 Michael Hersey is sentenced to six months house arrest in this home for income tax evasion and for issuing fraudulent charitable receipts. (Sue Reeve, QMI Agency)
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LONDON, Ont. - A 46-year-old former investment counsellor was sentenced to six months house arrest at his comfortable west London home for income tax evasion and for issuing fake documents to two clients who followed his advice to financial ruin.
Michael Hersey also was fined $40,560 Thursday for evading payment of his income taxes and another $12,305 for helping the two clients evade paying $12,305 in tax with phoney charitable receipts.
Hersey pleaded guilty in general division of Ontario court to two counts of tax evasion in 2003 and 2004.
Hersey also pleaded guilty to four counts of issuing fraudulent charitable receipts between 2002 and 2004.
His victims testified his financial advice had wiped them out financially and they are struggling to get by.
"Michael became my financial adviser and I trusted him with my life savings, unfortunately," 76-year-old widow Helen Cameron of Grand Bend told Justice Gregory Pockele.
"I have absolutely nothing left," she said. "I have lost everything."
Cameron said she placed $225,000 with Hersey and remembers a phone call from him in 2003 saying "everything is gone."
She said she fears she will be assessed the outstanding tax.
Margaret Wegman, a 57-year-old single mother of two children, considered Hersey a friend and stood up for him and his wife, Nancy, at their wedding.
"They were like family," she said.
"I trusted him," she said. "I trusted him as a friend. I trusted him as a financial adviser."
She said she placed $85,000 from a job buyout and another $15,000 in inheritance she planned to use for higher education for her children.
She, too, remembered Hersey telling her her money was gone.
"I am financially devastated," she said. "I have nothing. I live payday to payday. I will have to keep working forever and my children will have to fend for themselves."
She said she was reassessed and had to pay up the amount avoided.
Both women said after Hersey told them their money was gone he issued them receipts for a charity to which they had not contributed to help them cushion their loss.
On his own income tax form, Hersey reported total income of $4,500 in 2003 when it was actually $110,779 and $21,000 in 2004 when he earned $76,615.
In an agreed statement of facts filed with the court, it was revealed Hersey used the money he kept from the taxman to pay for his lifestyle, pay court judgments and pay off loans to third parties. He also gave money to his wife.
Aside from Thursday's fines, Hersey is being pursued civilly for the unpaid taxes and interest.
For his part, Hersey told court he didn't intend to cause financial hardship for his victims.
"It's not my nature," he said. "I feel bad, really bad about it."
"I have to be able to work so I can pay (the fines)."
Hersey is fixing cars to support his wife and two children and to pay the fines.
Prosecutor Ted Madison sought a jail term of from four to six months as a deterrent to others. Madison opposed house arrest for Hersey.
Defence lawyer Paul DioGuardia sought to avoid jail for his client, whom he said has "no personal assets . . . and large amounts to pay" so he must keep working.
Pockele said he realized the impact on Hersey's victims was "catastrophic" but he couldn't sentence him for that.
The judge said he had to focus on general deterrence and Hersey's breach of trust.
Aside from the conditional sentence Hersey must serve at his home on Richmeadow Rd., he was ordered to perform 75 hours of community service.
He also is prohibited from preparing tax returns for others.
chip.martin@sunmedia.ca
