Kitco Metals among gold traders facing Quebec tax fraud allegations – by Nicolas Van Praet (National Post – December 10, 2013)

The National Post is Canada’s second largest national paper.

MONTREAL – Revenu-Québec is seeking prison sentences and fines totalling $750-million for Kitco Metals Inc. founder Bart Kitner and directors with several other gold trading firms following one of the biggest tax fraud investigations in provincial history.

Quebec’s revenue department on Monday said it filed a total of 1,920 charges against Kitco and 11 other companies as well as their directors and an accountant implicated in an alleged fraud scheme linked to gold processing. Some 120 charges were filed against Kitco and another 120 against Mr. Kitner involving total fines of $454.6-million.

“This is an investigation that’s lasted several years and the evidence is significant,” said Revenu-Québec spokesman Stéphane Dion. “Without a doubt, it’s one of the largest investigations we’ve ever done.”

The total amount allegedly derailed by all 12 companies charged was $350-million over a two year period ending in 2010, Mr. Dion said. The ministry claims Kitco specifically made false statements and tried to obtain tax rebates to which it wasn’t entitled. The amount related to Kitco was not made public.

Kitco forcefully denied the allegations. The company last year filed a lawsuit against Revenu-Québec seeking $122-million in damages caused to the company and on Monday, it said its legal action against the department will escalate as a result of the formal charges.

“[Mr. Kitner] believes that [Revenu-Québec’s] continuous pursuit of this case is an abuse of their authority and has caused substantial harm to Kitco’s ongoing operations and development,” Kitco said in an emailed statement. “Kitco continues to vigorously contest all aspects of [the department’s] actions.”

Founded in 1977 by Mr. Kitner, privately-held Kitco is a well-known buyer and reseller of precious metals including gold. It runs a popular website that carries spot prices as well as expert commentary.

The penal code charges stem from a probe by the tax ministry dubbed Project Carat, disclosed in June 2011. While it defended itself from the allegations, Montreal-based Kitco was granted bankruptcy protection that month. Its current creditor protection extension is set to expire in March 2014.

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