Lowell Man Faces Federal Prison for Evading Tobacco Tax

BOSTON – A Lowell man pleaded guilty today in federal court today in connection with defrauding the state out of tobacco excise taxes between 2012 and 2014.

Neetal Shah, 41, pleaded guilty to one count of wire fraud. U.S. District Court Judge Allison D. Burroughs scheduled sentencing for July 21.

The U.S. Attorney's Office said that between April 2012 and November 2014, Shah operated a wholesale business in Lowell that sold tobacco products, including cigars, smoking tobacco and smokeless tobacco (such as snuff and chewing tobacco), as well as other non-tobacco items, to convenience stores, gas stations and other retail businesses.

Under state law, smokeless tobacco wholesalers must file an excise tax form monthly and pay a 210% excise tax on smokeless tobacco brought into Massachusetts. Cigar wholesalers must file an excise tax form quarterly and must pay a 40% excise tax on cigars brought into Massachusetts.

In order to evade tobacco taxes, Shah made regular purchases of loose smoking tobacco and smokeless tobacco for his business from two distributors in Pennsylvania, where these tobacco products are not taxed.

Knowing the products were subject to Massachusetts state excise taxes, Shah either drove the tobacco products or had them shipped to Massachusetts, where he resold them through his wholesale business without paying the requisite taxes.