On October 6th, 2021

Seven-Year Sentence in $51 Million Tobacco Distribution Fraud Scheme State investigators combine resources to tackle tax evasion

“State investigators from various departments and as part of state task forces investigate complicated cases that often take years to see through to prosecution and sentencing.  These investigations help to protect California’s financial future and services to its citizens by finding those who are evading taxes.” – CSLEA President Alan Barcelona

On October 5, 2021, the California Attorney General’s office announced the sentencing of Ali Tavaf for operating a fraudulent six-year scheme to evade paying more than $14 million in excise tax on more than $51 million of imported tobacco.

In November 2019, Tavaf pleaded guilty to multiple counts of filing a false tax return and a special allegation of the white-collar crime enhancement in excess of $500,000. He was sentenced to seven years in state prison. Tavaf was also ordered to pay $13,508,397 in restitution in addition to the $1 million he has paid the California Department of Tax and Fee Administration (CDTFA). The $14,508,397 represents the total tax liability he owes the department.

“Tax evasion is a serious crime with undue costs to California taxpayers,” said Attorney General Rob Bonta. “I hope today’s sentencing is a reminder that when you disregard the law, you will be held accountable. I’m grateful for the dedication of the California Department of Tax and Fee Administration and the other agencies in the TRUE Task Force for representing the interests of Californians.”

Distributors who import tobacco into California and distribute it within the state are required to report the distribution and pay the required excise tax.

Between April 2012 and September 2017, Tavaf purchased and sold to California retailers approximately 250 semitrailer truckloads of tobacco from distributors in Florida, Pennsylvania, and Virginia. During this time, he filed false tax returns with the CDTFA in order to evade excise tax payments totaling $14,508,397 on $51,358,470 of tobacco. On July 25, 2019, Tavaf was charged with 54 counts of filing a fraudulent report and a special allegation of the white-collar crime enhancement in excess of $500,000.

This case was investigated by the California Department of Justice and the CDTFA Investigations Bureau. Both agencies are part of the multiagency Tax Recovery in the Underground Economy (TRUE) Task Force, which also includes the California Employment Development Department and the Franchise Tax Board. The TRUE Task Force was created to ensure multiagency collaboration and to combat wage theft, tax evasion, and other crimes in the underground economy. The task force consists of attorneys, investigators, and special agents from the member agencies.

A copy of the Information is available here.

 

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