New Brunswick·CBC Investigates

N.B. owed $16M in large fines, may never see return on biggest one

New Brunswick is owed more than $16 million in unpaid fines over $50,000, the largest of which will likely never be paid.

Majority of unpaid fines over $50,000 involve tobacco, CBC investigation reveals

A now-defunct company owed $4.6 million after admitting to contravening the Excise Act by not reporting revenue, getting out of paying $2 million in taxes. (Rob LeClair/CBC)

New Brunswick is owed more than $16 million in unpaid fines over $50,000, the largest of which will likely never be paid.

One corporate lawyer says corporation fines sometimes "aren't worth the paper they're printed on."

"I call them empty judgments," Andrew Costin said.

CBC News asked all provinces and territories to provide details about fines over $50,000 that were sitting on their books. 

New Brunswick supplied a list of 77 fines levied against 75 individuals and two corporations, spanning 26 years. 

All but four of the fines were levied under the provincial Tobacco Tax Act or the federal Excise Act. About half the overall $16.9 million owed would be destined for provincial coffers, while the rest would be collected through the provincial court system, but ultimately passed on to the federal government. 

CBC only requested unpaid fines over $50,000, so the roughly $16 million total does not reflect the total amount of money owed to the province through smaller federal and provincial fines.

A pile of cigarettes is seen stacked.
The majority of unpaid fines are related to the Excise Act or the provincial Tobacco Tax Act. (Shutterstock)

The list of unpaid fines provided by the Department of Justice and Public Safety shows the largest one was levied against the Maritime Tobacco Corporation in 2001. The amount: $4.6 million.

The corporation was originally hailed as a made-in-New-Brunswick "healthier" cigarette, according to archival newspaper clippings. It was given a $100,000 loan from the province to start up in 1996. But a few years after its launch, the RCMP raided its Fredericton headquarters, seized $11 million worth of equipment, and charged multiple people with fraud.

The two company principals were each fined $375,200 in 1999 after pleading guilty to falsifying corporate information and skipping out on $2 million in taxes. 

The two fines levied upon the principals don't appear on the province's unpaid fine database, but the $4.6 million fine against the company remains unpaid.

'Basically impossible'

Saint John-based Costin said a person who doesn't pay a fine could be sentenced to jail time. But in the case of a dissolved corporation, the province has basically no options.

"When you're dealing with someone that's no longer around or has no legal existence, it's basically impossible to collect," he said. 

Public Prosecution Service of Canada spokesperson Sabrina Nemis suggests that can be especially true of tobacco fines .

In general, said Nemis, tobacco fines are subject to mandatory minimum penalties and are therefore "sometimes harder to recover."

Costin said it is sometimes difficult to "pierce the corporate veil" and get behind the corporations to charge real people. 

"A fine or a judgment or anything like that against a corporation, generally speaking, if it does not bind the directors personally, it will die with the corporation," he said.

The second largest unpaid corporate fine is a Clean Environment Act fine against Bathurst Redevelopment Inc, a Canadian subsidiary of American-owned Green Investment Group Inc. The company bought the the former Smurfit-Stone paper mill in Bathurst and promised to clean it up. But in 2016 the company was fined $150,000 for failure to do so.

Bathurst Redevelopment Inc. was found guilty of failing to clean up the property at the Smurfit-Stone paper mill site. (City of Bathurst)

The Crown prosecutor in the case noted at the time the fine was symbolic, since Bathurst Redevelopment Inc was insolvent. 

Green Investment Group Inc, which was based in Illinois, has been involuntarily dissolved, according to corporate records. The operator Raymond Stillwell has not responded to a request for an interview. 

Fines as a deterrent

Costin said the point of a fine isn't always to get money out of bad actors. It can also act as a deterrent, giving people a reason not to participate in illegal tobacco trade, for example.

Gary Grant is spokesperson for the National Coalition Against Contraband Tobacco, a group representing cigarette manufacturer's interests in reducing black-market competition. He suggested the fines are worthwhile, even if some of them go unpaid.

"It might deter people from getting involved in the trade at lower levels," he said. 

Grant also said tobacco fines are especially large, as people are fined per cigarette and smugglers are often transporting hundreds of thousands of cigarettes. 

According to the responses provided to CBC News by justice departments across the country, on outstanding fines over $50,000, more than 600 individuals owe $106 million for contravening provincial Tobacco Tax Acts.

CBC News New Brunswick requested an interview with provincial officials for details on efforts to collect unpaid fines, as well as information on the fines it successfully collects,but no one responded to the request by deadline. 

ABOUT THE AUTHOR

Hadeel Ibrahim is a reporter with CBC New Brunswick based in Saint John. She reports in English and Arabic. Email: [email protected].

With files from Matthew Pierce