Farmer Harmon Jones of Springfield, Tenn., walks through one of his barns where tobacco is still hanging on April 13, 2007. Jones said the crop is still profitable for him.
Sacramento, California – California Attorney General Rob Bonta on Thursday announced the indictment of five individuals accused of operating a years-long scheme to avoid paying California’s tobacco excise tax, costing the state over $24 million in lost revenue.
The group allegedly trafficked unlicensed tobacco products into the state and posed as legitimate distributors to evade the tax. The operation, which spanned from January 2018 to April 2024, involved shell companies and false documentation to conceal their activities, according to prosecutors.
“From the investigation to prosecution, my office is dedicated to seeing these five defendants pay for their crimes against the people of California,” Bonta said in a statement. “Schemes that defraud the government of millions in taxpayer money will not be tolerated.”
The defendants — Banayotis Reda Haddad, Ramzi Ibrahim Saba, Josef Friwat, Osama Zakour, and Jeries Ayoub Dababneh — face a total of 118 criminal counts, including conspiracy, money laundering, filing false tax returns, selling tobacco as unlicensed distributors, and a white-collar crime enhancement. A Sacramento County criminal grand jury handed down the indictment on March 14.
The alleged crimes were committed across multiple counties, including Sacramento, San Diego, Riverside, San Bernardino, and Los Angeles.
California Department of Tax and Fee Administration Director Trista Gonzalez emphasized the broader impact of tobacco tax fraud, noting that excise tax revenue funds critical services such as medical research, early childhood development, and tobacco-prevention programs for children.
Authorities say the group avoided tax obligations by misrepresenting the nature of their business, hiding the origins of the money used to purchase the untaxed tobacco, and concealing shipments. In some instances, they allegedly submitted false returns or failed to file taxes altogether.
Bonta said the conduct significantly compromised the integrity of California’s tobacco regulatory system and vowed to hold the defendants accountable.
