Thursday, July 9, 2015

Authorities Snuff Out $2M bootleg Smokes Ring

Authorities Snuff Out $2M bootleg Smokes Ring

BRONX, NEW YORK, JULY 9- District Attorney Robert Johnson announced multiple indictments of 20 people and six corporations containing 1,345 counts regarding a major smuggling operation that brought more than 44,000 untaxed cartons of cigarettes from Virginia to the Bronx during a single five-month period in 2014 alone. The participants are accused of evading more than $2.978 million in New York State and City taxes. The total maximum tax penalty, for New York City and State combined, is more than $35,768,000.

The various defendants face State felony charges ranging from Enterprise Corruption, Criminal Tax Fraud, and Money Laundering, to New York City Administrative Code violations of the Cigarette Tax laws.

After a two-and-a-half-year multi-agency investigation, 19 men and one woman were charged following simultaneous arrests in New York, Virginia, Connecticut and New Jersey. The Bronx County grand jury indictments were unsealed with the Supreme Court arraignment of several of the defendants in Part 60, before Justice Steven Barrett.  The following defendants are named in one or more indictment:

Cigarette smuggling is big business.  It is estimated that, in New York State, 58 percent of all cigarettes sold are untaxed, and smuggled in primarily from Virginia. With per pack prices topping $11 and more, bringing in untaxed cigarettes is very profitable – New York state and city taxes add $5.85 to each pack.

It is alleged in the indictment that the boss, Mohamed Mustafa, headed the operation by acquiring cigarettes for distribution from Virginia, storing those cigarettes at 2118 Matthews Avenue in Morris Park and other locations in the Bronx, and by controlling the distribution of cigarettes to the New York City area without paying New York State or City tobacco taxes, thereby generating hundreds of thousands of dollars in illicit proceeds for himself and other members of the enterprise. His lieutenant, Hiyad Chaib, is alleged to have assisted the criminal enterprise in all aspects of the operation, and would serve as the central contact for the employees and associates when Mustafa was away.

Mustafa and Chaib determined the New York-based distributors to whom they would sell cigarettes, the prices the
distributors had to pay for cigarettes, and the times and locations at which the distributors would exchange money for cigarettes, it is further alleged. They also controlled the storage facilities and both of them actively answered a “business line” to collect orders and arrange deliveries. Each week, almost 2,000 cartons of cigarettes (400,000 cigarettes) would pass through the enterprise costing the state over $100,000 in tax revenue. The total tax fraud is estimated to be close to $3 million; total maximum tax penalties, if the defendants are convicted, will reach nearly $36 million.

Indictment papers also describe how Mustafa and Chaib originally acquired the majority of the cigarettes they distributed in the Bronx from suppliers Rabih Saba and Moeen Khan, residents of the Commonwealth of Virginia, who owned and managed a chain of mattress stores (“The Mattress Place”) and dollar stores around Richmond, Virginia. Indeed, Saba and Khan used their Virginia businesses, in part, as collection and distribution centers for cigarettes purchased in Virginia with only the low Virginia cigarette tax, and thereafter controlled the distribution of
the cigarettes to the New York City area without anyone associated with the Enterprise paying New York State or City tobacco taxes for those cigarettes. They also used their business and personal accounts to transfer money from the Bronx and Manhattan to them in Virginia.

To generate said money, Saba and Khan are accused of forming a network of cigarette buyers in Virginia who would visit Costco, Sam’s Club, Wawa, and other retail sellers of cigarettes, to purchase cartons of cigarettes in a large enough quantity to make trafficking them to New York profitable. Saba and Khan arranged with Mustafa and Chaib for near-daily deliveries to New York. Some of the proceeds were also sent to a number of the defendants’ home countries in Africa and the Middle East.
Money seized from the operation totals more than $100,000.

Operation Smoke Brake is being prosecuted by Assistant District Attorneys W. Dyer Halpern, Jessica-Deanna Lupo, and Caitlin Carroll of the Arson/Auto/Economic Crimes Bureau, which is under the supervision of Counsel to the Investigations Division Mary Jo Blanchard, Bureau Chief William Zelenka and Executive A.D.A. Thomas Leahy.

#Cigarettes #BronxDA #Bronxnews

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