SACRAMENTO, Calif. — Akrum Alrahib, 43, of Miami, Florida, pleaded guilty today to conspiring to commit mail fraud in non-cigarette tobacco schemes that defrauded the State of California of over $10 million in unpaid excise taxes, Acting U.S. Attorney Phillip A. Talbert announced.
Non-cigarette tobacco (known as Other Tobacco Products or OTP) consists of tobacco products such as cigars, chewing tobacco, and leaf tobacco. During the relevant time period, California imposed an average excise tax of about 28.13% of the wholesale cost of the OTP between April 2016 and June 2016; 27.30% between July 2016 and June 2017; and 65.08% between July 2017 and December 2017. California licensed tobacco distributors are required to collect this tax when they distribute the product within the state. The distributor must then submit to the California Department of Tax and Fee Administration (CDTFA) in Sacramento (formerly the Board of Equalization) monthly reports reflecting the amount of untaxed OTP sold in the previous month and the amount of excise tax owing, and the payment.
According to court documents, between April 2016 and December 2017, Alrahib led two conspiracies involving multiple individuals and businesses operating in California. As the leader, Alrahib provided untaxed OTP to various individuals and companies in California, knowing that the products would be sold illegally, resulting in a loss to the State of California of over $10 million in tax revenue.
“This guilty plea is the result of a highly successful, collaborative effort involving federal and state investigators and prosecutors, working side-by-side,” Acting U.S. Attorney Talbert stated. “We will continue to root out illegal conduct and tax evasion in the tobacco products industry.”
“The primary goal of ATF in combating tobacco trafficking is to enforce the federal laws relating to the trafficking of domestically produced and counterfeit cigarettes and tobacco products,” said Special Agent in Charge Patrick Gorman, San Francisco Field Division, Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF). “ATF will continue to work alongside our partners to investigate incidents of illegal conduct and tax evasion of tobacco products.”
“Tax evasion is not a victimless crime. California communities lose critical tax dollars that pay for vital programs, and it isn’t fair for those hard-working business owners who play by the rules,” said California Department of Tax and Fee Administration Director Nick Maduros. “It’s important for our department and the U.S. Attorney’s Office to work together to stop tax evasion.”
This case is the product of an investigation by the Bureau of Alcohol, Tobacco, Firearms & Explosives and the California Department of Tax and Fee Administration. Assistant U.S. Attorneys Rosanne L. Rust and Michael D. Anderson are prosecuting the case.
Alrahib is scheduled to be sentenced by U.S. District Judge William B. Shubb on Dec. 13, 2021. Alrahib faces a maximum statutory penalty of five years in prison and a $250,000 fine. The actual sentence, however, will be determined at the discretion of the court after consideration of any applicable statutory factors and the Federal Sentencing Guidelines, which take into account a number of variables.
https://www.justice.gov/disaster-fraud/video/psa-national-center-disaster-fraud
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