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DAILY NEWS Dec 11, 2013 7:44 PM - 0 comments

Kitco, Kitner face fraud charges, potential jail time in Quebec

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One of the delights of watching the series Breaking Bad is the realization — second-season spoiler alert — that the seemingly cheerful and innocuous Pollos Hermanos fast-food chicken chain is just an elaborate front for a much more lucrative organized crime scheme.

Well, if new allegations by Revenue Quebec are proven true in a court of law, mining may just have its own Pollos Hermanos in the form of the beloved, free live gold price website, run by Montreal-based Kitco Metals and its founder and president Bart Kitner.

On Dec. 9, Revenue Quebec filed 1,920 charges against Kitco and 11 other companies plus their directors and an accountant, with the charges stemming from an alleged fraud scheme connected to gold processing. The agency is seeking jail terms and $750 million in fines for those charged, in one of the largest fraud investigations in Quebec history.

Some 120 charges were filed against Kitco and another 120 charges were filed against Kitner personally, with the agency seeking jail terms and total fines of $454.6 million from the two. Kitco denies the charges, and last year filed its own lawsuit seeking damages.

Revenue Quebec alleges the 12 companies illegally charged $350 million over two years ending in 2010 by making false statements and trying to obtain tax rebates for which they were not entitled. Things came to a head in June 2011 with Projet Carat, when 175 governments agents raided 70 Montreal-area businesses, offices and homes related to the investigation.

The alleged scam involved the processing and reprocessing of pure gold and scrap gold in bogus economic activity designed to claim unearned tax refunds, while avoiding federal and provincial tax. Sales of pure gold are not taxed while sales of gold jewellery are, creating a potential tax loophole if material is ostensibly converted back and forth between the two forms.

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Companies in This Story

Kitco Inc.

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