Financial Fraud: Kamlesh Patel Plead Guilty to Aiding And Abetting Untaxed Shipments of Tobacco Products

by fraudswatch

Pennsylvania Tobacco Distributor Agrees to Plead Guilty to Aiding Tobacco Trafficking in Massachusetts

BOSTON – A Pennsylvania wholesale tobacco distributor agreed to plead guilty yesterday in federal court in Boston to aiding and abetting untaxed shipments of tobacco products into Massachusetts and evading financial reporting requirements.

Kamlesh Patel, 60, was charged and agreed to plead guilty to one count of aiding and abetting a large Norwood-based customer to violate the Prevent All Cigarette Trafficking Act (PACT Act) and one count of failing to report large cash transactions to the IRS.

Patel owned and operated RDK Distributors (RDK) and MV Distributors (MV) in Stroudsburg, Penn., through which he distributed wholesale quantities of cigars, smoking tobacco and smokeless tobacco (such as snuff and chewing tobacco), among other products.

Title 15 of the PACT Act requires people who sell, advertise for sale, transfer or ship for profit smokeless tobacco between states to file a statement with the Attorney General and the tobacco tax administrator in the states to which they ship their products. The PACT Act also requires them to file with the tax administrator a monthly record of each shipment of smokeless tobacco that they transport into the state.

Beginning in approximately January 2013, Patel sold large quantities of tobacco products to a Norwood wholesaler, often worth more than $100,000 at a time. The Norwood wholesaler typically paid Patel for tobacco products in cash. To evade financial reporting requirements that would have notified the IRS of the size, nature and income of the Norwood wholesaler’s business, Patel falsely divided among multiple invoices the bulk cash payments he received. Patel created and instructed his employees to record the large cash payments he received as if there had been numerous sales over numerous days among numerous companies, each less than $10,000, rather than the single sale for which he had received one or two sizeable cash payments, often amounting to more than $100,000 at a time.

The charge of structuring cash transactions to evade financial reporting requirements provides for a sentence of no greater than 10 years in prison, three years of supervised release, a fine of up to $500,000 and forfeiture. The charge of aiding and abetting violation of the PACT Act provides for a sentence of no greater than three years in prison, up to 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 other statutory factors.

Acting United States Attorney William D. Weinreb and Joel P. Garland, Special Agent in Charge of the Internal Revenue Service’s Criminal Investigations in Boston, made the announcement today. The Massachusetts Department of Revenue also provided valuable assistance. Assistant U.S. Attorney Stephen Heymann of Weinreb’s Economic Crimes Unit is prosecuting the case.

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