Worcester Businessman Sentenced for Tobacco Tax Fraud
BOSTON – A Worcester man was sentenced today in connection with a scheme to defraud the Commonwealth of Massachusetts of tobacco excise taxes and submitting false tax returns.
Mohamed Afeez, 32, was sentenced by U.S. District Court Judge Timothy S. Hillman to one year and one day in prison, three years of supervised release, and ordered to pay $973,218 in restitution and forfeiture. In April 2017, Afeez pleaded guilty to subscribing a false tax return and conspiracy.
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 that 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.
United States Attorney Andrew E. Lelling 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 Lelling’s Economic Crimes Unit prosecuted the case