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BEYOND LOCAL: Tax collectors claim $300-million owed in alleged fraud related to First Nations gas stations

The long-running case centres around the tax strategies employed by a company once at the forefront of Canada’s expanding First Nations fuel businesses
pumping gas
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The tax bill owed by an Ontario company selling fuel to highway gas stations on First Nations reserves has ballooned to more than $300-million, a court-appointed auditor has found, and the provincial police’s anti-rackets squad is investigating.

Court records outline lavish spending by the husband-and-wife owners, including the purchase of a yacht named the Cuz We Can, and lawyers representing creditors warn the pair could be poised to flee the country.

The long-running case centres around the tax strategies employed by Original Traders Energy, a company founded in 2017 and once at the forefront of Canada’s expanding First Nations fuel businesses.

Derek Rogers, a spokesman for the Ontario Provincial Police, said in a statement last month the force is conducting a criminal investigation involving Original Traders.

Glenn Page was president of Original Traders until he was ousted from the company in 2022 by his business partners. He once stated on his résumé that he ran “Canada’s first Indigenous fuel producer” and that it made up to $800-million in yearly revenues.

Original Traders acquired fleets of trucks to buy and ship bulk fuel from the United States to Ontario. The fuel was mixed into gasoline on three different Indigenous reserves and then was sold to consumers at gas stations located on band land.

Thousands of pages of documents have been filed with the court including sworn statements by Mr. Page where he says doing business on an Indigenous reserve was key to Original Traders’s business model.

“The incentive to do the business on reserves was to minimize sales tax, thereby offering a competitive advantage,” Mr. Page says in court filings. “It was critical that Indigenous individuals with status under the Indian Act … hold a majority interest in OTE LP and its general partner.”

But Mr. Page, who is not Indigenous, was fired and then sued in 2022 by his former business partners, brothers Miles and Scott Hill, of the Six Nations of the Grand River, who claimed in court documents that Mr. Page and his wife Mandy Cox spent millions on home renovations, private jets, a resort in St. Lucia and the $4-million, 70-foot yacht.

In their lawsuit, the brothers claimed Mr. Page left behind a $35-million tax bill.

The Hills’ lawsuit was suspended when the company entered creditor protection. The courts installed KPMG as a monitor. Lawyers representing the accounting firm argued late last year that the couple’s assets should be frozen for allegedly “committing wide-scale fraud on OTE and its creditors.”

The unpaid taxes owed to the Canada Revenue Agency and the Ontario Ministry of Finance now are estimated to be in excess of $310-million, said a January judgment from Ontario Superior Court Justice Jessica Kimmel.

She ruled that the courts would keep freezing millions of dollars of assets controlled by Mr. Page as the creditor-protection proceedings continue to unfold.

Lawyers for KPMG said in filings last December that “the quantum of CRA’s claim will exceed $200-million in respect of unremitted carbon and excise taxes and other items.”

KPMG’s court submission also says an Ontario Ministry of Finance audit found “significant variances between the volumes of fuel imported and sold as reported by the OTE Group and volumes imported and sold as determined by the MOF.” Ontario is owed at least $130-million as of last September, the court filings show.

KPMG flagged for the court that the couple two years ago became citizens of St. Lucia and said they could be poised “to make a getaway to a country they are citizens of with no extradition treaty.”

In an e-mail to The Globe, Mr. Page said he hopes to clear his name in court and called the allegations against him “unsubstantiated.”

“I have not been contacted by the OPP,” he said.

He said that the company was profitable while he ran it and “at the time of my departure from OTE in July 2022, all taxes had been filed and documented.”

Mr. Page said he had been trying to set up a branch of the business in the Caribbean when he was fired.

“Several Canadian companies operate in St Lucia,” he said. “This business decision has been conflated to apply a nefarious intent of my part, which is not true.”

Spokesmen for the Canada Revenue Agency and the Ontario Ministry of Finance refused to comment directly on the case. In an unsigned statement to The Globe, the Ontario ministry said “only entitled First Nations purchasers buy gasoline exempt of Ontario gas tax.”

“Like off-reserve retailers, authorized on-reserve gasoline retailers must pay the Ontario gasoline tax when they purchase bulk gasoline from their supplier,” the statement said. “While non-status customers may purchase gas at on-reserve stations, they are not entitled to receive the gas tax exemption.”

The tax bill, which has increased tenfold from an estimation two years ago when the court proceedings began, is unusually large, said Jeremy Scott, an expert in sales and fuel taxes based in Halifax who is not connected to the case.

“I can certainly recall some tax reassessments or seeing tax court cases where the tax at issue was tens of millions of dollars, maybe close to $100-million in some retail settings,” he said.

“This is a whole different beast.”

Mr. Scott said a tax reassessment of this magnitude would likely include fines and interest costs, which can accumulate quickly.

Fuel wholesalers are responsible for charging gas stations for federal and provincial excise taxes that have to be promptly remitted to the government. These bills can be significant, Mr. Scott said, given how every dollar of gasoline sold in Canada adds on an additional 33 cents in these taxes.

Scott Hill told the Ontario Superior Court last year that he discovered in 2022 that the Ministry of Finance had notified Original Traders that the company had “failed to submit payments or remittances for provincial gasoline tax and fuel tax, and/or the returns associated with these taxes.”

Miles Hill told The Globe and Mail in an interview that the business expanded too quickly and without adequate checks and balances.

He said he is co-operating with the OPP investigation. “I had nothing to do with the day to day operation.”

The court filings allege the couple bought about $9-million of credits in a private jet company, Airsprint, that facilitated extensive travel.

“Page and Cox each took over 100 flights on the jets between April 2021 and February 2023 including 50 flights each to non business destinations including St. Lucia, Florida, Hawaii, Spain and France,” KPMG alleges in the documents.

A previous version of this article incorrectly reported that OPP spokesman Derek Rogers said last week in a statement that the force is conducting a criminal investigation involving Original Traders. He gave the statement last month. This version has been updated.