Superseding Indictment Names Eighth Defendant In Interstate Contraband Cigarette Conspiracy Charged By Way Of Superseding Indictment

PROVIDENCE, R.I. – A fifteen-count superseding federal indictment returned by a grand jury in Providence on Wednesday names eight individuals and expands the scope of federal charges previously brought in a complex interstate contraband cigarette trafficking conspiracy allegedly responsible for the sale in Rhode Island of more than $1.2 million dollars of contraband cigarettes. The superseding indictment also includes charges related to alleged conspiracies to defraud the Supplemental Nutrition Assistance Program (SNAP), commonly referred to as the food stamp program, and the Social Security Administration.

Additional allegations of food stamp fraud and the unauthorized acquisition of food stamp funds contained in the superseding indictment come, in part, based on information developed during an ongoing joint federal and state investigation into more than $3 million dollars in alleged food stamp fraud in Rhode Island announced on September 5, 2013, by United States Attorney Peter F. Neronha.

In May 2013, a federal grand jury returned a six-count indictment charging Wissam Khalil, 40, of Central Falls, a Providence convenience store owner; his brothers Bassam Khalil, 49, and Najd Khalil, 25, of Pawtucket; Abdullah Alnahas, 36, of Cranston, a Providence convenience store owner; Bassam Kiriaki, 45, a Pawtucket accountant; and Richard Larrain, 23, of Providence, an enlisted soldier in the U.S. Army Reserves, with allegedly participating in a conspiracy to possess, transport and distribute contraband cigarettes in Rhode Island. A seventh defendant, Valeria Mendez (Khalil), 30, of Central Falls, wife of Wissam Khalil, was charged with conspiring to make and making false statements to a government official in an application to the United States Department of Agriculture (USDA) to participate as a retailer in the food stamp program.

In addition to naming the defendants charged in the indictment returned in May, the superseding indictment returned on Wednesday charges Nazir Khalil, 75, father of Wissam, Bassam, and Najd Khalil, with participating in a conspiracy to defraud the Social Security Administration. It is alleged that Nazir, who resides outside the United States, participated in a conspiracy to fraudulently apply for and collect Social Security disability benefits.

Additionally, the superseding indictment includes additional charges against several of the defendants previously named, including conspiracy to engage in money laundering; money laundering; structuring; conspiracy to engage in food stamp fraud; and food stamp fraud.

The superseding indictment alleges that Wissam Khalil, Bassam Kiriaki and another person conspired to produce a sworn letter submitted to the USDA in support of an application of Valeria Mendez (Khalil) to participate in the Food Stamp Program as a retailer, knowing that the contents of that letter were false and/or incomplete. It is alleged that the intent of the conspiracy was to mask family relationships as it pertained to the true past and present ownership of a Providence convenience store. It is alleged that the true information was withheld to ensure participation as a retailer in SNAP.

 It is also alleged that several of the defendants conspired in various conspiracies to allow SNAP benefit recipients to use their Electronic Benefit Transfer cards to exchange their food stamp benefits for cash, a violation of the program’s laws and regulations. It is alleged that in return, the defendants added a surcharge to the recipients’ withdrawal of SNAP benefits, usually an amount equal to or more than that of the amount of cash benefit received by the recipient.

The superseding indictment was announced by Peter F. Neronha, United States Attorney for the District of Rhode Island; Colonel Steven G. O’Donnell, Superintendent of the Rhode Island State Police; Vincent B. Lisi, Special Agent in Charge of the Boston field office of the FBI; John Collins, Acting Special Agent in Charge of the Boston office of the Internal Revenue Service, Criminal Investigations; Bruce M. Foucart, Special Agent in Charge of Homeland Security Investigations in New England; Scott E. Antolik, Special Agent in Charge of the Boston Field Office of the Social Security Administration, Office of the Inspector General/Office of Investigations; and William G. Squires, Special Agent in Charge of the U.S. Department of Agriculture Office of Inspector General.

On May 8, 2013, more than a dozen teams of federal and state law enforcement agents and officers executed federal arrest and search warrants, arresting seven individuals and searching ten locations where a significant quantity of contraband cigarettes, approximately $100,000 in cash, business records and four vehicles, all allegedly connected to the trafficking operation, were seized. The majority of cash and cigarettes seized were discovered stashed in sophisticated hides in several of the locations.

It is alleged that as part of the conspiracy to traffic contraband cigarettes into Rhode Island, in July 2011 several “shell” corporations in Virginia were created and vacant retail storefronts were rented in Virginia for the purpose of making it appear that cigarettes being purchased in Virginia for resale in Virginia. The cigarette packages purchased included Virginia tax stamps, reflecting a Virginia tax of thirty-five cents per package. It is alleged that between July 2011 and continuing until May 2013, more than 30-thousand cartons (6 million) of cigarettes valued at more than $1.2 million dollars were purchased in Virginia and shipped to Rhode Island in a truck bearing Rhode Island War Veteran Plates. It is alleged that on numerous occasions the truck was driven by Richard Larrain, while wearing his United States Army uniform. It is alleged that he wore his Army uniform in an effort to gain favor and avoid law enforcement detection.

It is alleged that the cigarettes were distributed and sold in Rhode Island at or near full-retail price, including a tax payment of $3.50 per package. It is alleged that the lack of payment of the cigarette tax to the state of Rhode Island resulted in a loss of approximately $1.05 million dollars of tax revenue.
An indictmentis 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. Attorney William J. Ferland.

The matters charged in the indictment were investigated by the Rhode Island State Police, Federal Bureau of Investigation, Internal Revenue Service Criminal Investigations, United States Social Security Administration Office of Inspector General – Office of Investigations, Homeland Security Investigations, and the U. S. Department of Agriculture Office of Inspector General.

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Wissam Khalil, 40
Central Falls, RI
Counts 1-15

Bassam Khalil, 48
Pawtucket, RI
Counts 1, 2, 3, 4, 5

Najd Khalil, 26
Pawtucket, RI
Counts 1, 2, 5, 6-11, 12-14, 15

Valeria Mendez (Khalil), 31
Central Falls, RI
Count 15

Nazir Khalil, 75
Central Falls, RI
Counts 3, 4

Abdullah Alnahas, 35
Cranston, RI
Counts 1, 2

Bassam Kiriaki, 45
East Weymouth, MA
Counts 1, 2, 15

Richard Larrain, 24
Providence, RI
Counts 1, 2, 15

 

Count I: Conspiracy
Max Penalties: 5 years imprisonment; $250,000 fine; 3 years supervised release

Count II: Cigarette Trafficking
Max Penalties: 5 years imprisonment; $250,000 fine; 3 years supervised release

Count III: Conspiracy to Obtain Social Security Benefits
Max Penalties: 5 years imprisonment; $250,000 fine; 3 years supervised release

Count IV: Social Security Fraud
Max Penalties: 5 years imprisonment; $250,000 fine; 3 years supervised release

Count V: Conspiracy to Commit Money Laundering
Max Penalties: 20 years imprisonment; $500,000 fine; 3 years supervised release

 

Counts VI-XI:  Money Laundering
Max Penalties:  20 years imprisonment; $500,000 fine; 3 years supervised release

Count XII-XIV: Structuring
Max Penalties: 5 years imprisonment; $250,000 fine; 3 years supervised release

Count XV: Conspiracy to Commit Food Stamp Fraud
Max Penalties: 5 years imprisonment; $250,000 fine; 3 years supervised release

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To assist the media and the public, a glossary of federal judicial terms and procedures is available at http://www.justice.gov/usao/justice101/

Contact: 401-709-5357
USARI.Media@usdoj.gov