Tammy Bass-Lesure and husband Karlos Lesure began fostering the boy and girl in 2008 after the children had been removed from their addict mother’s care. But while the Lesures collected the sum of $730.00 every month, the children were being raised by Judge Lesure’s court bailiff’s sister.

The Lesures later adopted the twins and continued to receive state funds in the form of monthly adoption subsidies, available to parents of limited means. Despite Judge Lesure’s $120,000 annual salary, the couple filed for bankruptcy in 2009 with debts of $1 million.

Oddly, in the final adoption documents, the Lesures applied for a surname change for the children, but not their surname. They requested the children take the surname of her court bailiff’s sister.

Oklahoma investigators scrutinized Judge Lesure’s bank account established to receive the state funds and confirmed the monies were used to pay for services at spas, nail salons and at casinos.

Judge Lesure however, is no stranger to controversy. Elected to the bench twelve years ago, she ran into some trouble last summer and was forced to recuse herself from a high-profile murder trial. At the time she had been working out with her personal trainer, Colton Taz Ama, who was also a defendant in her courtroom accused of drug offences.

While at the gym she and Mr. Ama discussed his pending case. He was wired and recorded their conversations which included her advice that he fire his lawyer and hire another lawyer, recommending several, including one of the lawyers appearing before her in the murder trial. It is also alleged she advised Ama that she was “willing to work a deal” and the recommended lawyers “know how she rolls”.

After her recusal she was removed from the criminal docket and assigned only cases of probate, adoption and guardianship.

Meanwhile, two weeks after Judge Lesure was fingerprinted and photographed on the felony charges she returned to her seat on the bench. As an elected judge she can only be removed by the State Court of the Judiciary.

Perhaps this is one good example of why judges should be appointed after rigorous scrutiny, rather than elected in popularity contests?

Lawdiva aka Georgialee Lang

Lovelorn Sue Match.Com

Customers of the world’s largest online dating company describe shady deals, deceptive practices and sham profiles as a class action lawsuit is launched in Dallas, Texas.

The alleged victims of complain that observable patterns indicate many of the profiles on the site appear to be written by the same person. Others say the company has failed to make a match for them despite ongoing monthly fees of $34.99. Still others complain when their subscriptions are about to lapse they are inexplicably contacted by an inactive or fake member who expresses a romantic interest in them. came online in 1995 and is no stranger to lawsuits. In 2005 and 2009 similar allegation were made, however, none of those cases proceeded.

Counsel in this recent action believe they have credible evidence of misrepresentation based on statements of former employees of They allege they have witnesses who will testify that some profiles are illegitimate and referred to in-house as “filler”.

Other members are suggesting that up to 60% of’s members are inactive or fraudulent and cannot be contacted.

It is reported that’s parent company recorded recent earnings of $38.1 million with 1.82 million members.

The company says they intend to vigorously defend this “unmeritorious” lawsuit. The first step for the claimants is an application to have the court action certified as a class action lawsuit.

If these facts are proven in court, has no heart, which is ironic since they are in the business of love.

Lawdiva aka Georgialee Lang

Anna Nicole Smith Case Fizzles Out

Well, it looks like there is nobody to blame in Anna Nicole Smith’s overdose death, except Anna Nicole.

After a nine-week jury trial in 2010 I reported on November 9, 2010 that most of the charges against her boyfriend/lawyer Howard Stern, and her psychiatrist were dismissed, except for felony charges for conspiracy to obtain prescription drugs for Ms. Smith using a fraudulent name and prescribing opiates for an addict. Charges against her personal physician were also thrown out. The sentencing for Howard Stern and Dr. Eroshevich was to occur on January 6, 2011.

There was a sentence hearing this week, but before it got started Superior Court Judge Robert Perry ignored the jury’s decision and tossed out all the convictions, leaving only one misdemeanor count against psychiatrist Dr. Eroshevich for prescribing Vicodin to Ms. Smith.

Judge Perry, who presided over the jury trial, found that the evidence was “lacking and insufficient”. He also said that the prosecutors did not understand the law of conspiracy and the jury’s dismissal of most of the charges was a clear repudiation of the prosecutor’s case.

Perry held that in this media-crazed society it was not unreasonable for Howard Stern to obtain prescriptions for Ms. Smith under assumed names to protect her privacy. The Court referred to the situation when the dying Farrah Fawcett’s medical records were unlawfully released and the resultant breach of her privacy.

Perry also found Mr. Stern lacked the intent to commit fraud and Ms. Smith was not an addict, but she did suffer from chronic pain.

Dr. Eroshevich was sentenced to one-year probation and a fine of $100.00. The change from a felony conviction to a misdemeanor means the psychiatrist will not likely lose her medical license, although her practice and reputation have been decimated.

But not everyone is happy. The prosecutors have vowed to fight on and will appeal Judge Perry’s ruling. The Judge acknowledged there were medical practitioners who pushed pills, but not in Anna Nicole’s case.

Lawdiva aka Georgialee Lang

Top Three Tax Cheats in the World

New York hotel entrepreneur, the late Leona Helmsley was heard to say that “only the little people pay taxes”. She was right. You and I pay every penny we owe, just like millions of others in North America. It’s the filthy rich that get away with tax scams, those who don’t need a tax break at all. So who are the world’s worst tax cheats? Let me introduce my three finalists to you.

1. WALTER ANDERSON is an American telephone mogul who holds the record as the world’s biggest tax evader. A college dropout, he began his telecommunications career in sales, eventually morphing into an entrepreneur in the industry. Anderson was arrested in 2005 for secreting his corporate earnings in offshore accounts in Panama and the British Virgin Islands.
He plead guilty in 2006 to evading taxes on $365 million and was sentenced to nine years in prison and a restitution order of $200 million. His scams involved shell companies, offshore tax havens and secret accounts. Due to a “technicality” his fine was later reduced to a mere $23 million. Anderson continues to protest his innocence on his website “justiceforwalt”.

2. Country singer/songwriter WILLIE NELSON, “the redheaded stranger” has also had difficulties with the Internal Revenue Service. For reasons unknown, Willie failed to pay taxes on his significant career earnings and in 1990 was assessed $16.7 million in unpaid taxes. Willie released an album called “The IRS Tapes: Who’ll Buy My Memories” that quickly filled his coffers with money. The government also auctioned off some of Willie’s more valuable furnishings and memorabilia which were purchased by friends and fans who returned the items to him.

3. Fashion designer VALENTINO and his business/life partner GIANCARLO GIAMMETTI were fined $39 million by the Italian government for tax evasion. The couple moved from Italy to London in the late 90’s but their Italian couturier continued doing business in Italy, tax-free. Italian law provides that if one-half of an Italian’s income is earned in Italy, although the person may reside outside of Italy, tax must be paid on the Italian earnings. Valentino’s personal extravagance is evident in the documentary “The Last Emperor”.

Lawdiva aka Georgialee Lang

The High Cost of Cupid

The old way to meet potential partners was to hang out in bars and nightclubs and in the 1980’s many a happy marriage began at the disco. Personal ads in newspapers also gained popularity and created acronyms such as SWF (single white female) or AJP (American Jewish Princess). But the new wave of personal introductions is through the internet or professional matchmakers.

For well-heeled boomer women, companies like Hearts, RomancePros, Divine Intervention, JustLunch and hundreds of others, contract to introduce upscale sophisticates to charming, intelligent, eligible bachelors. For a price, of course.

Reality TV has also jumped on the bandwagon with Bravo’s Millionaire Matchmaker and VH1’s Tough Love.

But how successful are these matchmakers? Try as I might I have been unable to find any credible research or data on whether true love is actually realized as a result of these attempts at professional coupling. But anecdotally I can say that I am aware of dating disasters, hurt feelings and allegations of deceit involving companies who promise much, but deliver little.

Cases in point:

A beautiful, outgoing 45-year-old client of mine with professional business credentials paid $3,500.00 to a dating agency who asked her what her criteria for a match would be. She was not picky, open to either a blue-collar or white-collar worker but the candidate had to be at least 5’7″.

She was promised six dates over a twelve month period. Each of her first three dates were with gentleman who were under the height requirement. One was only 5’5″.

She complained to the agency but it seemed they were unperturbed, after all they already had her money. She declined the last three dates.

A second friend, a smart ex-beauty queen in her 50’s paid $2000.00. She carefully described her ideal mate. Her only non-starter was he had to be man of Christian faith. Her first two dates had never been inside a church, synagogue or mosque. Her last date was a non-practicing Jew. Over lunch she described the men she had met and to my surprise she had been lined up with a man named Doug who was dating another client of mine, at the same time!

She called a second dating agency and asked whether they had Christian men on their roster. This firm was honest and said no. She now wants her money back because she believes that the agency that took her money knew they had no candidates that met her requirements.

Case # 3 is the worst of all. This woman was introduced to the man of her dreams and fell madly in love with him. What she didn’t know was that he was a pathological liar and serial philanderer who had dated almost every eligible woman in his hometown, usually four or five at the same time, declaring undying love to each. Apparently, the dating agency kept him on their list and operated as a pimp, supplying women to him year after year. My friend spent several years under the illusion that this was forever-love.

When she discovered the truth she had a nervous breakdown, having spent several years as
his partner, lover, chef, interior designer, travel agent and therapist, abandoning her career, friends and family.

Should professional matchmakers be worried about lawsuits? I think they should. New York lawyer John Friedland, 51, recently sued Manhattan matchmaker Amy Laurent for $100,000.00 when her agency failed to provide him with suitable dates. After dropping $10,000.00 the disappointed lawyer found that the women introduced to him were already seeing other men, did not meet his criteria or had personal backgrounds that were less than stellar.

At hearing of the lawsuit Ms. Laurent callously quipped that she was a matchmaker, not a therapist. Later she backtracked and advised the media that she had no idea that Mr. Friedland was unhappy and she would be working this out with him. She purports to have a near-perfect track record of matches.

You say all is fair in love and war? I say men and women longing for a life partner deserve honesty and respect.

Lawdiva aka Georgialee Lang