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Lowell Wholesaler Busted for Tobacco Tax Scheme
A Lowell man was sentenced to three years of probation and ordered to pay restitution of more than $276,000 for his role in a scheme to defraud the Commonwealth of Massachusetts of tobacco excise taxes between 2012 and 2014.
Neetal Shah, 41, was sentenced by U.S. District Court Judge Allison D. Burroughs to spend the first six months of his probation in a halfway house and the remaining six months under home confinement. Shah’s scheme involved avoiding payment of excise taxes on tobacco products, including cigars, smoking tobacco, and smokeless tobacco.
According to prosecutors, Shah made regular purchases of loose smoking tobacco and smokeless tobacco from two distributors in Pennsylvania, where these products are not taxed, and then resold them in Massachusetts without paying the requisite state taxes. He would either drive the tobacco products to Massachusetts or have them shipped to his wholesale business.
Shah pleaded guilty to wire fraud in May 2017 in connection with the scheme. 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, while cigar wholesalers must file an excise tax form quarterly and pay a 40% excise tax on cigars brought into the state.
The investigation into Shah’s scheme was led by the Internal Revenue Service’s Criminal Investigation in Boston, with valuable assistance provided by the Massachusetts Department of Revenue. Assistant U.S. Attorney Stephen Heymann of the Economic Crimes Unit is prosecuting the case.
Acting United States Attorney William D. Weinreb and Special Agent in Charge Joel P. Garland of the Internal Revenue Service’s Criminal Investigation in Boston announced the sentencing today. The case serves as a reminder of the importance of enforcing tax laws and holding those who break the law accountable.
Key Facts
- State: Massachusetts
- Category: Fraud & Financial Crimes
- Source: DOJ Press Release â†â€â€
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