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Cigarettes News Last Updated: Sep 11th, 2007 - 10:49:25


Texas accuses 5 of tobacco tax stamp fraud
Sep 11, 2007, 10:42

 
The dollars at stake range from $427 that the state says should have been paid on "gray market" cigarettes seized from an El Paso convenience store to $9.8 million worth of cigarette tax stamps recovered in Southeast Texas and Kentucky. Gray-market cigarettes are tax-exempt only when exported to foreign markets. One of the indictments announced Monday stems from 2005, before the tax increase took effect Jan. 1. All were handed down a week ago but weren't announced until Monday. "When the state cigarette tax increased from 41 cents to $1.41 per pack, we anticipated an increase in tax evasion attempts," Comptroller Susan Combs said in a statement. "We continue to closely monitor sales of tobacco products and cigarette tax stamps, and we will investigate all suspicious activity." Three of those indicted are accused of state jail felonies, punishable by up to two years confinement and/or a $10,000 fine per count. Two are accused of third-degree felonies, punishable by two to 10 years in prison and/or a fine of up to $10,000. Travis County Assistant District Attorney Beverly Mathews said none of those indicted was in custody Monday.
Those indicted were:
•Mike Kimzey and Richard H. Russo, of Louisville, Ky., on 12 counts of tampering with a governmental record, a state jail felony. The comptroller's office said the two purchased an "unusually large number" of cigarette tax stamps late in 2006, before the price rose. The comptroller's office, which said it suspected them of planning to illegally resell the stamps, recovered $9.8 million worth of the stamps in Kentucky and Southeast Texas and cited an additional $320,400 in unpaid taxes. Neither Kimzey nor Russo immediately returned a telephone message.
•Tariq Majeed, of Austin, accused of possession of tobacco without paying taxes, a third-degree felony. The tax value of the seizure, which stemmed from the comptroller's investigators helping federal agents execute a search warrant for an unrelated offense, is $1,988. Majeed didn't return a telephone message to a home listed in that name.
•Convenience store owner Mohammed Khawar Jamshed, of Breckenridge, on two counts of tampering with a governmental record, a state jail felony. Jamshed is accused of falsifying cigarette inventory reports in a case worth $69,900 in state tobacco tax. Reached by telephone, Jamshed said he didn't falsify inventory reports and that he made his reports accurately. He said he knew nothing of the indictment.
•Convenience store owner Lazaro Ramirez, of El Paso, accused of failing to maintain books and records as required by the tax code, a third-degree felony. The comptroller's office said it seized from his store more than 300 packs of "gray market" cigarettes with a tax value of $427. He didn't immediately return a phone call.

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