U.S. Department of Justice
Peter F. Neronha
United States Attorney
District of Rhode Island
November 9, 2011
MASSACHUSETTS MAN CHARGED IN FEDERAL COURT WITH IMPORTING
AND SELLING CONTRABAND CIGARETTES IN RHODE ISLAND
Alleged sale of hundreds of thousands of packages of untaxed cigarettes
costs Rhode Island millions in tax revenue
PROVIDENCE, R.I. – A joint federal-state investigation in five states into the alleged importation and sale of hundreds of thousands of packages of contraband cigarettes in Rhode Island resulted with the execution of search warrants in four states Tuesday and Wednesday, and the arrest of a Cambridge, Massachusetts man on federal charges. The alleged importation and sale of contraband cigarettes by Mohamad Mohamad, 35, allegedly deprived Rhode Island of millions of dollarsin cigarette tax revenue.
The investigation and arrest of Mohamad Mohamad was announced by Peter F. Neronha, U.S. Attorney for the District of Rhode Island; Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police; Bruce M. Foucart, Special Agent in Charge of ICE-Homeland Security Investigations (ICE-HSI) in New England; and Guy N. Thomas, Special Agent in Charge of the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Boston Field Office.
A nearly year-long investigation by ICE-HSI, ATF and the R.I. State Police High Intensity Drug Trafficking Area Task Force (HIDTA) culminated with the execution of federal search warrants on Tuesday and Wednesday at storage facilities in Warwick, R.I., Richmond, Va., and Columbia, S.C.; and at Mohamad’s Massachusetts residence. Agents seized approximately 10,000 cartons of cigarettes from the storage facility in Warwick, 4,000 cartons from the storage unit in Virginia, and between 200 and 400 in South Carolina. In addition, agents seized approximately $32,000 and various documents from Mohamad’s Massachusetts residence and $15,000 from three bank accounts.
Under the direction of the R.I. State Police, state search warrants were executed at five Rhode Island locations while more than two-dozen teams of state troopers, local law enforcement officers and R.I. Department of Revenue- Division of Taxation agents conducted administrative inspections at retail outlets where contraband cigarettes were allegedly resold.
According to an affidavit in support of an arrest warrant, an investigation which began in December 2010, determined that Mohamad allegedly traveled regularly to North Carolina, South Carolina, and Virginia to purchase large quantities of cigarettes from retailers and wholesalers for resale to convenience stores and independent salespersons in Rhode Island. It is alleged that none of the packages of cigarettes resold by Mohamad contained Rhode Island tax stamps. Mohamad is not licensed to sell cigarettes in Rhode Island.
Rhode Island state law requires a valid tax stamp be affixed to each package of cigarettes sold in the state. Each tax stamp represents approximately $4.00 in Rhode Island tax revenue. The tax in South Carolina is $.57 per pack, in North Carolina the tax is $.45 per pack, and in Virginia the tax is $.30 per pack. North Carolina and South Carolina do not affix state tax stamps on the packages.
Mohamad made an initial appearance in U.S. District Court on Tuesday on a criminal complaint charging him with transporting and selling contraband cigarettes; money laundering; possessing fraudulent State tax stamps; and interstate travel with the intent to manage and distribute proceeds of unlawful activity. On Wednesday, U.S. District Court Magistrate Judge David L. Martin ordered Mohamad released to home confinement, that his whereabouts be electronically monitored with the use of an electronic monitoring ankle bracelet, and that his passport be surrendered.
A criminal complaint is merely an allegation and is not evidence of guilt. A defendant is entitled to a fair trial in which it will be the government’s burden to prove guilt beyond a reasonable doubt.
The case is being prosecuted by Assistant U.S. Attorneys William J. Ferland and Sandra R. Hebert. They have been assisted by federal prosecutors in the Districts of Massachusetts, Eastern Virginia and South Carolina.
ICE-HSI, ATF and HIDTA agents have been assisted in the investigation by various federal, state and local law enforcement agencies in North Carolina, South Carolina and Virginia; and the Internal Revenue Service, Warwick Police, Massachusetts State Police and Cambridge, Mass., Police.
The R.I. State Police HIDTA is a federally funded task force comprised of members of law enforcement from the R.I. State Police, ATF, DEA, ICE-HSI, R.I. National Guard, and the Johnston, Pawtucket, Providence, and Smithfield Police Departments.