Tobacco wholesaler pleads guilty to PACT Act violation

 

Date: April 21, 2022

Contact: newsroom@ci.irs.gov

A tobacco wholesaler from Connecticut has pleaded guilty to violating the Prevent All Cigarette Trafficking (PACT) Act.

Syed I. Bokhari, pleaded guilty on Tuesday, April 19, 2022 in federal court in Springfield before U.S. District Court Judge Mark G. Mastroianni who scheduled sentencing for July 28, 2022. Bokhari was indicted in October 2014, and subsequently charged in a superseding indictment in December 2015.

Established in 2010, the PACT Act is designed to prevent the evasion of state tobacco taxes on cigarettes and smokeless tobacco. The PACT Act requires, among other things, businesses to file a statement with the state tobacco tax administrator prior to shipping cigarettes or smokeless tobacco into that state.

Bokhari owned and operated a wholesale supply business in Scranton, Pa., that sold smokeless tobacco to customers in Massachusetts. Between 2010 and June 5, 2012, Bokhari's business shipped smokeless tobacco to customers in Massachusetts without ever filing the required statement with the Massachusetts tobacco tax administrator.

"By circumventing the law, Mr. Bokhari sold smokeless tobacco directly to consumers thereby cheating on his tax obligations," said United States Attorney Rachael S. Rollins. "Whether it is through underreporting taxable income or secreting taxable products to customers, tax fraud is a crime that we will continue to investigate – plain and simple."

"When unscrupulous tobacco wholesalers skirt their tax obligations, it puts competitors at an unfair disadvantage in the marketplace," said Joleen D. Simpson, Special Agent in Charge of the Internal Revenue Service-Criminal Investigation Division, Boston Office. "As the investigative arm of the IRS, IRS-CI special agents are a critical force multiplier with our partners in these investigations which focus on ensuring a level playing field for law-abiding tobacco businesses."

"The Department of Revenue's partnerships with the U.S. Attorney's Office, Bureau of Alcohol, Tobacco, Firearms, and Explosives, and Internal Revenue Service Criminal Investigations make it clear that we will pursue those who violate both federal and Massachusetts tax laws," said Massachusetts Department of Revenue Commissioner Geoffrey E. Snyder. "The Department's Criminal Investigations Bureau remains committed to working closely with our federal, state, and local partners to combat the illegal tobacco trade and recover lost revenue on behalf of Massachusetts taxpayers."

"This guilty plea should send a clear message that the illegal diversion of tobacco products will not be tolerated," said Special Agent in Charge James M. Ferguson of the ATF Boston Field Division. "ATF will continue to work alongside our partners to investigate incidents of illegal conduct and tax evasion of tobacco products."

"As a wholesaler, Bokhari imported large quantities of tobacco to Massachusetts without paying the appropriate taxes, diverting significant revenue that belongs to the state. HSI is proud to support our law enforcement partners in this investigation," said Matthew Millhollin, Special Agent in Charge for the Homeland Security Investigations' Boston Field Office.

The charge of violating the PACT Act provides for a sentence of up to three years in prison, one year of supervised release and a fine of $250,000. Sentences are imposed by a federal district court judge based upon the U.S. Sentencing Guidelines and statutes which govern the determination of a sentence in a criminal case.

U.S. Attorney Rollins, IRS-CI SAC Simpson, ATF SAC Ferguson, HSI SAC Millhollin, Massachusetts DOR Commissioner Snyder and Connecticut Department of Revenue Service Commissioner Mark D. Boughton made the announcement. Assistant U.S. Attorneys Alex J. Grant and Christopher Morgan of Rollins' Springfield Branch Office are prosecuting the case.