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January 11, 2023 - OAKLAND — California Attorney General Rob Bonta today announced the arrest of three owners of a tobacco distribution company for conspiring to carry out a large-scale excise tax fraud scheme. An investigation found that the defendants allegedly filed fraudulent tax returns to evade more than $7 million in taxes. The three defendants face multiple felony charges, including conspiracy to file false tax returns and money laundering. The investigation was carried out by the TRUE task force, which includes members of the California Department of Justice (DOJ), the California Franchise Tax Board, the Employment Development Department, and the California Department of Tax and Fee Administration (CDTFA).
“By failing to pay tobacco excise taxes, these defendants deprived communities in California of much-needed healthcare funding,” said Attorney General Bonta. “I am grateful for our team at the California Department of Justice, and our TRUE task force partners for their hard work on this investigation. As California's chief law enforcement officer, I will continue working every day to protect honest taxpayers and tackle the underground economy.”
“California has zero tolerance for tax evaders,” said California Department of Tax and Fee Administration Director Nick Maduros. “Smuggling illegal cigarette and tobacco products into California to avoid paying taxes harms the important programs funded with this revenue, including breast cancer research, early childhood development, healthcare treatment, and hospital services.”
Between August 2020 and March 2021, the three suspects allegedly purchased more than $12.7 million in tobacco products from different companies in Pennsylvania and imported them into California. They then conspired together to file false tax returns that did not disclose these transactions, in order to avoid paying the $7.27 million in taxes they had incurred. The three individuals face multiple felony charges, including conspiracy to file false tax returns and money laundering.
It is important to note that criminal charges are only allegations against a person. Every defendant is presumed innocent unless or until proven guilty.
The TRUE task force investigates and prosecutes economic crimes in the underground economy. That includes combating fraud, wage theft, tax evasion, piracy, the sale of black-market drugs, among other crimes. The task force consists of attorneys, investigators, and special agents from the member agencies.
Source: CA. DOJ
