A couple of recent Massachusetts cases have demonstrated the wide area of industries that can be swept up in federal fraud charges. This includes a tobacco smuggling operation taking place in Springfield, and fraud charges by a Shaklee product distributor by a former Belmont resident.
Federal prosecutors have recently gone after a Connecticut man for tobacco smuggling, accused of defrauding taxpayers in Massachusetts and Connecticut of $43 million. According to the US Attorney's Office for the District of Massachusetts, Syed Bokhari, of Middletown, Connecticut, faced a 32-count indictment including conspiracy to commit wire fraud, wire fraud, trafficking in contraband smokeless tobacco, money laundering, and violation of the Prevent All Cigarette Trafficking (PACT) Act.
Mr. Bokhari is the alleged owner of a Springfield warehouse, which went by a variety of names, and another warehouse in Danbury, Connecticut. Bokhari is alleged to have failed to pay excise taxes on cigars and smokeless tobacco, and transferring tobacco without reporting transfers to the state tax authorities. He is also alleged to have accepted payment for tobacco products in cash of more than $10,000 without reporting the transactions, in order to disguise the amount of tobacco sent to the warehouses.
"This indictment exposes a form of tax evasion that deprives states like Massachusetts and Connecticut of badly needed revenue that pays for essential government services like education, public safety, and infrastructure," said US Attorney, Carmen M. Ortiz. She continued, "when tobacco tax laws are evaded, as the defendant is alleged to have done in this indictment, honest tobacco distributors suffer, as does the honest taxpayer."
Bokhari could face up to 20 years in prison, three years of supervised release, and a fine of $250,000 or more, for each of the 11 fraud charges, and additional prison time, forfeiture and further fines for the money laundering and PACT Act violations.
However, it is not just tobacco smuggling which can be a major source of fraud in this state. In fact, a recent case has alleged fraud against a natural supplements distributor. Shaklee is a well-known multi-level marketing company which distributes nutritional supplements, beauty products, and weight control products. However, one high level distributor has allegedly bilked his investors out of $15 million.
John Cranney, was charged with four counts of wire fraud, 16 counts of mail fraud, and three counts of money laundering. The indictment alleges Cranney asked friends and Shaklee business associates for money, indicating the money would be invested, with a guaranteed rate of return. However, Cranney spent the money on personal expenses, and used some of the funds to pay back other victims and creditors.
According to the FBI, Cranney created shell investment companies for the investors' money. Once the money was deposited, Cranney transferred the funds to other accounts for his personal use. In 2012, the Massachusetts Securities Division charged Cranney with stealing over $10 million in an alleged Ponzi scheme. Cranney faces a sentence of 20 years in prison, three years of supervised release, and $250,000 or more in fines for the fraud charges. He faces additional jail time and fines for money laundering charges.