Dr. Sokol claimed charitable donations for the full amount for Colel Chabad Lubavitch Foundation
In 2009, when he was facing trial on criminal charges of fraud and money laundering, Dr. Lorne Wayne Sokol, 51, an expert in pain treatment and a frequent witness at Workplace Safety Insurance Board hearings who runs a clinic in Toronto’s Corso Italia neighbourhood, made a deal with Ontario prosecutors.
He repaid the $3,511,356.62 that police alleged he defrauded between 2003 and 2007 from the province’s health plan by claiming reimbursement for pain injections that were not compensable, including “nerve block, trigger point, bursa joint and ganglion tendon injections.”
In return for this repayment, plus his guilty plea to the charge of submitting billing that did not comply with Ontario’s Health Insurance Act, the criminal charges were dropped, and the Crown joined the defence in recommending that Dr. Sokol pay the maximum fine, $25,000, plus a victim surcharge of $6,125, but be spared the potential 12-month prison sentence.
Counsel for the Crown at Dr. Sokol’s guilty plea in the Ontario Court of Justice on Dec. 14, 2009, said the trial would have involved 20 patient witnesses, five expert witnesses, “and a number of other witnesses, and that’s just for the Crown.” Had it gone to trial, it would have been a months-long “battle of the experts,” said Crown lawyer Philip Perlmutter, according to a transcript.
That deal marked the culmination of extensive pre-trial legal wrangling during which two initial criminal charges of fraud over $5,000 were expanded to include money laundering and possession of the proceeds of crime after search warrants were executed at Dr. Sokol’s Toronto home, his office, and the Montreal headquarters of Colel Chabad Lubavitch Foundation of Israel in Montreal, a Hasidic Jewish charity.
On Wednesday morning, the College of Physicians and Surgeons of Ontario is to bring discipline proceedings of its own against Dr. Sokol, for which it could revoke or suspend his medical licence. It alleges he is guilty of an offence relevant to his suitability to practice — the same provincial offence to which he pleaded guilty in 2009 — and also conduct unbecoming of a physician, and disgraceful, dishonourable or unprofessional conduct.
As the College pursues its own charges, legally piggybacking on Dr. Sokol’s guilty plea, the National Post has learned that the initial police allegations were of a scheme in which he sent proceeds of his non-compliant billing in 26 installments over four years to Colel Chabad Lubavitch Foundation of Israel, which then allegedly issued him tax receipts, and returned between 80% and 95% of the money in the form of bank drafts made out to Dr. Sokol’s offshore company, Moshe Shmuel Deitsh Corp.
None of the allegations made by police have been tested in court.
In effect, the allegations were that Dr. Sokol took millions from Ontario, laundered it in Quebec, sent it to an offshore tax haven, then claimed to Canada the money had gone to charity.
Those details, from information submitted to court by police to support a search warrant on the charity, are included in court pleadings filed by Dr. Sokol’s lawyer in 2009, requesting judicial review of a demand by the Minister of National Revenue for Dr. Sokol’s tax records from 2003 to 2006.
In his tax filings for 2005 and 2006, Dr. Sokol claimed charitable donations for the full amount of the receipts he received from the charity, the documents state.
According to the Belize Government Gazette, a government publication in Belmopan City, there is a Moshe Shmuel Deitsh Corp, number 46041, which was struck off the country’s International Business Company register in 2009 for failing to pay the annual licence fee.
No action was taken by Canada Revenue Agency against the Montreal charity, and the same president and secretary treasurer, who is also a rabbi, have been in place for at least 10 years.
In a phone interview, the president, Abraham Neuwirth of Montreal, an unemployed travel agent who said he is merely the president “on paper,” said he knew nothing about the tax-receipted donations from Dr. Sokol, and nothing about the charity of which the Canada Revenue Agency has listed him as president for a decade.
“It is customary for charitable organizations to take businessmen in the community and give them an honourary title called ‘president’ in the hope and anticipation that their business, and the people who deal business with them, will contribute,” he said. “I’m out of business a few years. As a matter of fact, I’m unemployed, but my name unfortunately is still on the paper [filed with the CRA].”
“That’s basically it,” he said. “They [Chabad Lubavitch] figured they have somebody in the community, who’s religious, observant, yet whose one foot is in the synagogue, the other foot is out in the world. Therefore it would be nice … in order to attract other potential contributors.”
He said he has zero involvement in the operation of the charity, that he has never been to its headquarters on Kent Avenue in Montreal, has never had a meeting, phone call, or correspondence with anyone else from the charity. He does not know who keeps the books or issues tax receipts, which under his 10-year presidency totalled almost $15-million. He said he knew Zalman Zirkind as a former classmate, but the CRA lists Mr. Zirkind, a rabbi, as the Secretary Treasurer, one of three listed directors with Mr. Neuwirth. Reached by phone, Mr. Zirkind said he would call back and never did.
Chabad.org lists a Rabbi Simcha Zirkind as director for Chabad in Montreal, with Zalman as an alternate contact. Rabbi Simcha has been photographed celebrating Chanukah with former prime minister Paul Martin.
“That is how it works for all charity organizations across the board,” said Mr. Neuwirth, explaining his unfamiliarity with the charity of which he is the president. “All I know is, regarding my personal stature as president, you could put me down as ‘admiral,’ ‘president,’ ‘general.’ I happen to think this organization is a wonderful organization.”
“If such allegations are true, I would be disgusted,” he said. “The first thing I would do is I would write a letter to the head head of the organization in New York.”
Chabad Lubavitch is an orthodox Jewish group based in Brooklyn, with branches all over the world, including 23 registered Chabad Lubavitch charities across Canada. In the 2008 attacks on Mumbai, terrorists specifically targeted its office there, Nariman House, and killed six people.
Mr. Neuwirth said it is not fair to denounce an entire organization because it was “abused” by someone who was not even a member. He said the Chabad movement is devoted to helping the poor in Jerusalem. Colel Chabad Lubavitch Foundation of Israel is listed as a federal charity in the category of “support of schools and education.”
In tax filings, the Montreal charity states that it is not subordinate to another larger group. It is a federally regulated charity and legally separate from other Chabad Lubavitch organizations. It reports that it employs one person, who is paid less than $40,000 except in 2005, when it was less than $80,000. A second employee in the lower range came on briefly in 2008.
Its total assets were about $25,000 in 2000, when it issued about $700,000 in tax receipts, and reported to CRA that is used the money to fund trips by students to a school in Israel, the Mercaz Outreach Colel Shamir, and to provide literature about Jewish holidays to promote Jewish culture.
The next year, its assets had tripled, though the tax receipted gifts were roughly the same. After a drop in 2002, the annual tax receipted gifts rose steeply, to more than $1.5-million in 2003, $1.1-million in 2004, $3.3-million in 2005, $4.3-million in 2006, $2.5-million in 2007, then dropped to $204,856 in 2008.
The billing that did not comply with the Ontario Health Insurance Act to which Dr. Sokol admitted took place between March, 2003, and February, 2007. He repaid the money in late 2009.
In the two most recent fiscal years, the charity has not reported revenue greater than $100,000.
If a charity was to be found to be involved in activities that violate the Income tax Act it could face consequences including revocation of its status.
“An audit would reveal whether they are in compliance with the income tax act or not,” said Philippe Brideau, CRA spokesman.
He would not speculate whether allegedly issuing tax receipts for donations that are returned to the donor is in violation of the act. Colel Chabad Lubavitch Foundation of Israel remains a registered charity.
Contested hearings at the CPSO sometimes take dozens of days spread over months. Only one day has been scheduled for this one, which suggests the outcome, once again, might already have been agreed by the lawyers.
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