LOUISVILLE, KY – In a shocking turn of events, Pedro ‘Peter’ Bello, a 43-year-old tobacco wholesaler from Miami, Florida, was sentenced to 18 months in prison followed by two years of supervised release for his role in a scheme that defrauded the Commonwealth of Kentucky of excise tax returns totaling more than $2 million.
Bello, who pleaded guilty to conspiracy to commit wire fraud on May 30, 2013, conspired with Israel Chavez, the owner of Chavez, Inc., d/b/a, Cigarettes Direct to You (CD2U), to deprive Kentucky of excise tax revenues. The two created fraudulent cigarette invoices for the sale of cigarettes to Chavez’s business in Louisville, making them appear as if the cigarettes had been sold and shipped from an out-of-state vendor.
However, in reality, the cigarettes had been sold by Bello to Chavez, both of whom were licensed by the Kentucky Department of Revenue, Excise Tax Division. This allowed them to avoid paying taxes on the cigarettes, resulting in a loss of over $2 million in excise tax revenues for the state.
Chavez was sentenced on December 13, 2013, to 12 months and one day in prison and was ordered to pay restitution in the amount of $2,090,571 to the Kentucky Department of Revenue. He also agreed to forfeit $3,214,035.66 and 10,842,192 tobacco products and tax stamps valued at $108,000, which were returned to the state.
The investigation into Bello’s scheme involved the Kentucky Attorney General’s Office of Criminal Investigations, the Louisville Metro Police Department, the U.S. Postal Inspection Service, and the U.S. Internal Revenue Service. The ATF investigation, which included coordination with various states’ revenue and regulatory agencies, has led to the collection of over $40 million in state excise taxes previously lost due to these illicit operations.
Bello’s sentence marks the latest development in a long-running investigation into the contraband cigarette trade in Kentucky. The case serves as a reminder of the importance of enforcing tax laws and preventing the loss of revenue for states.
Assistant United States Attorneys Randy Ream and Amanda Gregory prosecuted Bello’s case, while Amy Sullivan handled the civil forfeiture case. The investigation was conducted by the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) and the United States Postal Inspection Service.
The case is a significant victory for the people of Kentucky, who will no longer be defrauded by Bello’s scheme. It also highlights the importance of interagency cooperation in investigating and prosecuting complex financial crimes.
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Key Facts
- State: Kentucky
- Category: Fraud & Financial Crimes|White Collar Crime
- Source: DOJ Press Release â†â€â€
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