Legal Advice - falsifying invoices

[Locke]

Originally Posted by blankall

Sounds like fraud to me, which has a pretty wide definition:

https://laws-lois.justice.gc.ca/eng/...ction-380.html

You exaggerating an expense, and then charging the customer for that, is pretty straightforward fraud. I would not be a party to that. Definitely the kind of thing that could get you a record, licenses revoked, and possible jail time. Doesn't matter if you're profiting from it, you're still a party to the fraud and will be found liable.

Like other have said, I wouldn't deal with this guy. If he's willing to steal from the customer, he's willing to steal from you. Get paid up front for the job you are doing. Don't ever do a job with them again.

The thing is...its also creating 'plausible deniability.'

The client goes to the GC and asks: "How much did this cost?"

The GC hands the client the (doctored) invoice from the Sub. So then...if the client is so inclined he has to either demand the original invoice from the Sub via the GC or go straight to the Sub-trade themselves.

If the Sub shows the receipts and the client sees that the amount they've been billed is out of whack then that Tradey is SCREWED.

And if you think the GC is going to ride in and save you? Hoo boy...not gonna happen. He can always find another drywaller or whatever as opposed to admitting to fraud. He'd sooner nail you to that cross himself.

[nomad]

And when the CRA audits you, they will ask why you didn't declare all of your revenue. What will you say? "I declared my true income, but some of these invoices are fake." You will then be faced with a reassessment for unreported income, and if there's GST collection involved, CRA will also go after you for not remitting all of the GST you were supposed to remit. Not to mention penalties.

Your chances of getting audited will also increase when you deal with a fraudster, because CRA will probably audit the fraudster at some point, and will then eventually go after the fraudster's associates, you being one of them.

[Mickey76]

I’m curious about the actual law myself.I’m assuming the sub contractor can offer a discount for immediate payment or something like that. I don’t think the sub is in any trouble there.

[CorsiHockeyLeague]

Yes it's fraud and yes it's illegal and yes by providing the fraudulent invoice you could be liable.

[Locke]

Originally Posted by nomad

And when the CRA audits you, they will ask why you didn't declare all of your revenue. What will you say? "I declared my true income, but some of these invoices are fake." You will then be faced with a reassessment for unreported income, and if there's GST collection involved, CRA will also go after you for not remitting all of the GST you were supposed to remit. Not to mention penalties.

Your chances of getting audited will also increase when you deal with a fraudster, because CRA will probably audit the fraudster at some point, and will then eventually go after the fraudster's associates, you being one of them.

This is true.

Theres always a mistake at some point and CRA are completely incompetent morons...but if they catch 1 guy...they're like dogs with a bone.

They look at that one guy and then follow every little thread up and down the chain and through every link and off-shoot.

Because its the lowest hanging fruit.

"This guy worked here for that guy and with this guy and...."

You get the idea. Its like the CSI board with the strings and twine and the Polaroids, etc, etc.

In other news though...you should tell us who it is. CP tends to skew to higher incomes and this guy literally figured out that his client had cash and decided to scam them.

I'd like to avoid them in future.

[Locke]

Have you considered telling the client that his GC is actively trying to screw him?

Because you may decide not to do it, but a bunch of the trades might oblige.

If 25 of 30 guys pad their invoice? Thats a fair amount of cash.

The Devil's Advocate' position would be that the GC under-bid the job and is trying to make up for it? But in this instance he'd be doing it deceitfully.

If I was a sub-contractor and getting paid my rate I'd honestly say "Hell no. This sounds like 1000% 'not my problem.'"

[Shazam]

Originally Posted by nomad

And when the CRA audits you, they will ask why you didn't declare all of your revenue. What will you say? "I declared my true income, but some of these invoices are fake." You will then be faced with a reassessment for unreported income, and if there's GST collection involved, CRA will also go after you for not remitting all of the GST you were supposed to remit. Not to mention penalties.

Your chances of getting audited will also increase when you deal with a fraudster, because CRA will probably audit the fraudster at some point, and will then eventually go after the fraudster's associates, you being one of them.

Not sure what you're trying to say, revenue is just what you took in. If you invoiced and didn't get paid, that would be bad debt.

[GGG]

I think the sub could charge the contractor what ever rate the contractor agreed to even in retrospect. There would be nothing illegal on the sub side to submit a change order adjusting the rate from $80 an hour to $100 per hour getting it signed off and then billing and being paid at the revised rate. If you inflated hours or material costs that would be fraudulent but charging an increased rate you likely would be okay.

On the contractor side though this might break the terms of the cost plus contract because to protect yourself in a cost + you should have an agreed rate sheet and an agreed material mark up.

If the contracts are well crafted what is being proposed should be fraudulent.

[Bring_Back_Shantz]

Originally Posted by GGG

I think the sub could charge the contractor what ever rate the contractor agreed to even in retrospect. There would be nothing illegal on the sub side to submit a change order adjusting the rate from $80 an hour to $100 per hour getting it signed off and then billing and being paid at the revised rate. If you inflated hours or material costs that would be fraudulent but charging an increased rate you likely would be okay.

On the contractor side though this might break the terms of the cost plus contract because to protect yourself in a cost + you should have an agreed rate sheet and an agreed material mark up.

If the contracts are well crafted what is being proposed should be fraudulent.

Oops, I originally read that bolded part as "Should not be fraudulent".
But I'm gonna post my replay anyway because #-3 seems to think there is some grey area, when there most certainly is not.

It's 100% fraudulent.
Let's do some round numbers.

Main contractor (GC) has a contract with the customer for a cost+ contract.
Let's say the terms are Cost + 20%.

#-3's submits an invoice for $80, then the GC pays him his $80 and can charge the customer 20% ($16).

Total bill to the customer = ($96)
Profit for GC = $16

Now #-3 gives GC a new invoice that is higher than what he got paid.
New invoice is $100 say.
So now GC says he paid $100 and charges his 20% on top of that.

GC charges customer $120.
GC profits $40, which is now cost +50%

The GC has straight up stolen $24 from the customer and #-3 is a knowing party to fraud.

Nothing in this scenario is legal or a grey area.

[bizaro86]

Originally Posted by Bring_Back_Shantz

Oops, I originally read that bolded part as "Should not be fraudulent".
But I'm gonna post my replay anyway because #-3 seems to think there is some grey area, when there most certainly is not.

It's 100% fraudulent.
Let's do some round numbers.

Main contractor (GC) has a contract with the customer for a cost+ contract.
Let's say the terms are Cost + 20%.

#-3's submits an invoice for $80, then the GC pays him his $80 and can charge the customer 20% ($16).

Total bill to the customer = ($96)
Profit for GC = $16

Now #-3 gives GC a new invoice that is higher than what he got paid.
New invoice is $100 say.
So now GC says he paid $100 and charges his 20% on top of that.

GC charges customer $120.
GC profits $40, which is now cost +50%

The GC has straight up stolen $24 from the customer and #-3 is a knowing party to fraud.

Nothing in this scenario is legal or a grey area.

It's actually worse than that. He said they want a higher invoice that they won't pay to show the customer.

So #3 submits an invoice for $100

GC shows to client, charges client $120.

GC pays #3 $80, pocketing $40 instead of the $16 they were entitled to (20% of $80).

[blankall]

Originally Posted by bizaro86

It's actually worse than that. He said they want a higher invoice that they won't pay to show the customer.

So #3 submits an invoice for $100

GC shows to client, charges client $120.

GC pays #3 $80, pocketing $40 instead of the $16 they were entitled to (20% of $80).

Then like Locke said, if GC gets caught he just rolls over on the sub and points the finger at him. He denies the conversation, where he asked the sub to falsify the document, took place. The only actual evidence is the fraudulent invoice from the sub.

[Weitz]

Originally Posted by blankall

Then like Locke said, if GC gets caught he just rolls over on the sub and points the finger at him. He denies the conversation, where he asked the sub to falsify the document, took place. The only actual evidence is the fraudulent invoice from the sub.

Well and the paper trail of paying the lower invoiced amount…

[Weitz]

It’s a pretty easy conversation to have.

Tell your client/GC to pay you the higher amount. Win all around. Why would you help them get paid more with no benefit to you?

[bizaro86]

Originally Posted by Weitz

It’s a pretty easy conversation to have.

Tell your client/GC to pay you the higher amount. Win all around. Why would you help them get paid more with no benefit to you?

I'm sure this was suggested with the implication that it will affect getting hired for future jobs.

[Bring_Back_Shantz]

Originally Posted by bizaro86

It's actually worse than that. He said they want a higher invoice that they won't pay to show the customer.

So #3 submits an invoice for $100

GC shows to client, charges client $120.

GC pays #3 $80, pocketing $40 instead of the $16 they were entitled to (20% of $80).

That's....that's exactly what I said....

[Weitz]

Originally Posted by bizaro86

I'm sure this was suggested with the implication that it will affect getting hired for future jobs.

Probably. I’d be dropping an email to the customer in that case then. Scummy people shouldn’t be working.

[Shazam]

Originally Posted by Bring_Back_Shantz

Oops, I originally read that bolded part as "Should not be fraudulent".
But I'm gonna post my replay anyway because #-3 seems to think there is some grey area, when there most certainly is not.

It's 100% fraudulent.
Let's do some round numbers.

Main contractor (GC) has a contract with the customer for a cost+ contract.
Let's say the terms are Cost + 20%.

#-3's submits an invoice for $80, then the GC pays him his $80 and can charge the customer 20% ($16).

Total bill to the customer = ($96)
Profit for GC = $16

Now #-3 gives GC a new invoice that is higher than what he got paid.
New invoice is $100 say.
So now GC says he paid $100 and charges his 20% on top of that.

GC charges customer $120.
GC profits $40, which is now cost +50%

The GC has straight up stolen $24 from the customer and #-3 is a knowing party to fraud.

Nothing in this scenario is legal or a grey area.

Alright, sub just gives GC another invoice.

Prove that's fraudulent.

I mean is it fraudulent? Yeah. But proving it is another problem.

[Bring_Back_Shantz]

Originally Posted by Shazam

Alright, sub just gives GC another invoice.

Prove that's fraudulent.

I mean is it fraudulent? Yeah. But proving it is another problem.

Auditor.
This bill you gave your customer says you paid a sub contractor named #-3 $100, but your records indicate you only paid him $80.
Is it likely anyone will find out? Probably not.
But if anyone takes a close-ish look at the books, it's actually pretty easy.
I would say if the GC has an accountant working for them, that person would definitely notice, and unless they do something about it, they're also party to fraud.

The point is, if the GC is charging the customer based on anything other than what they paid the Sub Contractor, then it's 100% fraud. "Proving it is another problem" doesn't matter.

If #-3 does it, then he is 100% helping someone steal from a customer, and that's on him.

[bizaro86]

Originally Posted by Bring_Back_Shantz

That's....that's exactly what I said....

Sorry - misread your post somehow.

[Shazam]

Originally Posted by Bring_Back_Shantz

Auditor.
This bill you gave your customer says you paid a sub contractor named #-3 $100, but your records indicate you only paid him $80.
Is it likely anyone will find out? Probably not.
But if anyone takes a close-ish look at the books, it's actually pretty easy.
I would say if the GC has an accountant working for them, that person would definitely notice, and unless they do something about it, they're also party to fraud.

The point is, if the GC is charging the customer based on anything other than what they paid the Sub Contractor, then it's 100% fraud. "Proving it is another problem" doesn't matter.

If #-3 does it, then he is 100% helping someone steal from a customer, and that's on him.

CRA don't give two ####s if you did or didn't pay your suppliers. They only care that you paid your taxes.