Worcester Businessman Pleads Guilty to Tobacco Tax Fraud
BOSTON – A Worcester man pleaded guilty yesterday in connection with a scheme to defraud the Commonwealth of Massachusetts of tobacco excise taxes and submitting false tax returns.
Mohamed Afeez, 32, pleaded guilty to subscribing a false tax return and conspiracy. U.S. District Court Judge Timothy S. Hillman scheduled sentencing for Sept. 13, 2017.
Between approximately late 2014 and July 2016, Afeez operated a wholesale business in Worcester that sold tobacco products, including cigars, smoking tobacco and smokeless tobacco (such as snuff and chewing tobacco), as well as other non-tobacco items, to convenience stores, gas stations and other retail businesses. Under state law, smokeless tobacco wholesalers must file an excise tax form monthly and pay a 210% excise tax on smokeless tobacco brought into Massachusetts. Cigar wholesalers must file an excise tax form quarterly and pay a 40% excise tax on cigars brought into Massachusetts.
In order to evade tobacco taxes, Afeez made regular purchases of loose smoking tobacco and smokeless tobacco from a distributor in Pennsylvania where these tobacco products are not taxed. Afeez and a co-conspirator repeatedly drove bundles containing more than $10,000 in cash to the distributor for payment. A co-conspirator then drove the tobacco products to Massachusetts where Afeez resold them wholesale without paying the Massachusetts state excise taxes he knew were due. The illegal tobacco business generated over $448,000 that Afeez failed to report on his business’ income tax return for 2015.
The charge of conspiracy provides for a sentence of no greater than five years in prison, three years of supervised release and a fine of $250,000. The charge of subscribing to a false income tax return provides for a sentence of no greater than three years in prison, one year of supervised release and a fine of $100,000. Actual sentences for federal crimes are typically less than the maximum penalties. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and other statutory factors.
Acting United States Attorney William D. Weinreb and Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. Assistant U.S. Attorney Stephen Heymann of Weinreb’s Economic Crimes Unit is prosecuting the case.