15 charged with evasion of tens of millions of dollars in state tobacco taxes

Eight federal indictments have been unsealed charging 15 persons and three businesses with federal offenses relating to schemes to evade California excise taxes on non-cigarette tobacco products, according to U.S. Attorney Benjamin Wagner and California Attorney General Jerry Brown.

The indictments, the result of a joint three-year investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives, the California Board of Equalization, and a team of federal and state prosecutors, were filed in U.S. District Courts in Sacramento and Los Angeles.

Four earlier federal indictments arising from the same investigation were filed in Sacramento, charging an additional six persons and two businesses.

Of those earlier indictments, four defendants have pleaded guilty: Muhammad Inayat (March 26), Muhammed Malik (Dec. 18, 2009), ISA Chicago Wholesale (March 1), and Kultar Singh (May 4).

California lost more than $35 million in unpaid tobacco excise taxes from 12 criminal cases filed to date, prosecutors say.

Approximately $1.3 million in tobacco products and other assets have already been ordered forfeited, and civil forfeiture proceedings are pending against another $21.5 million in seized products and other assets.

The schemes charged in the indictments involve the distribution of tobacco products other than cigarettes, such as cigars, chewing tobacco, and leaf tobacco, known as OTP — other tobacco products. The indictments allege that various distributors and wholesalers of OTP, both in California and other states, schemed to defraud California through the use of dummy corporations, false invoicing, and the filing of false excise tax returns.

“This investigation has exposed systematic and widespread tax evasion in the distribution of tobacco products in California,” says Mr. Wagner. “Our investigations are not over.”

The investigation began n 2008 with the execution of a search warrant at the premises of Ideal Tobacco in Las Vegas. Then, last week more than 30 agents from the ATF, ICE, California DOJ, and the U.S. Marshals Service arrested all 15 recently indicted defendants in an operation named “Operation Blunt Force.”

source: centralvalleybusinesstimes.com

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