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A judge has rebuked the Canada Revenue Agency and ordered it to pay more than $1 million in damages for maliciously prosecuting a Nanaimo couple for alleged tax evasion.

In June 2008, Tony and Helen Samaroo, who operated a restaurant, a nightclub and a motel in the Vancouver Island community, were charged with 21 criminal counts of avoiding taxes.

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They were accused of skimming $1.7 million from their restaurant, the MGM, between 2004 and 2005, but in April 2011, following a 19-day trial, a Provincial Court judge acquitted them of all charges.

The judge found that Tony Samaroo was a credible witness and that his demeanour was impressive and his explanations for the revenues at the restaurant plausible and consistent.

The couple then sued the Canada Revenue Agency and an “ad hoc” prosecutor who was involved in the case for malicious prosecution.

In his ruling on the case, B.C. Supreme Court Justice Robert Punnett found that the agency was liable for the actions of Keith Kendal, a senior investigator for the CRA, and other employees.