CT Wholesaler Accused of $1M Tobacco Tax Scam

HARTFORD, CT – A Connecticut tobacco wholesaler is facing serious federal charges after allegedly running a multi-year scheme to evade state taxes. Khawar M. Khokhar, 35, of Ellington, was indicted by a federal grand jury in New Haven on May 15, 2024, and accused of defrauding the state of approximately $1 million.

According to the indictment, Khokhar operated Smokin’ Wholesale LLC, a licensed Connecticut business that sourced smokeless tobacco and other products from distributors in Pennsylvania and Illinois. Between May 2017 and June 2019, the business allegedly purchased around $2 million worth of tobacco, but deliberately underreported the value to the Connecticut Department of Revenue Services, effectively stiffing the state on owed tobacco taxes. The scheme involved a calculated effort to skirt tax obligations, investigators say.

Khokhar appeared before U.S. Magistrate Judge Thomas O. Farrish in Hartford today, entering a plea of not guilty. He was released on a $100,000 bond while the case proceeds. Federal prosecutors are painting a picture of systematic tax evasion, alleging Khokhar and his associates knowingly deprived Connecticut of vital revenue.

The 10-count indictment lays out a litany of serious charges. Khokhar faces one count of conspiracy, carrying a potential five-year prison sentence. He’s also been charged with eight counts of wire fraud – each carrying a maximum 20-year sentence – and one count of illegal monetary transaction, which could add another 10 years to a potential prison term. The combined penalties could result in decades behind bars if convicted.

U.S. Attorney Vanessa Roberts Avery was quick to emphasize that the indictment represents allegations, not proof of guilt. “An indictment is not evidence of guilt,” Avery stated. “Charges are only allegations, and the defendant is presumed innocent unless and until proven guilty beyond a reasonable doubt.” The burden of proof rests squarely on the prosecution.

The investigation is a joint effort between the U.S. Postal Inspection Service and the Connecticut Department of Revenue Services’ Criminal Investigations Division. Assistant U.S. Attorney Michael S. McGarry is leading the prosecution. This case underscores the ongoing federal commitment to cracking down on tax fraud and holding accountable those who attempt to cheat the system, especially when it impacts state revenue and public services.