Golden State Today

California Attorney General Rob Bonta has announced the indictment of five individuals involved in an unlicensed tobacco distribution operation, which reportedly resulted in the state losing over $24 million in tax revenue. The suspects face charges from a Sacramento County criminal grand jury for conspiracy, selling tobacco without a license, filing false tax returns, money laundering, and a white-collar enhancement.

Attorney General Bonta stated, "From the investigation to prosecution, my office is dedicated to seeing these five defendants pay for their crimes against the people of California. Schemes that defraud the government of millions in taxpayer money will not be tolerated. Today’s announcement should serve as a reminder: If you break the law and engage in fraud and theft, my office will hold you accountable."

The scheme, running from January 2017 through April 2024, involved importing untaxed tobacco into California via shell entities, selling these products to in-state customers while evading the tobacco excise tax. The coordinated effort included hiding the origin of funds, concealing shipment arrivals, misleading customers about compliance, and avoiding tax obligations.

In the case, the suspects allegedly filed false or failed to file monthly excise tax returns to California's Department of Tax and Fee Administration, leading to the substantial revenue loss. The California DOJ and the Department of Tax and Fee Administration investigated, with the DOJ handling prosecution.

Trista Gonzalez, Director of the California Department of Tax and Fee Administration, remarked, "Tobacco taxes provide funding for medical research, childhood development, and tobacco-prevention programs for kids. They also pay for many other critical services that Californians rely on. That’s why we will continue to work with DOJ and our other state colleagues to fight against tax evasion."

It is emphasized that current charges are allegations and that each defendant is presumed innocent until proven guilty.

A copy of the unsealed indictment is available for public viewing.