Simi Valley Tobacco Distributor Sentenced for a Scheme to Avoid Paying $528,000 in Excise Tax
LOS ANGELES, Calif. – Mehdi Humkar, 58, of Simi Valley, was sentenced on September 24, 2012 in U.S. District Court in Los Angeles for his role in a scheme to avoid paying $528,000 in state tobacco excise taxes, United States Attorney Benjamin B. Wagner and California Attorney General Kamala D. Harris announced. Humkar appeared in court with a cashier's check for $200,000 for the State of California and requested probation. Instead, U.S. Circuit Judge Nguyen sentenced Humkar to 18 months in prison, ordered him to repay the tax loss, and fined him $10,000 to be paid in 180 days.
According to court documents, from 2006 to 2008, Humkar ordered large shipments of tobacco products other than cigarettes (cigars, chewing tobacco, etc.) from a distributor in Las Vegas. The untaxed tobacco was shipped to a truck depot in the Los Angeles area instead of to Humkar's place of business. Humkar did not keep any invoices from the purchases as required by state law.
Legitimate licensed California tobacco distributors of unstamped tobacco must report monthly to the California Board of Equalization (BOE) the in-state sales and pay approximately 46 percent of the wholesale price in excise taxes. Humkar was not licensed to possess untaxed tobacco and did not report any of the purchases or subsequent sales to the BOE, as is required by state law. By conducting business in this manner, Humkar avoided paying the tobacco excise taxes owed on the tobacco sold in California.
This case is the product of a continuing cooperative effort between the U.S. Attorney's Office for the Eastern District of California; the California Attorney General's Office; the ATF; and the California Board of Equalization. Assistant U.S. Attorney R. Steven Lapham and California Deputy Attorney General Peter Williams, cross-designated as a Special Assistant U.S. Attorney, are prosecuting the case.
For the last several years, these offices have supported a task force dedicated to combating the systemic problem of tobacco excise tax evasion in California. In 2007, the BOE estimated that the state lost approximately $90 million in unstamped tobacco excise taxes to contraband distributors and approximately $120 million in excise taxes for taxed stamped tobacco — such as cigarettes. Because California has a relatively high excise tax rate, it is a frequent target for contraband tobacco smugglers and tax evaders.
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