Pennsylvania Tobacco Distributor Sentenced for Aiding Tobacco Trafficking in Massachusetts
BOSTON – A Pennsylvania wholesale tobacco distributor was sentenced yesterday in federal court in Boston for aiding and abetting untaxed shipments of tobacco products into Massachusetts and evading financial reporting requirements.
Kamlesh Patel, 60, was sentenced by U.S. District Court Judge Douglas P. Woodlock to one year and one day in prison, two years of supervised release, and ordered to pay fine of $500,000 and forfeiture of $153,846. In September 2017, Patel pleaded guilty to one count of aiding and abetting a Norwood-based wholesaler to violate the Prevent All Cigarette Trafficking Act (PACT Act) and one count of failing to report large cash transactions to the IRS.
Patel owned and operated RDK Distributors (RDK) and MV Distributors (MV) in Stroudsburg, Penn., through which he distributed wholesale quantities of cigars, smoking tobacco and smokeless tobacco (such as snuff and chewing tobacco), among other products.
Title 15 of the PACT Act requires people who sell, advertise for sale, transfer or ship for profit smokeless tobacco between states to file a statement with the Attorney General and the tobacco tax administrator in the states to which they ship their products. The PACT Act also requires them to file with the tax administrator a monthly record of each shipment of smokeless tobacco that they transport into the state.
Beginning in approximately January 2013, Patel sold large quantities of tobacco products to a Norwood wholesaler, often worth more than $100,000 at a time. The Norwood wholesaler typically paid Patel for the tobacco products in cash. To evade financial reporting requirements that would have notified the IRS of the size, nature and income of the Norwood wholesaler’s business, Patel falsely divided the bulk cash payments he received among multiple invoices. Patel created and instructed his employees to record the large cash payments he received as if there had been numerous sales over numerous days among numerous companies, each less than $10,000, rather than the single sale for which he had received one or two sizeable cash payments, often amounting to more than $100,000 at a time.
United States Attorney Andrew E. Lelling and Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, made the announcement today. The Massachusetts Department of Revenue also provided valuable assistance. Assistant U.S. Attorney Stephen Heymann of Lelling’s Economic Crimes Unit prosecuted the case.