Richmond Store Owner Sentenced to 41 Months for Cigarette and Wire Fraud Scheme
Defendant evaded paying over $1 million in sales tax to Virginia while selling cigarettes to traffickers
RICHMOND, Va. – Mohamed Seid Ahmed Mohamed, 57, of North Chesterfield, Virginia, was sentenced today to 41 months in prison, followed by 3 years of supervised release, for conspiring to commit wire fraud and to traffic in contraband cigarettes. He was also ordered to pay $1,009,046 in restitution to the Commonwealth of Virginia, Department of Taxation.
Dana J. Boente, U.S. Attorney for the Eastern District of Virginia; and Thomas J. Kelly, Special Agent in Charge of the Internal Revenue Service Criminal Investigation’s Washington, D.C., Field Office, made the announcement after sentencing by Senior U.S. District Robert E. Payne.
Mohamed pleaded guilty on September 3, 2014. According to court documents, Mohamed was the owner and operator of The Cigarette Club, LLC, a cigarette retail store in Richmond, Virginia, doing business as City Cigarettes. From June 2011 to January 2014, Mohamed and his co-conspirators purchased over 440,000 cartons—worth approximately $19.8 million—of various brands of cigarettes at wholesale stores in the Richmond area using multiple membership accounts. In making the cigarette purchases, Mohamed and/or co-conspirators certified that the cigarettes would be resold through Mohamed’s retail business. As a result, he and his co-conspirators were not required to pay the Virginia Retail Sales and Use Tax on the cigarettes at the time they purchased them. Instead, they were responsible to collect and pay the taxes once they sold them.
In fact, at the time of each purchase, Mohamed and his co-conspirators intended to sell, and ultimately did sell, the overwhelming majority of the cigarettes to individuals who they knew were transporting the cigarettes to jurisdictions outside of the Commonwealth of Virginia for resale as untaxed cigarettes. Mohamed and his co-conspirators never intended to, and ultimately did not, collect or pay the applicable Virginia Retail Sales and Use Tax for the cigarettes purchased at the wholesale stores. As a result of the conspiracy, the Commonwealth of Virginia lost sales tax revenue in the amount of $1,009,046.
This case was investigated by the IRS-Criminal Investigation in Richmond, Virginia, with assistance from the Multi-Jurisdictional Special Operations Group. Assistant U.S. Attorney Dominick S. Gerace is prosecuting the case on behalf of the United States.
A copy of this press release may be found on the website of the U.S. Attorney’s Office for the Eastern District of Virginia. Related court documents and information may be found on the website of the District Court for the Eastern District of Virginia or on PACER by searching for Case No. 3:14CR00143.