Los Angeles tobacco distributor sentenced to prison for tax evasion
A Los Angeles distributor who imported tobacco products from out of state pleaded guilty to running a $3-million tax evasion scheme and was sentenced to more than two years in state prison, the California attorney general's office announced Friday.
Sadiq Mohammed imported tobacco products from Florida and Illinois and claimed the items were from California to avoid paying the state's excise taxes, according to charging documents filed by California Atty. Gen. Rob Bonta's office. Those taxes apply to purchases of out-of-state products such as alcohol, tobacco and cannabis.
Mohammed then took the proceeds from his scheme and purchased more tobacco products, according to court records filed in Los Angeles County Superior Court.
Mohammed's business, L.A. Trading and Distribution Inc., underreported sales to the California Department of Tax and Fee Administration between 2017 and 2018, avoiding more than $3 million worth of tax payments, Bonta's office announced in a news release Friday.
A Department of Justice task force uncovered the scheme in 2019 when state agents served a search warrant at a residence and found cashier checks payable to Mohammed's business. The home's location is redacted in court documents.
As part of their case, investigators served a search warrant at Wells Fargo Bank, where they discovered that Mohammed "deposited or directed the deposit of proceeds from the sale of untaxed tobacco into one or more accounts, and then used the deposited funds to pay for additional purchases of untaxed tobacco" while he underreported his sales to the state of California, according to court documents.
Mohammed was arrested in November 2022 by U.S. Customs and Border Protection agents as he attempted to re-enter the United States, according to the news release. He was extradited to California and has remained in custody since then.
Prosecutors initially charged Mohammed with 20 counts of filing false tax returns and money laundering, but on Sept. 23 he pleaded guilty to two charges of filing false or fraudulent returns.
On Wednesday, he was sentenced to 32 months in state prison and ordered to pay $3.04 million in restitution, according to the Department of Justice. He has 387 days' credit for time served, according to court records.
“When individuals defraud and steal from taxpayers and the state of California, we will hold them accountable,” Bonta said in a statement. “Taxes owed to the state pay for services that our communities depend on, and we will not stop in our efforts to track down those who put these services and our state at risk. We will find them and return the funds back where they belong."
This story originally appeared in Los Angeles Times.
