California Attorney General Rob Bonta today (April 10) announced the grand jury indictment of five suspects for selling tobacco without a license and committing tax fraud that cost the state more than $24 million in lost tax revenue. The suspects were indicted on 118 counts of conspiracy, selling tobacco as an unlicensed distributor, filing false tax returns, money laundering, and a white-collar enhancement.
“From the investigation to prosecution, my office is dedicated to seeing these five defendants pay for their crimes against the people of California,” Bonta said.“Schemes that defraud the government of millions in taxpayer money will not be tolerated. Today’s announcement should serve as a reminder: If you break the law and engage in fraud and theft, my office will hold you accountable.”
From January 2017 to April 2024, the suspects allegedly engaged in the importation of untaxed tobacco products into California using shell entities, subsequently selling these products to customers in the state while evading the tobacco excise tax. This operation involved a series of coordinated actions aimed at misusing personal and regulatory information, hiding the source of funds used for purchasing untaxed tobacco, concealing the arrival of tobacco shipments in California, misleading customers about compliance, and avoiding obligations related to California’s tobacco excise tax.
Additionally, the five suspects perpetuated their scheme by submitting false monthly excise tax returns to the California Department of Tax and Fee Administration or, in some cases, neglecting to file these returns altogether.