From: WPRI.com Eyewitness News
Allegedly sold $1.2 million in illegal cigarettes
By Dan McGowan, WPRI.com Reporter
PROVIDENCE, R.I. (WPRI) – Seven individuals were arrested Wednesday in connection with an alleged cigarette trafficking conspiracy that resulted in the sale of more than $1.2 million in illegal cigarettes, according to the U.S. Attorney’s Office.
The indictment came after scores of state and federal law enforcement agents raided ten businesses and residences across the state Wednesday morning. Officials said they recovered approximately $100,000 in cash as well as business records and four vehicles allegedly connected to the trafficking operation.
“As alleged, today’s indictment has taken down a wide-ranging, complex interstate criminal enterprise,” U.S. Attorney Peter Neronha said in a prepared statement. “Members of this enterprise, often under the cloak of purportedly legitimate businesses, used any means possible to steal more than a million dollars from Rhode Island taxpayers. The means varied – cigarette smuggling and corresponding evasion of Rhode Island cigarette taxes, social security fraud, and food stamp fraud – but the result was the same.”
According to the indictment, the smuggling scheme involved sending people to Virginia to purchase cigarettes at a discounted rate and then reselling them in the Ocean State. In March, one of the individuals arrested, 25-year-old Najd Khalil, was allegedly in possession of $30,000 in cash when he was stopped by the Virginia State Police. Officials believe the money was going to be used to buy cigarettes in bulk.
Others arrested in connection with the investigation include:
Wissam Khalil, 40, of Central Falls; Bassam Khalil, 48, of Pawtucket; Abdullah Alnahas, 36, of Cranston; Bassam Kiriaki, 45, of Pawtucket. Richard Larrain, 23, of Providence; Valeria Mendez, 30, of Central Falls.
Wissam Khalil and Alnahas are storeowners in Providence.
Officials allege Larrain’s role in the elaborate scheme involved him driving vehicles with Rhode Island War Veteran license plates and wearing his United States Army uniform to avoid attention from law enforcement.
The indictment alleges that between July 2011 and last week, the traffickers purchased more than 30,000 cartons of cigarettes in Virginia to ship to Rhode Island.
The cigarettes purchased carried Virginia tax stamps, which are taxed at just 35 cents per package. In Rhode Island, where tobacco taxes are $3.50 per pack, the cigarettes were sold at close to market value, costing the state more than $1 million in lost tax revenue.
Cigarette smuggling is a common crime in Rhode Island, which has the second-highest tobacco tax in the United States behind New York. In January, the Washington D.C.-based Tax Foundation issued a report that found that nearly 40% of all cigarettes sold in the state were illegally purchased in other states.
At 39.8%, the report ranked Rhode Island fifth in the country for smuggling rates in 2011, behind only Washington, New Mexico, Arizona and New York, which tops the list at 60.9%. The Ocean State ranked first in smuggling in 2006.
