International Journal of Coercion, Abuse, and Manipulation Volume 6 2023 104
2013 “Tax Preparer,” 2020).
The number of fraudulent tax returns prepared by
Fiscal Arbitrators is unclear. For example, a 2014
media report indicates in 2009 nearly 1,800 taxpayers
employed Fiscal Arbitrators strategies (Hoff, 2014).
A lawyer involved in some Fiscal Arbitrators appeals
claimed the scheme had “up to 3,000” customers
(Melnitzer, 2016). However, at trial, Watts was found
guilty of only preparing false income tax returns for
241 taxpayers. These 241 fraudulent returns attempted
to generate $10,507,131 in evaded taxes and fraudulent
refunds, of which $2,750,288 was actually credited to
taxpayers (R v Watts, 2016 ONSC 4843, paras. 1-2).
The higher volume estimates of Fiscal Arbitrators
income tax returns very plausibly include other related
and unrelated tax avoidance and evasion scheme users.
What can be said with confidence is that a substantial
number of Canadian taxpayers did adopt Fiscal
Arbitrators strategies.
The scope of Fiscal Arbitrators’ activities is plausibly
confused because Fiscal Arbitrators was associated
with other non-pseudolaw questionable income
tax avoidance schemes, in particular charitable gift
programs. These schemes exploited Income Tax
Act provisions that authorize a large tax credit for
donations to charities. Briefly, the charity schemes
either fabricated or greatly multiplied the tax credit
associated with charitable donations (e.g., Canada
(Attorney General) v Nash, 2005 FCA 386 Cannon v
Funds for Canada Foundation, 2012 ONSC 6101 Klotz
v The Queen, 2004 TCC 147 Scott v The Queen, 2010
TCC 237, see also Bozek, 2022).
Reported court decisions show that some Fiscal
Arbitrators customers had previously been involved
in charity-based tax avoidance schemes. For example,
certain Fiscal Arbitrator promoters had first sold charity
schemes, and then introduced their charity scheme
customers to Fiscal Arbitrators to purportedly provide
even further tax advantages (e.g., Lauzon v The Queen,
2016 TCC 71, para. 4 Mayne v The Queen, 2016 TCC
212, paras. 5, 17-24 Wynter v The Queen, 2016 TCC
103, para. 5). A multilevel marketing charity donation
program, DSC Lifestyle Services (“Financial Company
Director,” 2013), is frequently linked to these scenarios.
Another repeating motif is that refunds obtained
by Fiscal Arbitrators would not be recovered by
taxpayers, but instead were immediately directed into
questionable to fraudulent investment schemes, such as
Frieslander Financials (e.g., Brisson v The Queen, 2013
TCC 235, paras. 12, 21 Mallette v The Queen, 2016
TCC 27, paras. 3-5). Friesland Financials reportedly
required its investors only file income tax returns via
Fiscal Arbitrators (Mallette v The Queen, 2016 TCC
27, para. 31). Muntaz Rasool also was involved in pre-
Fiscal Arbitrators investment schemes (e.g., Anderson v
The Queen, 2016 TCC 93, paras. 11-13).
The typical fee structure for Fiscal Arbitrators was an
up-front payment of $500, then 20% of the total refund
received (e.g., Chartrand v The Queen, 2015 TCC 298,
para. 27 Daszkiewicz v The Queen, 2016 TCC 44,
para. 37 Mallette v The Queen, 2016 TCC 27, para.
5), though some taxpayers reported more aggressive
billing, such as an over $10,000 “contingency fee”
(Taylor v The Queen, 2015 TCC 335, para. 40), or that
Rasool had demanded 50% of refunds received from
the CRA (Robichaud v The Queen, 2016 TCC 19, para.
31). Fiscal Arbitrators consistently did not include any
tax preparer information in its customers’ returns,
despite that being required by law.
Fiscal Arbitrators promoters are frequently reported to
have claimed to be former CRA employees:
• Branch (e.g., Gray v The Queen, 2016 TCC 54,
para. 5)
• Danasar Morlee (e.g., Brathwaite v The Queen,
2016 TCC 29, para. 11)
• Rasool (e.g., Hogg v The Queen, 2017 TCC 231,
para. 4 Robichaud v The Queen, 2016 TCC 19,
para. 29) and
• Watts (e.g., Brisson v The Queen, 2013 TCC 235,
para. 9).
This purported subject expertise was, however,
countered by provisos in Fiscal Arbitrators documents,
such as: “all information, material, is strictly for
educational and private purposes,” and that Fiscal
Arbitrators promoters had no legal, tax, or accounting
expertise (Mior v Canada (Attorney General), 2019 FC
321, para. 16).

ISSN: 2710-4028 DOI: doi.org/10.54208/1000/0006 105
Watts’s claim to be an ex-CRA employee was a
fabrication he was a former computer programmer
turned financial planner (R v Watts, 2016 ONSC
4843, para. 7). Surprisingly, the CRA employee claim
is true for Branch, who reportedly worked for the
CRA between 1976-1980 (R v Branch, [2020] OJ No
2628 (QL) (Ont Ct J), para. 14 “Tax Preparer,” 2020).
Branch admitted during his criminal proceedings that
he knew the Fiscal Arbitrators Strawman “business”
claims were false and fraud (R v Branch, [2020] OJ No
2628 (QL) (Ont Ct J), para. 15).
The degree to which other Fiscal Arbitrators’ promoters
believed their scheme was valid is difficult to evaluate.
That said, Watts personally appeared, as a witness,
in the Tax Court of Canada appeal by Yongwoo Kim
(Kim v The Queen, 2017 TCC 246, paras. 22-26), and
testified that the Canadian income tax returns Watts
had prepared for Kim contained no false statements
or omissions, and “that the returns were accurate.”
Watts at this hearing also admitted to being found
guilty of fraud and sentenced for his preparing Fiscal
Arbitrators tax returns. Smith J concluded: “[i]t follows
that this Court must conclude that [Watts’s] testimony
is inherently unreliable.”
In the years that followed the collapse of the Fiscal
Arbitrators scheme, criminal prosecutions were
successfully conducted by the Public Prosecution
Service of Canada against Fiscal Arbitrators promoters.
No evidence indicates that taxpayers who had
subscribed to Fiscal Arbitrators were also the target of
criminal proceedings.
Watts vigorously but unsuccessfully resisted criminal
prosecution for preparing fraudulent income tax
returns for himself and Fiscal Arbitrators clients. Watts’s
defence included classic Detaxer arguments, such as
there is no valid Income Tax Act (R v Watts, 2015 ONSC
5597, paras. 6-9), and Strawman Theory claims about
governments and “persons” (R v Watts, 2015 ONSC
5600). A jury convicted Watts on all counts, and Watts
received a six-year sentence (R v Watts, 2016 ONSC
4843). Interestingly, during sentencing Watts claimed
he was not motivated by “pure greed,” but, instead,
“distrust of authority” and “anti-establishment views of
the economic and social principles of our society” (R v
Watts, 2016 ONSC 4843, para. 29), typical pseudolaw
adherent perspectives. Watts’s conviction and sentence
were confirmed on appeal (R v Watts, 2018 ONCA
148), and the Supreme Court of Canada denied Watts
leave to appeal (R v Watts (27 September 2018), Ottawa
38141 (SCC)).
After his arrest in 2012, Branch absconded from
Canada. Branch in 2017 was located in Costa Rica,
detained, and in 2019 was extradited to Canada after
unsuccessful attempts to avoid that transfer (Canada
Revenue Agency, 2019 R v Branch, [2020] OJ No 2628
(QL) (Ont Ct J), paras. 21-36). Branch pled guilty
to fraud and was sentenced to 4.5 years (R v Branch,
[2020] OJ No 2628 (QL) (Ont Ct J) “Tax Preparer,”
2020). Promoter Christian Lachapelle in 2015 was
sentenced to four years after pleading guilty to fraud
charges (Brathwaite v The Queen, 2016 TCC 29, para.
59). Charges against Rasool were stayed on June 2,
2016, probably in light of pre-trial detention.
II. Methodology
This study draws its data from two interrelated sources:
1. reported court judgments identified primarily
via the public Canadian Legal Information Institute
[CanLII] online website database,3
1
and
2. Tax Court of Canada, Federal Court of
Canada, and Federal Court of Appeal docket records,
as viewed using each Court’s online search engine.4
The CanLII database contains the large majority
of court judgments issued in Canada, where court
decision-making results in a written--“reported”--court
judgment. As will be subsequently discussed, only a
portion of court decision-making results in reported
court judgments. Many Canadian courts have an oral
decision-making tradition, so in those jurisdictions the
information obtained from CanLII searches almost
certainly represents only part of the relevant court
activity. The Tax Court of Canada is one such “oral
tradition” Court.
The author on an ongoing basis locates reported
pseudolaw-related litigation via a variety of means
(Netolitzky, 2017, pp. 964-965 reviews search
3 Website: https://www.canlii.org/.
4 Websites: https://www.fct-cf.gc.ca/en/court-files-and-decisions/
court-files https://www.tcc-cci.gc.ca/en/pages/find-a-court-file.