Elaborate frauds known as carousel schemes are using fake business transactions to reap fraudulent tax refunds from the Canada Revenue Agency, costing Canadian taxpayers hundreds of millions of dollars. CBC’s The Fifth Estate and Radio-Canada’s Enquête teamed up to search for the missing money.
About The Fifth Estate: For more than four decades, The Fifth Estate has been Canada’s premier investigative documentary program. Hosts Bob McKeown, Mark Kelley and Steven D’Souza continue a tradition of provocative and fearless journalism. The Fifth Estate brings in-depth investigations that matter to Canadians — delivering a dazzling parade of political leaders, controversial characters and ordinary people whose lives were touched by triumph or tragedy.

Video Script:

[Bob McKeown] On this
edition of The Fifth Estate, Scamming the System. The Bank of Canada
is being robbed. Your tax dollars stolen. Why has nobody
been arrested? There is obviously
serious money involved in this fraud. [Bob]
Serious money taken by networks
of sophisticated fraudsters. You run into a bank
with a gun in your hand and there’s very
high level of risk. The beauty
of this crime is that it’s so easy to perform. [Bob] The Canada Revenue Agency
repeatedly duped into handing over
hundreds of millions of our hard-earned dollars
from the National Treasury as bogus tax refunds. We team up with our
colleagues at Radio-Canada to take you
inside the investigation… So we go down
this alley, I believe. [Bob] …to find out
who’s behind it. And what does that mean?
You’re afraid? If they were really
right about that, why am I not in handcuffs? [Bob]
It’s a search that takes us across the Atlantic
to England… Mr. Zahoor,
hi, I’m Bob McKeown from the Canadian
Broadcasting Corporation. …and to Germany. Can you tell us
where the money went, sir? I feel livid that
this is happening in Canada. I’m sure the fraud is still
going on as we’re speaking now. So, who’s been robbing
the Bank of Canada? And how have they been
getting away with it? I’m Bob McKeown.
This is The Fifth Estate. If you were a criminal thinking of robbing
a bank in Ottawa, perhaps the Bank of Canada
down the street from Parliament Hill
might not be your first choice. This is where your money goes
when you pay federal taxes, and from here it pays
for social programs, Medicare, education, defence. But our
investigation reveals that multiple groups
of tech-savvy criminals have set their sights
right here– tricking the government
into paying out huge refunds for sham business transactions. Cheques from
the Government of Canada, sent coast to coast, transfers to Hong Kong, Dubai and England. We found case after case
in Federal Tax Court where the Canada
Revenue Agency says fake companies
doing fake business, have resulted in repeated losses
to the Government of Canada The CRA says
they’ve identified $1.1 billion related to carousel schemes
since 2017. It’s a crazy
amount of money that’s being stolen out
of your government’s treasury. It’s– it’s unimaginable. You move the goods around… [Bob] Bo Elkjaer
is an investigative journalist in Denmark
who knows all about how those criminals
scam the system. This is money
that’s being stolen from the Canadian government. It’s money that the government
is supposed to use to pay off the welfare goods that you as a citizen
would expect to get. It’s hospital beds,
it’s schools and roads that’s being stolen by criminals
who use it to– to– well, basically buy Ferraris. Our investigation
begins here, with this merry-go-round,
a carousel for children. And what we’ve discovered
is known as a carousel scheme, in which a group of companies
works together to create the illusion
of legitimate business with large sums of money being passed
from one company to another, around and around. Much like
these carousel ponies. The first company
in the carousel is supposed to pay tax
on the products it sells but it doesn’t. And to disguise that fact the products
are sold and re-sold to multiple
“buffer” companies. The last company in the chain
then exports the products. But no sales tax is payable
on exports from Canada. So that last company
gets a refund on tax that was never paid
in the first place. Before you know it,
some of the companies have disappeared
and so has your money. [indistinct radio chatter] According
to the Canada Revenue Agency, this man, Samer Bishay, is at the centre of
one of those carousel schemes. One 6000, eight, Sierra Bravo. [Bob] One which they say
cost Canadians $63 million dollars. Bishay runs Iristel, a Canadian
telecommunications company. He’s also a pilot. He maintains he’s innocent, that if the CRA succeeds
it will destroy his company and his reputation, so he’s suing them
for $275 million. And he’s going public
to clear his name. -Welcome in Matane, sir.
-Hi, thank you. [Bob] In Matane, Quebec, on the south shore
of the St. Lawrence River, the mayor comes out
to greet Bishay. Towns like Matane say
Iristel’s services are badly needed
in their remote communities. We are spread
all around the area, so many people
are not still connected to the high-speed internet,
to the cell phones, so it’s a great challenge
for your company. Thank you. So, this is a test site
right now we never… [Bob] Samer Bishay says
he grew his business by providing those essential telecom services
to rural Canadians. This location
is pretty critical for us because we service a lot
of the two-way radio systems for public safety,
for Sûreté du Québec, for ambulance, police. [Bob]
And if the CRA gets its way, he says he’ll no longer
have the money to help those Canadians. I put blood,
sweat and tears for almost 25 years
in this company. They accuse me of something without any factual findings. [Bob] In fact, following
a six-month investigation, the CRA concluded that Iristel was
at the “centre of the scheme,” with “control
over the supply chain” and was the “defacto banker”. They say Iristel
was either knowingly involved or “wilfully blind”. Today, the CRA
is demanding Iristel pay back the $63 million
of government money it got and millions more
in penalties. This is not just an attack
on a taxpayer. This is an attack
on entrepreneurship. This is an attack
on hard work. [Bob] Oh, wow. It’s hard to know
where the eye goes first. Samer Bishay says
he built his company from the ground up,
and he makes no apologies for the success
he’s enjoyed. Every milestone of success
that I hit, I like to kind of
remember it with– So, this is a 2009 Audi R8. And what happened
in 2009? We landed a huge contract
with a large American company. So, first of all… [Bob]
Bishay says it’s telling that he is not facing
any criminal charges, where the burden of proof
would be on the CRA. So, yeah,
what they’re trying to do is portray me as the mastermind
behind all of this. That’s all nonsense. [Bob]
So how did Samer Bishay find himself
in such a mess? This is it, this is where
it all happens, right here. -How are ya? Good?
-Good, good. [Bob] The answer
to that has much to do with the highly
competitive world of global telecommunications. Hi, how are you? [Bob]
Telecom is big business, often based
on personal relationships forged at massive
trade shows. Delegates from around the world
are here to do deals. For Samer Bishay and his
VP of Sales, Nik Petridis, it may look like
organized chaos as at this conference
in Maryland. -I’ve got a twelve o’clock.
-Is he meeting us after, or? Who’s your twelve o’clock? [Bob] Major
telecom operators come here– Videotron, Verizon, AT&T. There also are hundreds
of smaller telecom companies you may never
have heard of. Back in 2018, Samer Bishay decided
to expand his business with some of those
lesser-known companies into what’s called
the wholesale market. For Bishay that meant
the buying and selling of bulk internet
telephone minutes. When you make
an international phone call, that call bounces
at lightning speed often through multiple
telecom companies, finding the cheapest way
to its final destination. And it’s at
the telecom conferences where those
connections are made. [Samer] It’s literally
just minute trading. Minute, data, SMS,
all the stuff that we use every day on our mobiles,
on our landlines. Touch base with me.
Send me a text. [Bob]
It is a combustible market, as evident
in the dramatic increase in Iristel’s
annual sales figures. According to the CRA, from $27 million in 2017, to $800 million
just two years later. And as its exports boomed, Iristel began claiming
millions of dollars every month
in Canadian tax refunds. Hey, we’re in the lobby
where Belvedere is. [Bob]
But who exactly were those new suppliers
and customers that Iristel
was getting into business with? Today, Iristel sales chief
Nik Petridis concedes the CRA
may be onto something. Perhaps someone else
in the chain didn’t pay their taxes. If they’re pressing
this long, they know
something has happened. We’re not arguing that,
but nothing happened with us. Nothing ever happened
with Iristel. [Bob] Samer Bishay says,
perhaps the problem is higher up the chain. So then on top of that, what the CRA
is alleging in my case is that a supplier
of a supplier of a supplier. So, three layers down
that I have no idea who it is. In telecom, you only know
your immediate supplier and your immediate customer. [Bob]
And CRA documents allege that Iristel’s US customers “exhibited
a lot of red flags”, and that one of those companies,
called LDI, was a key participant
in the carousel scheme. Meet Louis Arriola. [James Lott Jr.]
He executive produces TV, films, he’s the CEO
of LDI Networks. Louis Arriola,
how are you sir? I’m very good,
happy to be here. [Bob] Arriola says,
he’s a former member of the US Marine Corps who now promotes himself
as a telecom executive and movie producer. But in 2009 he was sentenced
to 27 months in prison for a fraud involving
a fake telecom company. In 2012, he was accused of “looting and misappropriating
company funds” in a case that was later
settled out of court. And there are
more cases ongoing. When I met Lou,
he was telling me about how he was
going to give us all… the business
from one of our competitors. And those are things
you want to hear. So, the last thing
I’m going to do is go and Google him
to see if he’s a criminal or anything like that. [Bob]
He’s a convicted fraudster. That’s what we found out. [Bob] He went to prison
in 2009 for fraud. He was accused of defrauding
another company in 2012. Yeah. We found that out after
at the time. You couldn’t have
found it out before? Because we don’t typically
run Google searches on owners of companies. We run a credit check. We had a Dun & Bradstreet
report that said they were low risk. He’s a telecom veteran, and the last thing
you would do is why would you go to
a Google search about somebody? I don’t do that. Because it would tell you if he’s a convicted fraudster. All right. [Bob] When we come back, the hunt
for our missing millions. The solution is to go
after the criminals very fast, very hard. Why has that not been done? Your name has been
mentioned in connection with a large fraud
in Canada. You have to speak
with my lawyer. ♪ [Bob] To the average Canadian,
a carousel like this, might conjure up
memories of childhood. But to the Canada
Revenue Agency, it may suggest
something quite different. Elaborate schemes
to defraud the Federal Treasury by claiming
illegitimate tax refunds. So, technology typically… Today, Samer Bishay
is fighting allegations from the CRA
that he was at the centre of a $63 million scheme connecting his suppliers
in Canada to his customers
outside the country. He says if he were caught up
in a carousel scheme, he knows nothing about it. So, where did your
missing millions go? We went up the chain
to find those telecom companies. When they
didn’t get back to us, we hit the road,
using hidden cameras. First stop,
30 minutes west of Toronto, the corporate
headquarters of a company called Carrier Zone. According to the CRA, in 2019 Iristel claimed it purchased $22 million
worth of telephone minutes from Carrier Zone. Their office
was registered here in this apartment block. [line ringing] [Matt Pierce]
Is this Omran Abdul Salam? I’m trying to speak
with Omran about Carrier Zone, a telecom company he owned. [knocking on door] [Bob] But apparently
Carrier Zone had moved on. [Harvey Cashore] The thing
downstairs still says Omran. Sometimes I receive
a letter in this name, but I just
put it back in the, you know. [Harvey]
Thanks very much, sorry. -Bye.
-[Matt] All right. Bye. -That was definitely not him.
-No. [Bob] Our next stop,
a 15-minute drive to the offices of ML Telecom
in Mississauga, Ontario. In 2019,
they claimed they sold $90 million
of telephone minutes to Iristel. All right. [Bob] And their address
took us to this accounting firm. [Harvey] Their company
is registered to this address? [Bob]
Though the new owners said, they’d never heard
of ML Telecom, Thank you, appreciate it.
Thanks for your time [Bob] ML Telecom’s
only shareholder is Linoy Xavier Antony, He told the CRA
he was a driver for Uber and for Skip the Dishes. But he didn’t return
our messages either. -Okay, you rolling?
-Yeah. That’s recording. [Bob]
Next was Hamilton, Ontario. According to the CRA,
in 2019, Iristel claimed it bought a whopping $156 million in telecom minutes from a company here
called Joven Tel. Their corporate records
took us to this office building in downtown Hamilton. [Bob] I’m trying
to track down a company that I think uses you
as their address. It’s a company
called Joven Tel. [man] They were here years ago,
they’ve been gone for… before COVID. I have stuff come for them
and we send it back RTS. -RTS?
-[man] Yeah, “return to sender.” [Bob] Right.
Thank you for your time. Okay. Bye-bye. [Bob] Stephen Reza
listed himself as Joven Tel’s
Director of Operations. But his LinkedIn page says his business is installing
stone countertops. He also wrote a book
about bitcoin and cryptocurrency. [voicemail]
Hi. This is Stephen Reza. -Please leave me a message.
-[line beeps] Stephen, it’s Bob McKeown
from The Fifth Estate. We’re still waiting
on his return phone call. Well, let’s hope
this is a bump in the road. Not what the rest of the road
is going to be like. [Bob] Joven Tel
corporate records also list Joshua Venturelli,
Stephen Reza’s brother, as a director. His corporate filings
show an address in Hamilton’s east end, just south
of Tim Horton’s field, where the Tiger Cats
play football. So we go down this alley,
I believe. Hi, we’re hoping
to be put in touch with one of your tenants. [landlord on phone]
I know the name and he used to be
a tenant of mine, -but he’s not anymore.
-Bye-bye. [Bob]
Venturelli had moved out, but we did talk
to his former neighbor. Do you know
how long ago he left? He hasn’t been here
for a few years. Oh, a few years? Yeah, he lived here alone.
He actually was right above me. Did you ever talk to him about
his occupation, his business? Well, he said,
like, as far as I knew, he was,
like, he installed -granite countertops.
-[Matthew] Right. I wish you well
on your quest, gentlemen. [Matthew]
Thank you very much. ♪ [Bob] Our next stop
was London, Ontario, and a company called
Aella Telecom. Iristel reportedly bought $16 million
in telephone minutes from Aella in 2019. We found the address
of its corporate headquarters in this
residential neighborhood. -[Bob] Hello. Mr. Butt?
-Hey. Yes. [Bob] Hassan Butt was listed
as part owner of the company and he answered
the door for us. Okay, guys,
so tell me about what– what are you guys
looking for? [Bob] In tax court,
the CRA alleges Aella is a front company. I didn’t know.
I don’t know much about it. [Bob] Hassan Butt says
he registered the company as a favor for a friend… and that now
the CRA is coming after him. [Matthew] Thanks very much.
Thank you. Appreciate it. [Bob] Samer Bishay says
he saw nothing suspicious when he says
he began paying hundreds of millions of dollars to those companies
that we just visited. One of the things the CRA said,
they concluded that many of the companies
you do business with are “paper companies.” What do they mean by that? I have no idea,
because one of the things I think that they say is,
“Oh, they’re all, like, Regus-registered addresses.” Well, guess what,
when I moved away from my parents’ basement,
I registered an office at Regus. Iristel was a Regus address [Bob] It wasn’t just that
they operated from their homes or rented offices. According to the CRA, Iristel’s suppliers
were of “modest means” and had
“no real business activity”, despite the fact
they had claimed $663 million in sales. The CRA alleges
Iristel was only concerned with creating
tens of millions of dollars in illegitimate tax refunds. These companies,
they disappear before they can pay back
the GST. [Bob] Danish journalist
Bo Elkjaer has reported on carousel fraud
schemes for a decade, and he helped us
with this investigation. When you get higher up
in the hierarchy, you get further
and further away from the frontlines,
so to speak. At the bottom level,
you find any people that would sell off
their identity to be used as a front figure
in a false company. [Bob] He says in the vernacular
of the business, the people at the bottom
are known as “stooges,” who may well feel
like the ponies going around and around
in circles on a carousel. On our carousel quest,
we visited dozens of locations where all together,
hundreds of millions of dollars in telecom business
purportedly took place. Yet we found abandoned offices,
rental homes, and few people
who seemed to know anything about the telecom industry. So, what happened next
would be a turning point for us. Associate Producer Matt Pierce
obtained invoices from two companies
in the alleged carousel scheme, called Envision and Bestec. So, was there
real business activity behind those invoices? Or were they just a front,
to create an illusion? Iristel’s doing business
with four companies. But those four companies
are doing business with just two. And those two are doing
business with just one. So all the minutes
for all of these four companies are coming from one
central place, from Telo. One of the invoices
you just sent me, Matt… [Bob] Then
our Radio-Canada colleagues at Enquête
made another discovery. The invoices
contained information buried in those PDF forms about who created them
and when. And you can see
when it was created, time and software
that was used to do it. [Bob] They discovered
these invoices from companies across Canada were actually created
in Pakistan. And they all listed
the same author, someone named
Noorulain Hassan. [Harvey]
That’s ML Telecom billing Iris. [Bob] Nick Petridis
of Iristel. Wow. Wow. [Harvey] But doesn’t it say
that the same person who did the invoicing -for all these companies–
-It certainly does. It certainly does.
She doesn’t do our invoicing. I could tell you that much.
I don’t know who that is. But that does sound
like they’re very closely knit. Um, yeah. [Harvey] It could speak
to a carousel scheme? It could. Yeah, This is a huge no-no for us. So, let’s take a look here… [Bob] Our Radio-Canada
colleague Frederic Zalac showed the same invoices
to Bo Elkjaer. So, here
let’s look at the time. It’s within seconds. These two are within seconds. [both laughing] Oh. It really makes no sense. It’s just crazy. So, there’s not a doubt
in your mind here -of what we’re seeing?
-No, no. No, not a doubt. How– how would you explain this as a regular,
legal business transaction? What’s the reason
to do it like this? It’s just the movement
of the minutes from company to company
to company in a chain. This really fits
the pattern for GST fraud. [calliope music plays] [Bob] Someone seemed
to have made a big mistake. Leaving a clue that a number
of these suppliers were working together. Now it was time
for us to visit a company
called Telo Networks, the one company in Canada,
according to the CRA, at the top of the chain. The Chief Executive Officer
of Telo Networks is Danish Habib, based in Windsor, at least, according
to his LinkedIn profile. But corporate records show that Danish Habib
was also a driver for Walmart, apparently
with no prior experience in the telecom business. [Bob] As you can see,
we’re on the road, heading west
along Highway 401 towards Windsor, Ontario. If someone can help
to locate all that missing money,
our money… it’s Danish Habib. Hello. Sorry to bother you,
is Danish Habib here? -Thank you.
-[Matthew] Thank you. Bye-bye. [Bob] It seems
Danish Habib had vanished too. And he might have had
a reason to lay low. During their investigation,
the CRA was told Habib transferred
half a million dollars into his own bank account. Then “was threatened
by people with guns in his home.” He apparently paid
the money back two days later. [line ringing] And then we got
a call from a source whose voice we’ve altered, because they were also afraid
for their safety. [secret source]
Please do not tell him that you’ve been
talking to me. [Bob] That source told us we were looking
in all the wrong places. That the real bosses
of the carousel scheme weren’t located
in Canada at all, but abroad. [secret source]
He has some friends here. And what does that mean?
You’re afraid? [secret source] I don’t know,
he might ask them to do something stupid. They know where I live. [Bob] When we come back… There is obviously serious money
involved in this fraud, and there have been
some very dangerous people over the years. You’re the sitting duck in a huge
global-organized crime. You’re the target. ♪ [Bob] The Canada Revenue Agency
collects your taxes and makes sure that refunds
go where they’re supposed to. But in 2019, they believed they’d made
an enormous mistake, paying out a bogus $63 million
to fraudsters. So, where did
all that money go? The CRA alleges that millions
ended up outside Canada. Our investigation reveals
an international network of individuals involved
in the Canadian carousel scheme. People connected to Pakistan,
the United Arab Emirates, Germany,
Denmark and England. You need to ask
your politicians now to understand this is a very,
very serious attack on the Canadian revenue. [Bob] Which is why we’re meeting
with Mike Cheetham. He’s helped to expose
carousel fraud schemes in Europe for more than a decade. And he says
we shouldn’t be too quick to judge
Samer Bishay and Iristel. The criminals have attacked
the Canadian tax system. It appears that his company has been caught
in the middle of this, surrounded
by stooge companies. [Bob] In the early 2000s, Cheetham says
he was inadvertently caught up in a carousel scheme himself. He’d been targeted
and used by fraudsters to help cheat
the United Kingdom’s tax department. It’s an absolute replica of the models
that we’ve seen in Europe. [Bob] Cheetham now spends
much of his time warning others and says Canada
needs to get these cases out of tax court
and pursue them criminally. Why are you here
in the United Kingdom, trying to trace
these criminals down? And to my knowledge,
the CRA has done nothing, absolutely nothing
to go after these people. There are extradition treaties. Why are they not tracing them? Here in Europe,
we have proceeds of crime. They can seize
everything these people have. [GPS automated voice
speaks in French] [Bob] So if the CRA
isn’t looking for them, we thought we would. We got information that another participant
in the Canadian carousel is a man
named Habib Khan, now living in Germany. Khan allegedly helped to set up
the operation in Canada, recruiting and directing
the so-called stooges, registering companies
in Ontario and BC. And he was the one
reported to have come to Canada to threaten
Danish Habib with guns after money went missing. We located Habib Khan in a quiet neighborhood
in Stuttgart, where his name’s
on the mailbox. [door buzzes] -[Harvey] Hello?
-[Khan] Hello. -[Harvey] Habib Khan?
-Yeah? [Bob] We told him
we wanted to talk about the companies
that he’d set up in Canada. I have nothing to say to you,
I’m sorry. [Harvey] Can you tell us
where the money went, sir? Where the money went?
Millions went missing. Which millions? [Harvey] From the–
from the Canadian government. [Bob] Habib Khan later
denied any involvement in a carousel scheme and said
he had never threatened anyone. Back in the United Kingdom, in the town of Hayes
outside London, we’ve located another man
reported to be instrumental in recruiting
and instructing many of the so-called stooges
in Canada. His name
is Amir Agha Zahoor. Court documents show
that his company received millions from Canadian stooges, with another $50,000 deposited
to his personal account. On social media,
Zahoor appears to lead a normal suburban life, working out
at his local gym, playing cricket. The CRA noted
Zahoor used to live in this townhome in Hayes
with a roommate, who was convicted
in a carousel fraud scheme and sentenced to prison
in the UK. We went
to Zahoor’s current address. Hi there.
Is Mr. Zahoor here? -[woman] Yes, he is.
-[Bob] Can I speak to him? -[woman] Yes.
-[Bob] Thanks. [Bob] It turns out
all we had to do was knock on the door. As you know,
your name has been mentioned in connection
with a large fraud in Canada. The Canada Revenue Agency says you’ve received payments,
illicit payments because of it, and we’d like to get
your side of the story. I can’t give you any–
any comments. [Bob] Why not? You have to speak
with my lawyer. I’m just an Uber driver here. -You’re an Uber driver.
-Yeah, yeah, yeah, yeah. We’ve actually heard
that denial before that people aren’t who… they actually are, that they don’t live
where they really live and that
they’re not involved in this. I am not going to say
anything right now. If anything
goes against me right now, it’s better
that you should, you know, uh, contact
with my solicitor. It’s– it’s going to be easy
for all of us. [Bob] Uber driver or not, Zahoor referred us
to his criminal lawyer who claimed they weren’t aware
of any investigations in Canada, and would have nothing to say. I think
you probably only uncovered the tip of the iceberg. I believe
that the fault here is with the tax authority. There will always be criminals, they will always attack
the low-hanging fruit. And your tax system
is wide open for this fraud.

How do the criminals do it? They set up shady companies… [Bob] In fact, in Europe,
they’ve been campaigning to stamp out
carousel tax fraud for years.

It’s called
VAT carousel fraud. The same goods
go round and round… [Bob] This video was produced
by the European Union.

Are you mad by now? You should be. [Bob] The EU
wasn’t only warning the public about this kind of crime, it was warning the criminals.

The rules
of the game need to change, and that’s what
the European Union is doing. [banging on door] [reporter] The surveillance team tracked all the suspects
to the meeting. [news anchor] Spanish police
proceeded to arrest her with the intention
of extraditing her as soon as possible. [reporter]
The nine-month trial found six of the seven
guilty as charged, who all received
at least five years in prison. [speaking French] [Bob] In Europe,
there’ve been numerous arrests and convictions. But throughout the EU, criminal investigations
are not the only priority. So too is prevention. A growing list of industries
prone to carousel fraud are exempted
from collecting sales tax to prevent
bogus refund claims. And unlike in Canada, European companies
are required to know far more about their suppliers
and customers, says Mike Cheetham. I think
by European standards, when you look at the Iristel
case, it would be a problem. There would be red flags
all over the place. You are expected to visit
your customers and suppliers to check them out. The law requires it. There’s been some jail time
for some of the higher levels in– in–
in this structure. So, they’ve moved
to safer areas. They found places where– where they are not yet
being investigated and hounded
by the authorities. And that would be Canada. [Frédéric] So, we’re now
an easy target. Yes. Yes.
You’re the sitting duck. In– in huge
global organized crime you’re the target. [Bob] We requested interviews with the Commissioner
of the Canada Revenue Agency, Bob Hamilton, and with Canada’s
Minister of Revenue, Marie-Claude Bibeau. Both declined. In a statement
the CRA told us they’ve made
significant investments in detecting
carousel schemes. And that they aim to prevent
and address them as early as possible. Mike Cheetham says
it’s already too late. How many heart operations, how many
cancer treatments does this– Coming from a medical
background as I do, I feel livid that
this is happening in Canada. I’m sure the fraud
is still going on as we’re speaking now. [Bob] When we come back… [Harvey] He’s saying there
that they have direct evidence to tie Iristel to the scheme. Perfect. Where’s the evidence? [Bob] Samer Bishay
has had a turbulent ride over the past four years, fighting allegations
he’s been involved in a carousel scheme that deprived
the Canadian treasury of $63 million. In tax court
and in federal court, the Canada Revenue Agency
has documented its case against Bishay
and his telecom company Iristel. The CRA says,
Iris has not been behaving like a company
in financial peril. According to them, Iris leased
a fleet of luxury cars… including two Jaguars,
a McLaren, two BMWs and a Porsche. Also, they say Bishay himself
got $2 million in a shareholder
loan repayment, and he bought
a $7 million executive jet. These are leases on vehicles, and you’re talking about
a couple of thousand bucks. I’ve had sports cars and–
Since 1999. And the jet
that they talk about for $7 million, that’s a jet that goes on a private jet
charter operation that generates 40% return. You siphoned off,
and that’s their phrase, siphoned off $4 million
to your Romanian affiliate. Iristel Romania
is one of our companies that’s been there since 2001. They run our call center. That’s what’s infuriating
about this whole process is how could the DOJ not get their facts right,
you know? And– and just accuse. [Bob] But the CRA says it’s Bishay
who has his facts wrong, and that he provided
“no supporting invoices” to explain those payments
to the bank account in Romania. They also reported
that in 2019, Iristel’s
Vice President of Sales, Nick Petridis,
was paid $1.8 million, some in commissions for sales the CRA alleges
never really happened. 1.8 million
is Iristel’s commission to me. But that’s
all my commissions, yeah. That was my–
that was my best year ever. Every minute that came in
we made margin on. It’s a fraction
of the money made, for sure. But that’s what I do. I make a fraction
of what I bring in. [Bob] Tax court documents
also state that an accountant connected to three
of the Canadian stooge companies offered to make a deal. If his clients
were given concessions they would co-operate
and provide direct evidence of Iristel’s involvement. The documents don’t say what that concrete evidence
might be. [Harvey] So, he’s saying there
that they have direct evidence to tie Iristel to the scheme. Perfect. Where’s the evidence? What evidence
are they going to provide? I think they’re full of it. [Bob] The court documents show the CRA had serious questions about Iristel’s relationship
with this man, the convicted fraudster
Louis Arriola. The CRA alleges that Iristel
paid kickbacks of $275,000 to Arriola’s company, LDI, as well
as to another US customer for participating
in the carousel scheme. The CRA alleges
the payments were omitted from Iristel’s general ledger “with the intention
of hiding the kickback.” Samer Bishay claims
there is a benign explanation. They were loan repayments. They are not able to read what are
financial statements, they were not kickbacks. They were simply payments that had nothing to do
with HST. [Bob] And according
to this email, Arriola also had
in-depth knowledge of Iristel’s suppliers, and helped process
their payments. The court file shows
CRA auditors wondered about what happened next. Iristel and Louis Arriola
moved away from traditional banking and onto a cryptocurrency-based
payment platform. Hi, I’m your guide
to using TeleEscrow. [Bob] TeleEscrow
and Amerix Coin were promoted as a tool
for telecom companies to quickly settle accounts. Free yourself from the banks
and start using the most valuable coin on earth,
Amerix. [Bob] And it turns out Louis
Arriola was the man behind both. The criminals, unfortunately,
use payment platforms. This is to mask
the transactions because banks have
a responsibility, even in Canada, to report
suspicious transactions for money laundering. But in Canada,
it’s a– it’s a new thing. People are not aware
of these payment platforms and how they operate. [Bob] According to the CRA, Iristel directed its suppliers to use Arriola’s
payment platform, TeleEscrow. And the CRA alleges
the purpose of TeleEscrow was to make it look as if money
were moving between Iristel, its suppliers
and its customers. But in our interview,
Bishay claimed he had no idea that Arriola was behind
the payment platform. [Bob] Was Lou Arriola part
of the connection to TeleEscrow? He was definitely recommended
the platform, but I was not made aware
of any ownership status or anything like that. [Bob] And soon, Louis Arriola
and TeleEscrow were in big trouble
in the US for alleged wrongdoing
in numerous other cases. A bankruptcy receiver said TeleEscrow was “designed
to defraud,” part of a criminal enterprise with no real business activity. And that Louis Arriola
and others at TeleEscrow conspired to fabricate
a pretend business to perpetuate a massive fraud
against lenders. Arriola has not responded to our repeated attempts
to reach him. So, you’ve–
you’ve got a company that appears to be… essentially in business
for fraud. And then you’ve got
the recommendation of who– of Lou Arriola,
a convicted fraudster. I didn’t know who
Louis Arriola is partners with or who he’s dealing with
or who he’s sleeping with. That’s none of my business. And it’s very unfair to come four years into it
and say, “Well,
you should have known this, and I should have known that.” Should have known what? [Bob]
Yet in our first interview, Samer Bishay claimed he hired
a major accounting firm to look into TeleEscrow
before signing up. Uh, we have a full report
from Deloitte at the time that we said,
“Is there anything wrong about using this platform, about this technology
in general?” Not at all. [Bob] In fact, under oath, Iristel’s CFO
admitted to the CRA that Deloitte
had not been hired to determine the legitimacy
of TeleEscrow. Emails show Deloitte asked
for a meeting with TeleEscrow, but Iristel turned it down. They are accusing you of… managing a massive fraud against the Canadian treasury and therefore
the Canadian people. If they were really
right about that, why am I not in handcuffs? [Bob] A civil court judge
may one day rule on the CRA’s allegations that Iristel played
a central role in the carousel scheme. So far, all allegations remain
untested in court. But for Canadians
the real question might be, “Where did your tax dollars go?” We traced
the invoices we obtained to Pakistan and to a company
in Islamabad called Samaviya. Which,
according to a CRA audit, in 2019 alone was sent $42 million from a carousel scheme
in Canada. [Bob] Minister Bibeau.
Hello, I’m Bob McKeown. [Bob] We thought we would try
one more time to speak
to the Minister of Revenue about carousel schemes
in general. After all, it’s your money, your tax dollars being stolen. [Bob] We are doing
an investigation on carousel tax frauds… and I’d like to ask you
a question if I could. Um, I would answer
your question, but I’d prefer to get
a little briefing before. [Bob] Bibeau was appointed
Revenue Minister this past summer. Though it seems the CRA
had not yet got around to briefing her. [Bob] Carousel tax frauds. How big an issue are they
for the CRA and as minister for you? Okay, seriously,
Simon will just, uh, stay in contact with you
and I’ll get back to you, okay? But I– I–
I need to, uh, look at it. [Bob] We– we’ve had
some difficulty getting a yes to our interview request. I say yes, okay,
I say yes, we’ll do it, but let me get ready for that. [Bob] That’s very kind of you.
Thanks. Okay? Thank you. [Bob] But Minister Bibeau
promptly changed her mind. Though the CRA has identified
at least $1.1 billion related to carousel schemes
in Canada, the minister decided
she wouldn’t be discussing them with us after all. Instead,
she sent this statement. [Bo] The money
has left your country, the– the money has left
my country, and you can’t imagine where. You have to face the reality that you’ve been stolen of money
that you’re never going to see. The– the money’s gone.