Manchester Man Sentenced To 16 Months For Scheme To Defraud State Of New Hampshire In Connection With Untaxed Tobacco Products

          CONCORD – United States Attorney Scott W. Murray announced today that Imtiaz Shaikh, 46, of Manchester was sentenced on Monday to 16 months in prison for participating in a wire fraud scheme to defraud the State of New Hampshire out of tobacco excise tax revenue.

          According to court documents and statements made in court, Shaikh’s scheme, which he executed between 2013 and 2016, involved the purchase of tobacco products other than cigarettes, referred to as “other tobacco products” or “OTP,” from various suppliers located in Pennsylvania.  Shaikh and others then transported the products to New Hampshire for sale to retail businesses.  In New Hampshire, wholesale distributors of OTP must be licensed and are required to file reports identifying the quantity of OTP sold each month.  New Hampshire taxes OTP at 65.03 percent of the wholesale sales price.  Shaikh avoided most of the licensing and reporting requirements by conducting business through a number of shell corporations.  Except for a single report filed in September 2014, Shaikh and the entities he created failed to pay the taxes owed to the State of New Hampshire.  The state lost an estimated $2.8 million in tax revenue as a result of the scheme.

          In addition to the sentence of imprisonment, the court ordered Shaikh to pay restitution to the State of New Hampshire in the amount of $2,845,270, and ordered that he forfeit $132,538 in seized funds.

          Shaikh previously pleaded guilty to wire fraud on June 29, 2018.

          “This scheme swindled the State of New Hampshire out of much needed tax revenue,” said U.S. Attorney Murray.  “The Defendant’s conduct effectively made each honest taxpayer the victim of fraud.  In order to protect the public treasury, we will always work closely with our law enforcement partners to identify and prosecute those who choose to engage in fraudulent conduct.”

          “Hard-working taxpayers in the Granite State ended up having to foot the bill after Mr. Shaikh cheated the state out of approximately $2.8 million in tax revenue,” said Joseph R. Bonavolonta, Special Agent in Charge of the FBI Boston Division.  “He hid his income to evade taxes but failed miserably at not getting caught. No one is above the law, and the FBI will continue to work with our law enforcement partners to identify others like him who are engaging in fraudulent conduct.” 

          “Both the federal and state tax systems are designed to provide vital government services to our citizens.  They are not slush funds for thieves and fraudsters,” said Special Agent in Charge Kristina O’Connell, IRS Criminal Investigation’s Boston Field Office.  “Mr. Shaikh’s prison sentence is appropriate, given the significant tax revenues stolen from the Granite State and ultimately, its residents.  IRS-CI is proud to be part of this dedicated investigative team, and to lend our financial expertise to combat OTP tax fraud.”

          “The Department of Revenue Administration is committed to ensuring that no one defrauds or deprives our state and its law abiding citizens of tax revenue,” said Lindsey Stepp, Commissioner of the New Hampshire Department of Revenue Administration. “We are proud to have worked collaboratively with local, state and federal law enforcement partners to uncover this scheme and see Mr. Shaikh held accountable for his criminal actions.”

          The Federal Bureau of Investigation, the Internal Revenue Service, Criminal Investigation, the New Hampshire State Police, the Manchester Police Department, the Salem New Hampshire Police Department, the Massachusetts State Police and the New Hampshire Department of Revenue Administration all participated in the investigation of this case.  Assistant United States Attorney John Davis prosecuted the case.