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Hopkinton businessman pleads guilty to multi-million dollar tax evasion scheme

BY Sam Bonacci

5/25/2016
Luciaano Belviso via Flickr
Luciaano Belviso via Flickr
The tax evasion scheme involved tobacco products purchased out of state.

Two men, one from Hopkinton, pleaded guilty today in U.S. District Court in Boston to evading federal income taxes and defrauding the commonwealth of Massachusetts of millions of dollars in connection with the sale of cigarettes and other tobacco products, according to a release from the Office of United States Attorney Carmen M. Ortiz.
Raza Ali, 56, of Hopkinton, and Kaleem Ahmad, 47, of Sharon, both pleaded guilty to one count of conspiring to commit wire fraud and launder money and one count of making a false statement on a federal income tax return, according to the release. They were arrested in December\. A third co-conspirator, Muhammad Saleem Iqbal, 54, of Sharon, also pleaded guilty for his role in the same conspiracy in May 2016. Ali is scheduled to be sentenced on Sept.14; Ahmad on Sept. 9; and Iqbal on Sept. 7, 2016.
According to the U.S. attorney’s office, the trio operated a wholesale business in Norwood that sold tobacco products, including cigars, smoking tobacco and smokeless tobacco (such as snuff and chewing tobacco), to convenience stores, gas stations and other retail businesses. The business was conducted in Massachusetts under the names “Pick N Dip” and, later, “MSI Distributors.”
To supply their business, Ali and Iqbal repeatedly purchased tens, and sometimes hundreds of thousands, of dollars at a time of smoking tobacco, smokeless tobacco and cigars in Pennsylvania, where no taxes are imposed on these products. According to the release, Ali then arranged to have the products covertly transported to Massachusetts for resale. Ali and Iqbal did not file reports and records required by state and federal law, and did not pay excise taxes.
They then made and directed multiple bank deposits of cash from the business in amounts less than $10,000 to create the false appearance that the total amount being deposited fell below the amount they knew the banks were required to report to the U.S. Treasury Department. Ahmad and others repeatedly transported cash in excess of $50,000 at a time generated by the sale of untaxed cigars, smoking tobacco and smokeless tobacco products in Massachusetts to Pennsylvania, where the money was used to purchase additional untaxed tobacco products.
The conspiracy charge carries sentences of up to five years in jail along with restitution to the state and a fine of twice the tax lost to Massachusetts. The false income tax return charge carries a sentence of up to three years in jail and a fine of up to $100,000.