International Journal of Coercion, Abuse, and Manipulation Volume 6 2023 100
A Ride With My Best Friend: The Fiscal Arbitrators Pseudolaw Tax Evasion
Scheme, Recruitment, and Litigation
Donald J. Netolitzky, PhD, K.C.
Alberta Court of King’s Bench
Abstract: Fiscal Arbitrators was a comparative short-lived Canadian pseudolaw tax avoidance scheme that
operated between 2006-2012. Taxpayers made “Strawman Theory” claims to create large but fictitious business
expenses. Taxpayers who employed Fiscal Arbitrators techniques had no legal basis for their claims. The Canada
Revenue Agency assessed “gross negligence” penalties in addition to other automatic charges. At least 500 Fiscal
Arbitrators customers appealed their taxation re-assessments at the Tax Court of Canada. There, these taxpayers
usually claimed their actions, and blatantly false tax returns, had a reasonable basis.
This unusual confluence of factors resulted in a substantial number of written court decisions that include first-hand,
first-person, accounts of how and why Fiscal Arbitrators’ customers were recruited, and that describe this “Detax”
scheme’s operation. Unexpectedly, Fiscal Arbitrators customers were primarily recruited via person-to-person
contacts and through family, social, and workplace networks. No Internet-based recruitment was reported. Fiscal
Arbitrators customers showed little to no interest in or understanding of the basis for their extraordinary claims.
Their sole motivation was greed. These taxpayers were mainly non-ideological “mercenaries” who abandoned
pseudolaw to conduct damage control steps as rational self-interested actors. Most voluntarily terminated their
appeals prior to a full appeal court hearing.
The characteristics of this study’s Fiscal Arbitrators population do not correspond with how legal, media, and
academic sources stereotypically portray and describe pseudolaw adherents. This investigation thus illustrates
pseudolaw’s users are potentially more diverse than is commonly recognized
Keywords: Pseudolaw, Organized Pseudolegal Commercial Arguments, Fiscal Arbitrators, Income Tax, Detaxer
I. Introduction -Pseudolaw and Fiscal Arbitrators
This article investigates an important but little studied
aspect of pseudolaw cultures: how are people recruited
into pseudolaw-using groups. As is expanded on below,
pseudolaw is a set of highly stereotypic not-law rules,
meshed within a conspiratorial matrix, that represent
a legal system (of a kind) that is in competition with
“conventional” or “mainstream” law in many countries,
worldwide.
Pseudolaw is also a minority and/or outlier legal system,
in that pseudolaw is usually adopted by marginal and
dissident populations. Those populations are highly
diverse, but generally have an overarching goal: the
transfer of authority to individuals, and away from
government, law enforcement, institutions, and courts.
The exact objectives of pseudolaw groups range broadly,
from counter-revolutions that seek to overthrow
perceived false authorities, to separation from mass
culture on religious or racial grounds, to what could be
called institutionalized Eric Cartmanism: “I do what I
want!” and “Respect My Authority!”
This article focuses on persons who adopted pseudolaw
promoted by Fiscal Arbitrators, a Canadian pseudolaw
organization led by Lawrence (Larry) Watts and
Aurelius Carlton Branch that promised its customers
dramatic personal income tax advantages. Fiscal
Arbitrators appears to have operated between 2006-
2012, which makes Fiscal Arbitrators one of the final
Canadian “Detaxer” schemes. The Detaxers were a
collection of leadership figures and promoters, “gurus,”
whose applications of pseudolaw were effectively
doi.org/10.54208/1000/0006/005

ISSN: 2710-4028 DOI: doi.org/10.54208/1000/0006 101
limited to tax-related contexts (Netolitzky, 2016a, pp.
616-624 Netolitzky, 2023a, pp. 814-817). All offered
some form of immunity from federal and provincial
income tax obligations. At one point at least a dozen
separate schemes promoted by Detaxer personalities
competed within this marketplace.
The Detaxer phenomenon collapsed in the late
2000s, when Detaxer gurus were targeted in criminal
proceedings conducted by the Public Prosecution
Service of Canada, and ultimately convicted of tax
evasion and counselling fraud charges (Netolitzky,
2023a, pp. 814-815). The only remaining active
personality from that period, David Kevin Lindsay,
has successfully re-invented himself as a COVID-19
pandemic mitigation step resister (Netolitzky, 2023a,
pp. 815-817). Overall, the Detaxer movement in
Canada has now been dead for over a decade. Much
the same occurred in the United States, with its parallel
pseudolaw Tax Protestor movement.
This article investigates one aspect of the fallout
resulting from Fiscal Arbitrators. In the late 2000s,
many hundreds of Canadians submitted income tax
filings based on Fiscal Arbitrators theories. The overall
result was those taxpayers grossly misrepresented their
total income, thus failing to pay income tax due. For
taxpayers who were employees, the taxpayer received
a large and unwarranted refund cheque. Frequently,
Fiscal Arbitrators taxpayers also submitted revised
assessments of prior income tax years, to trigger large
but spurious income tax refunds. Some of those refunds
were paid by the Canada Revenue Agency [CRA].
Ultimately, taxation authorities caught up with this
scheme, which was readily identifiable because of
certain highly atypical fingerprint language Fiscal
Arbitrators used to complete standard Canadian T1 tax
forms. When the CRA re-assessed the Fiscal Arbitrators
income tax returns, the spurious pseudolaw-based
claims were identified as problematic, and CRA auditors
ordered: 1) payment of actual outstanding income
tax, and 2) return of improper tax refunds issued to
those taxpayers. Since the Fiscal Arbitrators scheme
was obviously false, taxpayers who had employed
Fiscal Arbitrators had no legal alternative but to pay
outstanding income tax, return illegal refunds, and
satisfy late payment interest charges and penalties.
However, the Income Tax Act of Canada also mandates
that a taxpayer who makes a “false statement or
omission,” “knowingly, or under circumstances
amounting to gross negligence, has made or has
participated in, assented to or acquiesced in the making
of, a false statement or omission” (section 163(2)), is
also liable for a further penalty of the larger of $100 or
50% of the tax that was avoided, in addition to other
unpaid taxes, and late payment and interest sums. The
CRA appears to have generally imposed this section
163(2) “gross negligence” penalty against those who
participated in the Fiscal Arbitrators scheme.
Taxpayers who were unfortunate enough to adopt
the Fiscal Arbitrators program had basically no
hope of challenging the tax they ought to have paid,
and associated interest and penalties. Few of those
taxpayers appear to have attempted to challenge the
CRA’s reassessments on those bases. However, the
CRA’s imposition of section 163(2) gross negligence
penalties led to a substantial volume of appeals to
the Tax Court of Canada, where Fiscal Arbitrators
customers rejected that they were grossly negligent.
Instead, these taxpayers argued there were allegedly
legitimate reason(s) to think the Fiscal Arbitrators
scheme was valid. Those taxpayers needed to provide
evidence that their mistaken belief and actions had
some reasonable basis.
This combination of circumstances led to an unusual
situation. A large number of persons who adopted and
applied a pseudolaw Detaxing scam have appeared in
court, the Tax Court of Canada, to explain how they
were recruited into the Fiscal Arbitrators scheme, the
nature of their interactions with Fiscal Arbitrators
promoters, and why these taxpayers believed the Fiscal
Arbitrators tax elimination process was legitimate.
Justices of the Tax Court of Canada have then ruled
on the credibility, reliability, and implications of
that evidence. This article surveys identified Fiscal
Arbitrator Tax Court of Canada litigation, and reviews
Fiscal Arbitrators customer testimony on:
1. the operation of Fiscal Arbitrators,
2. the taxpayer’s understanding of Fiscal
Arbitrators’ methods, and