Owner of Norwood Business Sentenced For Multi-Million Dollar Tax Evasion Scheme

NORWOOD, MA — A Hopkinton man was sentenced Friday for 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.

Raza Ali, 56, of Hopkinton was sentenced in U.S. District Court in Boston to a year and a day in prison and two years of supervised release. Ali was also ordered to pay a fine of $30,000; restitution to the Commonwealth of Massachusetts in the amount of $28,072,946; and forfeit all property involved in the offense, including a warehouse-full of tobacco products and over $160,000 seized during the investigation.

In May 2016, Ali 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. He was arrested in December 2015, according to the U.S. Attorney's office.

Ali was one of three people who operated a wholesale business under the names “Pick N Dip” and later, “MSI Distributors” in Norwood that sold tobacco products, including cigars, smoking tobacco and smokeless tobacco to convenience stores, gas stations and other retail businesses.

Wholesalers of smokeless tobacco are licensed by the Massachusetts Department of Revenue and must file an excise tax form monthly and pay excise tax on smokeless tobacco brought into and sold in Massachusetts. Cigar and smoking tobacco wholesalers must file an excise tax form quarterly and pay excise tax on cigars and smoking tobacco brought into and sold in Massachusetts.

In order to evade tobacco taxes, the defendants 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. They then covertly transported the products to Massachusetts for resale without filing the reports required by state and federal law and without paying excise taxes, the U.S. Attorney's office said.

The three ccepted payments for the tobacco products primarily in cash. They 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 that banks were required to report to the U.S. Treasury Department. They then 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.

Information from the U.S. Attorney's office was used in this article.

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