SACRAMENTO : Akrum Alrahib, 43, of Miami, Florida, was sentenced today to five years in prison and ordered to pay over $10 million in restitution for conspiring to commit mail fraud in non-cigarette tobacco schemes that defrauded the State of California of over $10 million in unpaid excise taxes, U.S. Attorney Phillip A. Talbert announced.
Non-cigarette tobacco (known as Other Tobacco Products or OTP) consists of tobacco products such as cigars, chewing tobacco, and leaf tobacco. During the relevant time period, California imposed an average excise tax of about 28.13% of the wholesale cost of the OTP between April 2016 and June 2016; 27.30% between July 2016 and June 2017; and 65.08% between July 2017 and December 2017. California licensed tobacco distributors are required to collect this tax when they distribute the product within the state. The distributor must then submit to the California Department of Tax and Fee Administration (CDTFA) in Sacramento (formerly the Board of Equalization) monthly reports reflecting the amount of untaxed OTP sold in the previous month and the amount of excise tax owing, and the payment of the excise tax.
According to court documents, between April 2016 and December 2017, Alrahib led two conspiracies involving multiple individuals and businesses operating in California. As the leader, Alrahib provided untaxed OTP to various individuals and companies in California, knowing that the products would be sold illegally without collecting the required excise tax, resulting in a loss to the State of California of over $10 million in tax revenue.
“Today’s sentence is the result of a highly successful, collaborative effort involving federal and state investigators and prosecutors, working side-by-side,” U.S. Attorney Talbert stated. “We will continue to root out illegal conduct and tax evasion in the tobacco products industry.”
“The primary goal of ATF in combating tobacco trafficking is to enforce the federal laws relating to the trafficking of domestically produced and counterfeit cigarettes and tobacco products,” said Special Agent in Charge Patrick Gorman, Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), San Francisco Field Division. “Partnerships are the backbone of law enforcement. ATF will continue to work alongside our partners to investigate incidents of illegal conduct and tax evasion of tobacco products.”
“Tax evasion is a serious crime, depriving our communities of critical resources and exposing law-abiding businesses to unfair competition,” said California Department of Tax and Fee Administration Director Nick Maduros. “We will continue to work with federal and state prosecutors to bring tax evaders to justice.”
This case was the product of an investigation by the Bureau of Alcohol, Tobacco, Firearms and Explosives and the California Department of Tax and Fee Administration. Assistant U.S. Attorneys Rosanne L. Rust and Michael D. Anderson prosecuted the case.