Attorney General Bonta Charges Five Suspects in Unlicensed Tobacco Scheme that Cost Californians $24 Million in Lost Tax Revenue

SACRAMENTO – California Attorney General Rob Bonta today announced the grand jury indictment of five suspects for selling tobacco without a license and committing tax fraud that cost the state of California over $24 million in lost tax revenue. On March 14, 2025, the Sacramento County criminal grand jury indicted the five suspects with 118-counts of conspiracy, selling tobacco as an unlicensed distributor, filing false tax returns, money laundering, and a white-collar enhancement. 

“From the investigation to prosecution, my office is dedicated to seeing these five defendants pay for their crimes against the people of California,” said Attorney General Rob Bonta. “Schemes that defraud the government of millions in taxpayer money will not be tolerated. Today’s announcement should serve as a reminder: If you break the law and engage in fraud and theft, my office will hold you accountable.”

"Tobacco taxes provide funding for medical research, childhood development, and tobacco-prevention programs for kids. They also pay for many other critical services that Californians rely on,” said California Department of Tax and Fee Administration Director Trista Gonzalez. “That’s why we will continue to work with DOJ and our other state colleagues to fight against tax evasion.” 

From January 2017 to April 2024, the suspects allegedly engaged in the importation of untaxed tobacco products into California using shell entities, subsequently selling these products to customers in the state while evading the tobacco excise tax. This operation involved a series of coordinated actions aimed at misusing personal and regulatory information, hiding the source of funds used for purchasing untaxed tobacco, concealing the arrival of tobacco shipments in California, misleading customers about compliance, and avoiding obligations related to California’s tobacco excise tax. 

Additionally, the five suspects perpetuated their scheme by submitting false monthly excise tax returns to the California Department of Tax and Fee Administration or, in some cases, neglecting to file these returns altogether. As a result of their actions, the state of California suffered over $24 million in lost tax revenue, significantly compromising the integrity of its tobacco regulatory system. This case was investigated by the California Department of Justice (DOJ), and the California Department of Tax and Fee Administration. It is being prosecuted by DOJ. 

It is important to note that a criminal complaint contains charges that are only allegations against a person. Every defendant is presumed innocent until proven guilty.

A copy of the unsealed indictment can be found here.