Halifax construction firm linked to convicted drug dealer faces CRA tax fraud probe

GMB East Coast Enterprises Inc., owned by Gary Boudreau, is under CRA investigation for an alleged illegal tax scheme involving straw recipients and cash payments.

Halifax drywall company tied to convicted trafficker under CRA tax investigation

Google News CA — Crime (EN) reports that a Halifax-area construction company formerly owned by a convicted drug trafficker is now under investigation by the Canada Revenue Agency for an alleged illegal tax scheme.

Gary Michael Boudreau, 50, known as "Boo," was convicted last year on drug, proceeds of crime, and money-laundering charges following a 2020 RCMP investigation into cocaine trafficking and illegal cannabis grow-ops in the Nova Scotia region. He is scheduled to be sentenced in October. Now, a separate tax investigation has emerged targeting his drywalling and insulation business, GMB East Coast Enterprises Inc.

In March, CRA investigators searched two properties, including the lakeside suburban home where Boudreau resides near Kearney Lake, seizing dozens of documents and financial records covering the period between 2020 and 2023, according to court filings.

The court records indicate the investigation is examining potential offences under the Income Tax Act — specifically, making false or deceptive entries or omissions in company records, and evading or attempting to evade the payment of taxes. No charges have been laid, and none of the allegations have been tested in court.

An affidavit filed by a CRA investigator in June indicated it could take approximately eight more months before investigators determine whether tax charges or other charges are warranted.

Boudreau's lawyer, Pat MacEwen, stated in an email that he had not yet reviewed the documents underpinning the search warrants, but noted that "searches are often conducted based on information which turns out to be erroneous. Mr. Boudreau has not been charged with any offences by CRA at this time."

Alleged scheme involved straw recipients and off-books cash

While Boudreau was listed as the president and sole director of GMB, the search warrant records do not directly implicate him in the alleged scheme. Instead, they focus on a supervisor employed by the company.

According to the CRA's allegations, the supervisor would issue cheques to subcontractors who were in fact "straw recipients." Those individuals would submit a fake invoice, deposit the cheque, and then immediately withdraw most or all of the funds in cash — handing the money back to the supervisor. The cash was then used to pay the subcontractors who were actually performing the work, keeping those payments entirely off the books.

This arrangement made it "virtually impossible" for authorities to determine whether the workers had paid the proper amount of tax, according to the court records. In one documented case, a subcontractor appeared to have received tens of thousands of dollars in cash payments but reported just $1 in income on his tax return, according to a CRA investigator's affidavit.

The company itself also allegedly listed the payments to the straw recipients on its income tax filings, reducing GMB's taxable income in the process.

As for the two straw recipients examined by the CRA, the records acknowledge they may have carried out legitimate work on some occasions, but allege their primary function was as "cheque cashers." At least one was likely paid a commission for this role. Neither filed income taxes during the years under investigation.

The tax probe draws in part on evidence gathered during the original RCMP criminal investigation six years ago, including surveillance reports from officers who photographed cheques and cash being exchanged in a Bedford, N.S., parking lot.

A spokesperson for the CRA declined to comment on the matter this week, as did the Public Prosecution Service of Canada.

Criminal sentencing and $1.2M home dispute still unresolved

The fact that Boudreau operated a construction company and drew income from it was already examined during his criminal trial in Halifax provincial court. His defence lawyer pointed to GMB as evidence that his wealth was not derived solely from proceeds of crime.

Judge Elizabeth Buckle, however, found Boudreau guilty of proceeds of crime offences, including using drug money to help finance construction of his Kearney Lake home, now assessed at $1.2 million. The prosecution subsequently sought forfeiture of the property.

In July, Buckle ruled the home should not be turned over to the government, finding it had been built using a combination of both legal and illegitimate funds. She ordered Boudreau to pay a $240,000 fine instead. Last week, prosecutors filed an appeal of that ruling, asking the Nova Scotia Court of Appeal to order forfeiture of the house. No date for the appeal has been set.

Buckle is scheduled to sentence Boudreau in late October on the charges arising from the original RCMP investigation — cocaine trafficking, proceeds of crime, money laundering, and weapons offences connected to a shotgun found in his bedroom. Prosecutors have sought a 13-year prison term; the defence argued for three and a half years during submissions this spring.

Source: Google News CA — Crime (EN)