The Canada Revenue Agency (CRA) has recently taken control of a high-value condominium located in Old Montreal. According to filings submitted to the Federal Court, the property was owned by a trust associated with controversial businessman Jean-François Malo.
Despite Malo’s connection to the property, the enforcement action is primarily aimed at contractor Yvan Drapeau, the condo’s former owner, who reportedly owes approximately $2.5 million in tax debt.
The seized property is estimated to be worth around $2.8 million, based on valuation figures provided by the City of Montreal.
Background: Malo’s Legal Troubles and Arrest
Jean-François Malo has been at the center of legal controversy. He was arrested in Martinique in December after evading authorities for roughly three months.
Earlier, he had been sentenced to five years in prison for orchestrating an armed attack on a lawyer, adding further complexity to the case surrounding the property.
Ownership Transfer Raises Questions
Federal Court documents reveal that Malo’s trust acquired the condominium in 2023 from a company controlled by Yvan Drapeau. This transaction occurred at a time when the CRA had already begun taking steps to recover Drapeau’s outstanding tax liabilities.
The timing of the transfer has drawn scrutiny, as it coincided with ongoing enforcement actions.
CRA Moves Ahead of Municipal Tax Auction
The CRA moved swiftly to seize the condo in mid-January, just before the City of Montreal could proceed with a public auction to recover unpaid municipal taxes.
By acting first, the agency secured control over the property, allowing it to use the asset toward recovering federal tax debts.
Court Ruling Allows Use of Property to Settle Debt
According to a Federal Court decision, the CRA has the legal authority to apply the value of the condo toward Drapeau’s tax liability.
Judge Danielle Ferron ruled that the agency could treat the property as if it were still owned by the debtor, enabling it to satisfy the outstanding $2.5 million claim.
Failed Attempts to Contact Key Individuals
Efforts to reach both Yvan Drapeau and Jean-François Malo for comment were unsuccessful.
Court filings indicate that both individuals have challenged the CRA’s actions, defending the legitimacy of their 2023 transaction and opposing attempts to freeze funds related to the deal.
Origins of the Dispute: Tax Refund Controversy
The case is rooted in a broader financial dispute involving a company named Carflex.
In 2023, Carflex received a tax refund totaling $4.99 million, claiming it had paid taxes on a capital gain. However, federal lawyers argued that the company failed to provide sufficient evidence that such taxes had actually been paid.
Authorities allege that the refund was obtained through a series of questionable or potentially fraudulent tax maneuvers.
Property Purchase and Fund Freezing
Shortly after receiving the refund, Yvan Drapeau purchased the Old Montreal condo for approximately $2 million.
However, TD Bank later froze funds in the account linked to the transaction, complicating the financial trail and raising further concerns about the legitimacy of the deal.
Transfer to Malo’s Trust Under Scrutiny
The condo was subsequently transferred to a trust managed by Jean-François Malo.
According to the CRA, this transfer occurred without compensation, suggesting it may have been intended to shield the asset from creditors.
Malo, however, disputes this claim, stating that his trust contributed roughly $600,000 toward the property’s purchase.
Legal Action and Seizure Order
On January 15, a formal writ of seizure and execution was filed in the Federal Court targeting the Old Montreal condo.
This legal action enabled the CRA to proceed with the seizure and potentially sell the property to recover the outstanding tax debt.
CRA Statement on Enforcement Powers
While declining to comment on the specifics of the case, a CRA spokesperson emphasized that the agency has the authority to seize and sell assets when a legally confirmed debt remains unpaid.
The agency reaffirmed its commitment to enforcing tax laws responsibly, protecting public finances, and maintaining the integrity of Canada’s tax system.
City of Montreal Declines Comment
A representative from the City of Montreal also declined to provide details, citing that the matter is still under judicial consideration.