BOSTON - A Lowell man was sentenced today in federal court in Boston in connection with defrauding 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 three years of probation, the first six of months of which is to be served in a halfway house, and the remaining six months is to be served under home confinement. Shah is also ordered to pay restitution of more than $276,000 to the Commonwealth of Massachusetts.
In May 2017, Shah pleaded guilty to wire fraud in connection with a scheme to avoid paying excise taxes on tobacco products - including cigars, smoking tobacco and smokeless tobacco (such as snuff and chewing tobacco) - and other non-tobacco items that Shah sold to convenience stores, gas stations and other retail businesses through his Lowell wholesale business between approximately April 2012 and November 2014.
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. Cigar wholesalers must file an excise tax form quarterly and must pay a 40% excise tax on cigars brought into Massachusetts.
In order to evade tobacco taxes, Shah made regular purchases of loose smoking tobacco and smokeless tobacco for his business from two distributors in Pennsylvania, where these tobacco products are not taxed, and either drove the tobacco products or had them shipped to Massachusetts, where he resold them through his wholesale business without paying the requisite state taxes.
Acting United States Attorney William D. Weinreb and Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigation in Boston, made the announcement today. Valuable assistance was also provided by the Massachusetts Department of Revenue. Assistant U.S. Attorney Stephen Heymann of Weinreb’s Economic Crimes Unit is prosecuting the case.
Source: U.S. Department of Justice, Office of the United States Attorneys
