Illinois Brothers Charged with $10 Million Cigarette Tax Scam

Published August 1, 2006

Two brothers from the Chicago suburb of Burbank, Illinois were arrested June 6 for allegedly diverting millions of dollars in taxes on sales of tobacco products. A third brother was arrested in Florida on the same charges.

The U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF) seized several trailers of tobacco products from the Burbank homes and businesses of Omar and Faride Dahla. According to the ATF, the brothers took in more than $10 million in less than two years and “handled hundreds of thousands of pounds of tobacco products” without paying state and local taxes.

The Dahlas are accused of “underreporting millions of dollars in sales of chewing tobacco, snuff, pipe tobacco, and cigars,” according to the ATF.

“Diverting legal tobacco products for illegal means is a sophisticated way of amassing large sums of money,” Andrew Traver, special agent-in-charge of ATF in Chicago, said in a written statement.

John W. Skorburg ([email protected]) is visiting lecturer in economics at the University of Illinois at Chicago and associate editor of Budget & Tax News.