June 22, 2012 - 7:30 PM
SEATTLE - A California man convicted of drawing hundreds of Canadians into a tax fraud scheme in the U.S. has been sentenced to 12 years in prison.
Ronald Brekke's sentence was handed down Friday in a courtroom in Seattle, Wash.
Brekke was also ordered to pay more than US$6 million in restitution for conspiracy and wire fraud.
According to a statement from the U.S. Department of Justice, judge John Coughenour said Brekke "fundamentally failed" to grasp the country's laws.
Brekke's trial heard he masterminded a scheme that saw nearly a thousand people in three countries file fraudulent tax refunds totalling $763 million.
IRS officials say about 630 Canadians were roped into the scheme, which paid out $14 million before it was discovered in 2010.
Authorities say Brekke told his victims the U.S. Treasury would pay out tax refunds equal to their personal debt — a deception known as "1099 OID'' fraud, after the form used to claim the refund.
A government trial brief says the ploy earned Brekke more than $400,000 between February 2009 and his arrest in November 2010.
The scam started to fall apart after two of Brekke's co-conspirators, both Canadians, tried to cash refund cheques worth more than $350,000 each at a bank in Bellingham, Wash.
Donald Mason of Fort Saskatchewan, Alta., and John Chung of Kelowna, B.C., were arrested in October 2009 and the investigation led authorities to Brekke, whose promotional materials were found in Mason's hotel room. They were convicted of fraud in connection with the case.
"The promotional material made clear that Brekke was the mastermind of the scheme,'' American court documents read.
Emails obtained by IRS investigators showed at least two others organized seminars in Canada to draw more people into the scam, the documents read.
News from © The Canadian Press, 2012