A major Halifax developer is under investigation for allegedly “willfully evading” paying corporate income tax and “making false or deceptive statements” in one of his company’s HST returns, according to court documents.
Navid Saberi, a company he heads called Glen Arbour Condominium Inc., and his brother Saeid Saberi, are being investigated by the Canada Revenue Agency’s Criminal Investigations Division for allegedly taking in $127,639 in Harmonized Sales Tax in the monthly filing periods ending June 30, 2010, and Dec. 31, 2011, but not handing it over to the feds.
They are also under scrutiny for allegedly failing to report $926,498 of the company’s income during the same two periods.
“During the course of an audit for Harmonized Sales Tax, the auditor identified that the electronic records of Glen Arbour Condominium Inc. included entries to record the sale of three condominium units and also included corresponding entries to offset (reverse) the recorded sales and the Harmonized Sales Tax collected on the sale of the three condominium units,” according to court documents Bruce McCabe, an investigator with the Canada Revenue Agency, used to obtain a search warrant for suite 111 at 60 Walter Havill Dr. in Halifax to gather evidence in the case. “The net result was that the monthly Harmonized Sales Tax returns that included the date of the sales did not include the sale of the condominiums or the Harmonized Sales Tax collected on the sales. The auditor also determined that the sales in question did occur and were not reported in any other Harmonized Sales Tax return during the audit period. The sale of the three condominium units were also not reported for income tax purposes by Glen Arbour Condominium Inc. because corporate income tax returns have not been filed for 2010 to 2013, inclusive.”
Navid Saberi is the president and only director of the corporation, say documents filed at Halifax provincial court. The address searched is the same location for his company, United Gulf Developments Ltd.
In a brief telephone interview Thursday, Navid Saberi said the Canada Revenue Agency has not laid any charges in the case.
“It’s going to sort itself out,” he told the Halifax Examiner.
“They’ll see there’s nothing there … Nothing will happen in the end because it’s OK.”
If Navid Saberi’s name rings a bell, it’s likely because he was behind two massive projects proposed for downtown Halifax that never got built.
In November 2012, Halifax regional council rejected a request for an exemption to height restrictions for Skye Halifax, a $350 million, 48-storey twin tower development proposed by Navid Saberi’s United Gulf. The project proposed for the corner of Granville and Sackville streets exceeded HRM by Design’s height restrictions by 106 metres.
Six years earlier, United Gulf won approval from City Hall to build a $150-million project dubbed the Twisted Sisters on the same site. But the two 27-storey towers never materialized.
Saeid Saberi is the business manager for Glen Arbour Condominium, the company now being scrutinized by the Canada Revenue Agency.
“Upon being presented with the results of the audit findings, Saeid Saberi stated to the auditor that some entries in the general ledger may be reversed if possession of the property occurred on a different date. Saeid Saberi agreed that the sales took place during the audit period but did not state why the sales were not re-entered into the general ledger on a later date,” McCabe says in court documents.
The three properties in question are in a sprawling subdivision just beyond the Glen Arbour Golf Course in Hammonds Plains. They have street addresses of 61, 123, and 137 Carnoustie Drive. All three appeared to be occupied Thursday morning.
An auditor sent a letter to GAC in July 2014 indicating officials were considering imposing a penalty for the unreported HST.
Saeid Saberi responded to the auditor in September 2014. “The reply letter stated that they disagreed with his findings and wanted to set up a meeting to review the issues in question and to ‘clear this misunderstanding,’” say court documents.
The auditor met later that same month with Saeid Saberi and GAC’s bookkeeper, Terra.
During a conversation when Saeid Saberi was out of the room, the auditor asked the bookkeeper about two of the condominium sales in question, say court documents. “The auditor asked Terra if the sales took place. Terra stated the sales took place and the contracts were signed prior to July 1, 2010 and that is why she calculated HST at 13 per cent. The auditor then asked Terra why they were reversed out of the (general ledger) if the units were sold. Terra stated that he would have to ask Saeid about that.”
When the auditor did just that “the explanation provided by Saeid was that the client probably did not take possession of the unit until a later date. Saeid agreed that the sale took place within the audit period. Saeid did not state why the sale was not reported on another date,” say court documents.
When the auditor contacted Saeid Saberi by telephone on September 24, 2014, he asked for more HST documentation. “Saeid indicated Terra is still getting the records ready and it is taking longer than he thought it would. Saeid indicated the records should be ready the following week.”
Similarly, when asked during the initial audit interview in February 2014 why the company had not filed T2 returns since 2009, “Saeid stated that the T2 returns for the corporation are being worked on and should be done in a few weeks. The T2 returns have still not been filed over two years later,” say court documents.
Based on discrepancies in the general ledger compared to filed HST returns, and Saeid Saberi’s statement on Sept. 17, 2014 about the reversed entries, the auditor referred the case on Nov. 7, 2014 to the agency’s Enforcement Division, later renamed the Criminal Investigations Division.
Prior to that referral, Saeid Saberi was asked about the status of condo units that were built by GAC, but not sold. “Saeid stated nothing has been done with the units as they are waiting for approval from HRM,” say court documents.
McCabe doesn’t believe that to be true, according to court documents. “Many of the completed condominium units that have not been sold appear to have been used as residential rental units during the investigation period.”
The rental rate is probably between $1,500 and $1,700 a month for each unit, “based on a current advertisement on the Kijiji website for a rental unit that was sold or transferred by GAC to a related corporation,” he said. McCabe noted that at least six units were used as residential units during the investigation period while still owned by GAC.
Saeid Saberi postponed or rescheduled the start of the audit from April 25, 2013 to Feb. 25, 2014. On one occasion he said he was out of town. He didn’t give specific reasons “for the rescheduling on other occasions. It is not known if it was planned or just coincidental that the audit started just five days after the remaining properties were sold or transferred out of Glen Arbour Condominium Inc. to a related corporation,” McCabe says. “As of August 12, 2015 GAC does not own any real estate properties.”
Saeid Saberi did not provide the auditor with the original books and records of Glen Arbour Condominium Inc., the documents say.
“The things that we hope to seize will be used to determine if Glen Arbour Condominium Inc. has paid the correct amount of income tax and Harmonized Sales Tax and to determine if they have willfully understated their taxable income and net Harmonized Sales Tax payable.”
The allegations contained in the of the warrant have not been tested in court.
Potential punishments for willfully evading paying the corporate income taxes in question include a fine of between 50 per cent and 200 per cent of the amount of tax they were allegedly trying to evade, as well as up to two years in jail. The punishments for evading remittance of HST fall within the same range.
Glen Arbour Condominium Inc. bought the land where it built the Hammonds Plains condo project from Annapolis Group Inc. in December of 2003.
“Annapolis Group Inc. is not related or associated with GAC although they have an ongoing business relationship with corporations related to GAC,” say court documents.
Mina Saberi, Navid’s wife, is the sole shareholder of Glen Arbour Condominium Inc. She and her husband live at 1069 Belmont on the Arm in Halifax. Their home is assessed at $3. 766 million.
“Mina’s involvement in the operations of GAC may be limited as Navid signed for Mina as a guarantor on a mortgage document on January 17, 2011 (during the investigation period) as her lawful attorney,” say court documents.
Navid Saberi, 53, is the president and sole director of at least 23 companies; most are involve construction and real estate. Those that have had transactions with GAC include United Gulf Developments Ltd., GNF Investments Ltd., and Greater Construction Ltd.
Saeid Saberi, 51, lives at 103 St George Boulevard in Hammonds Plains. The home is assessed at $568,600.
The warrant for the address on Walter Havill Drive contains 13 pages itemizing documentation and computer gear seized in the July 27 search. On Oct. 21, an investigator requested more time to go over the detained items.
Read the entire warrant here: