Tax evasion sentences upheld for couple claiming ‘natural persons’ exemption

Couple received $1.8 million in education course fees, paid no taxes


The Chilliwack man called a mastermind behind a tax-fraud counselling scheme has had his sentence upheld by the BC Court of Appeal, which also upheld the conviction of his business partner.


Russell Porisky and Elaine Gould were convicted of income tax evasion in 2016. Porisky was also convicted of counselling fraud and failing to remit GST.

The pair claimed the trial judge erred in using the words “avoid” and “evade” synonymously in her charge to the jury. They claimed the first means legal tax avoidance, the second connoting guile, trickery, dishonesty and deceit.

Fisher said the trial judge’s clear instruction to the jury was that the Crown was required to prove that the appellants knew that tax was owing under the Income Tax Act.

“There was ‘no air of reality to a potential tax avoidance versus tax evasion explanation’ for the appellants’ conduct,” Fisher said.

The charges relate to Porisky and Gould’s business, the Paradigm Education Group, which promoted a taxation theory that so-called natural persons are not subject to the Income Tax Act if they have structured their affairs in a certain way.

In law, natural persons are individual human beings, as opposed to a legal person, which can be an organization.

The 2016 sentencing judge, Justice Miriam Gropper of BC Supreme Court, said trying to describe the Paradigm theory in a logical manner is impossible.

“Generally, Mr. Porisky and his Paradigm theory was based on the concept that, as natural persons as opposed to artificial persons, no tax on income was payable,” Gropper said. “As a natural person, Mr. Porisky, Ms. Gould, his educators and students could arrange their affairs by using contracts for hire, confidentiality clauses, amendments to the signature box on tax returns, disclaimers, and withdrawing from government benefit plans by using forms that Mr. Porisky and Paradigm prepared and provided to them.”

“This theory has been consistently rejected by the courts as ‘bogus’ and ‘nonsensical,’” Justice Fisher wrote in her April 30 ruling released May 8. The three-judge panel’s rejection of the appeal was unanimous.

The court said Paradigm sold and distributed so-called “educational” course materials and other products.

Porisky and Gould earned revenues from sales of Paradigm products, conference fees, and a percentage of fees that students paid to educators.

The court said between 2004 and 2008, about $1.8 million was deposited into a joint bank account, including gross revenues of about $1.4 million based on cheques made payable to Porisky, Gould or Paradigm.

Porisky reported no income for the 2004 to 2007 taxation years. Gould reported no income for the 2004 to 2008 taxation years.

At the July 2017 sentencing, Gropper told Porisky, “Your moral culpability is higher than any of those who have already been convicted and sentenced of similar offences.  I have described you as a mastermind of the Paradigm theory. You were proselytizing it and it was followed by your acolytes. You received significant financial benefit from it, both before and after the theory was discredited by several court decisions.”

She sentenced him to a total of five and a half years in prison and fined him $259,482.

Gropper sentenced Gould to six months and one day in jail with a fine of $38,241.

The 2016 conviction was the second for Porisky and Gould on the charges. A 2012 conviction was successfully appealed in 2014 and the new trial ordered.