Ontario Basketball Association complicit in tax evasion, lawsuit alleges

A former Ontario Basketball Association executive alleges in a lawsuit that association officials have been complicit in tax evasion and that he was fired for his work introducing a policy mandating more transparency in the organization’s payments to coaches and other outside contractors.

In a lawsuit filed Apr. 13 in Ontario Superior Court in Toronto, Joseph Moutoussidis alleges he was wrongfully dismissed by the OBA on Apr. 4, 2022.

Moutoussidis has asked a court to award him $110,000 as a retiring allowance and $350,000 for punitive and aggravated damages, as well as to cover items including potential bonus entitlements and continued benefits coverage.

OBA executive director Dave Stockton declined to comment. Moutoussidis’ allegations have not been proven and the OBA has not filed a statement of defence.

Based in Toronto, the OBA is the governing body for basketball in Ontario and oversees approximately 50,000 players, coaches and administrators participating in programs ranging from grass-roots development to provincial teams. According to its financial statements, the OBA generated $4.3 million in revenue in 2022, including $448,776 in provincial government funding.

Moutoussidis alleges in his lawsuit that, shortly after beginning his job as the OBA’s director of business operations and finance on Sept. 7, 2021, he was instructed to ensure that the OBA was compliant with financial regulations applicable to provincial sports organizations.

According to the lawsuit, Moutoussidis began noticing that some contractors had been providing the OBA with questionable invoices. Some invoices had no letterhead or a proper company name. Harmonized sales tax had been charged by one contractor who had not provided a business registration number, he alleges.

Moutoussidis alleges that he began facing blowback in early January 2022 after he informed OBA contractors that T4A income statements would be issued moving forward when the organization paid someone more than $500. Such income slips allow the government to calculate the proper amount of tax income earners should pay. In some cases, coaches who were OBA contractors had billed the organization nearly $70,000, the lawsuit alleges.

Moutoussidis alleges he made then-OBA president John Rocchi aware that some transactions related to the Blessed Sacrament Basketball Club, a youth club in Hamilton where Rocchi was also president, might expose the OBA to an audit by the Canada Revenue Agency (CRA).

Rocchi did not respond to a request for comment.

When Moutoussidis began asking for tax-related information from contractors, he alleges that basketball coaches, including one college coach who had invoiced the OBA for about $17,000, reached out to complain about the policy change, adding that the coaches were upset the new reporting practice would impact their income tax filings.

“Moutoussidis became increasingly subject to oppressive, threatening, and isolating personnel management,” the lawsuit reads. “Moutoussidis was subjected to a toxic and poisoned work environment.”

Moutoussidis alleges that he approached the OBA’s external auditor to ask whether it was appropriate for coaches to be given T4A slips, which would ensure the CRA was aware that the coaches had been paid taxable income. The auditor advised the OBA's board in a Jan. 26, 2022, email that Moutoussidis’ analysis of CRA’s financial reporting rules was correct, according to the lawsuit.

Despite the auditor’s opinion, the OBA then hired an independent human relations consultant who hired an accountant and a tax lawyer to try to obtain a different opinion for the organization, the lawsuit said, adding that none of the professionals contradicted Moutoussidis.

“From the onset, it appears OBA was acting in a manner that is construed as tax evasion,” the lawsuit reads. “In reviewing coaching contractor draft agreements, Moutoussidis advised that these contractors were effectively employees under CRA definitions, T4A's would be issued, and should be noted in the agreement…”

Moutoussidis was fired on Apr. 4, 2022, he alleges in his lawsuit.

“The Plaintiff’s termination was a direct response and retaliatory to his refusal to abandon a course of conduct that upset the dealing of parties operating within and adjacent to the OBA,” the lawsuit reads. “These parties were affronted by [Moutoussidis’] unwillingness to endorse and tolerate accounting processes that would allow for them to engage in illegal practices allowing for their unlawful enrichment. This was effectively tax evasion.”