A Naperville man was sentenced to four years in federal prison for his role in a large-scale tobacco excise tax fraud scheme, according to a news release from the U.S. Attorney’s Office, Eastern District of California.
Naperville man involved with tax fraud and ordered to pay more than $5.9 million
Rahman Lakhani and his two companies, N. Ali Enterprises Inc. and 21st Century Distribution Inc. were sentenced for a total of 20 counts of mail and wire fraud. The companies were placed on three years of probation. All defendants have been ordered to pay more than $5.9 million in restitution.
The sentencing stems from a scheme involving the movement of over $25 million worth of other tobacco products (OTP) across multiple states, using warehouses in Illinois, Nevada, and California in the process. OTP includes tobacco products other than cigarettes, like cigars and chewing tobacco.
How Lakhani and his companies committed the fraud
Lakhani and his companies used these shipments to commit mail and wire fraud, by submitting false excise tax returns to state regulators. The fraudulent returns were designed to hide the true size and value of the shipments as the products moved from state to state.
The OTP was sold in California on false invoices, with the misrepresentation that tax had been paid. As a result, Lakhani and his companies defrauded the state of California out of more than $5.9 million in unpaid taxes. The scheme allowed Lakhani and his companies to undercut the competition who were paying the excise tax, and to gain an extra profit, according to the news release.
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