The mission of the Criminal Investigation Division is to deter intentional criminal conduct against the state tax laws administered by the Texas Comptroller of Public Accounts. This deterrence is achieved by detecting and investigating felony and misdemeanor tax-related crimes, and by informing the public of the results of case prosecution.
Spotlight on...Dyed Diesel Crime
Most gasoline and diesel fuel is purchased by businesses and private citizens for use on public highways. Texas' motor fuels tax rate, as set by the Texas Legislature, is 20 cents per gallon. In fiscal 2013, the motor fuels tax was the state's fourth-largest source of tax revenue, at $3.2 billion. Texas allocates most of this revenue to the state highway fund.
The motor fuel tax is paid early in the supply chain, by distributors who purchase fuel from terminal operators. Distributors pay the tax to the terminal operators who remit it to the Comptroller's office. Distributors recover this cost by passing it along as part of the sales price to retailers, who in turn recover their cost by passing it along to consumers.
Contraband Cigarette Traffickers Sentenced in Federal Court
The last of seven contraband cigarette traffickers was sentenced November 13, 2013 federal court in Dallas. Saleem Durvesh, 61, Hisham Mahmoud Rashid, 50, Vashu Samtani, 49, Kan Arjel, 36, Keshab Thapaliya, 43, Inayat Ishaak, 49, and Mushtaq Ali, 53, pled guilty to Trafficking in Contraband Cigarettes, a violation of 18 U.S.C. 2342(a). All defendants except Ali pled guilty to an additional charge of Receipt of Counterfeit Securities, a violation of 18 U.S.C. 2315. One defendant, Durvesh, was sentenced to prison time.
Durvesh will serve 1 year and one day in prison, followed by 2 years of supervised release on each charge. Rashid, Samtani, Arjel, and Thapaliya were sentenced to 4 years of probation on each charge, to run concurrently. Ishaak received 2 years of probation on each, also to run concurrently. Ali will serve 2 years of probation.
The defendants were ordered to pay a combined restitution amount of $895,766 to the Texas Comptroller of Public Accounts, and to forfeit a combined $180,028 to the U.S. Government.
The cases, filed as case numbers CR-00359 (Samtani, Arjel, and Thapaliya), CR-00369 (Ishaak) CR-00371 (Durvesh), and CR-00375 (Rashid), were investigated jointly by the Bureau of Alcohol, Tobacco, Firearms, and Explosives, the Euless Police Department, and the Criminal Investigation Division of the Texas Comptroller of Public Accounts. The cases were prosecuted by the U.S. Attorney's Office for the Northern District of Texas.
Houston Woman Sentenced to Federal Prison for Identity Crimes
Tawana Scott, 31, of Houston, was sentenced July 8, 2013 in U.S. District Court to 39 months in federal prison after pleading guilty to Aggravated Identity Theft and Conspiracy to Commit Mail Fraud. Scott was accused in court documents of conspiring to defraud the Harris County Tax Office and the Texas Comptroller of Public Accounts through the U.S. Mail. In addition to her prison sentence, Scott was ordered to pay $161,804 in restitution to the Harris County Tax Office. Scott's case, filed as cause number 4:11CR00238-002, was jointly investigated by the U.S. Postal Inspection Service and the Texas Comptroller's Criminal Investigation Division. It was prosecuted by the U.S. Attorney's Office for the Southern District of Texas.
Houston Men Sentenced in Federal Court for Conspiracy relating to Motor Fuel Tax
Assad Najib Boulos, 62, of Spring, and Talaat Boulos Boulos, 71, of Houston, were convicted and sentenced March 25, 2013 in U.S. District Court in Houston of Conspiracy to Defraud the United States, a violation of 18 U.S.C. 371. Each admitted in court documents to conspiring to impede and impair the Internal Revenue Service by causing purchases of motor fuel, on which they knew no federal fuel excise taxes had been paid, to occur; causing that fuel to be sold to consumers in certain convenience stores as tax-paid diesel for on-road use; and failing to report taxable diesel sales or remit excise tax. Each was sentenced to 5 years of federal probation and ordered to pay $650,000 in restitution jointly and severally. The cases, filed as cause numbers CR H-11-533-1 and -2, were prosecuted by the U.S. Attorney's Office for the Southern District of Texas.
Odessa Duo Receives Federal Prison Time for Motor Fuel-Related Fraud
Jose Maria Delbosque, 36 and Blanca Ronquillo-Corrales, 42, both of Odessa, were convicted and sentenced in U.S. District Court in October 2012 for motor fuel-related fraud. Delbosque and Ronquillo-Corrales were alleged by indictment of Accessing a Computer Device in Furtherance of Fraud, specifically, of knowingly and with the intent to defraud accessing a protected computer device without authorization in order to obtain fuel.
Delbosque pled guilty to one count of the offense and was sentenced October 5, 2012 to 24 months in federal prison, to be followed by three years of supervised release. As part of his sentence, he is ordered to pay $167,438 in restitution to West Texas Gas, jointly and severally with co-defendant Ronquillo-Corrales.
Ronquillo-Corrales was found guilty after a jury trial of three counts of Accessing a Computer Device in Furtherance of Fraud and was sentenced on October 25, 2012 to 11 months in federal prison with three years of supervised release to follow. Ronquillo-Corrales was ordered to pay $37,763 restitution jointly and severally with co-defendant Jose Delbosque to West Texas Gas as part of her sentence.
The case was prosecuted by the U.S. Attorney's Office for the Western District of Texas (Midland) as cause number MO12CR0149.
Motor Fuel Tax Evader Sentenced to 20 Years in Prison
Calvin Russell Laird, 50, of Lawn, was sentenced to twenty years in prison on July 6th, 2012 for motor fuel tax fraud. It is the maximum sentence allowed by law for Evading Motor Fuel Tax, a second-degree felony that is the highest criminal charge in Chapter 162 of the Tax Code.
Laird was accused by indictment of intentionally and knowingly evading and attempting to evade motor fuel tax by delivering dyed diesel into the fuel tank of a motor vehicle for use upon a public highway. The case was prosecuted by the Taylor County District Attorney's Office and was a part of a multi-case plea bargain involving separate, unrelated offenses alleged to have been committed in Taylor County. The sentences run concurrently, and Laird's motor fuel sentence was the highest sentence imposed.
"The opportunities for dyed diesel crime have increased over the last several years, due to increased industrial activity in West Texas," stated Sgt. Dickie Hass, a peace officer with the Comptroller's Criminal Investigation Division. "As access increases, so do the opportunities for improper use.
"In order to deter improper use and protect the state's tax revenue, the Tax Code allows dyed diesel offenses to be prosecuted per act regardless of value, rather than by value, the way property crimes such as Theft are defined," explained Hass. "The result is that a felony conviction can be based, depending on the facts, on actions relating to one tank of fuel."
"This case is a warning to those considering diverting a tank or two of dyed diesel fuel into their vehicles for use on a public highway, which is prohibited by law," said CID Chief Martin D. Cano, Jr. "Prison time is a possibility in these cases. Any time, much less 20 years, is a lot of time to think about a couple of dollars saved. It's just not worth it."
Sales Tax Evader Returns to Federal Prison a Second Time
On June 8, 2012, Mike Wooten, 50, of Dallas, returned to federal prison a second time after pleading true in U.S. District Court in Lubbock to the prosecution's Motion to Revoke Supervised Release. In 2010, Wooten pled guilty to misprision of a felony in a case involving state sales tax evasion and wire fraud with his business, West Texas Lighting, located in Lubbock. Wooten served 6 months in federal prison, paid the Comptroller $200,000 in restitution, and was placed on one year of supervised release after his initial discharge from prison. Wooten admitted to violating the terms of his supervised release and was sentenced to serve an additional 6 months in federal prison.
Four Men Sentenced for Fuel and Tax Crimes Committed at Biggs Air Field
Tomas Quintero, 52, Fernando Baca, 54, and Luis Campos, 63, of El Paso, and Richard Baca, 55, of Albuquerque, NM, were sentenced in May 2012 in federal court on charges relating to theft of fuel from Biggs Air Field.
All men pled guilty to Conspiring to Commit Theft, a violation of 18 U.S.C. 371, 7(3), and 661. Three of the men: Quintero, Fernando Baca, and Campos were sentenced to prison sentences of 30, 15, and 4 months, respectively, each to be followed by 3 years of supervised release. Richard Baca was sentenced to 5 years of probation.
Additional prison terms were handed down for Quintero and Fernando Baca. Quintero, who pled guilty to Tax Evasion, a violation of 26 U.S.C. 7201, was sentenced to 30 months in prison to be followed by 3 years supervised release, to run concurrently with his Conspiracy sentence. Fernando Baca, who pled guilty to Fraud and False Statements, a violation of 26 U.S.C. 7206, was sentenced to 15 months in prison to be followed by 3 years supervised release, to run concurrently with his Conspiracy sentence.
All men were ordered to pay restitution, jointly and severally, to the Defense Energy Support Center in the amount of $291,817; the U.S. Department of Transportation in the amount of $26,511, and the IRS in the amount of $25, 504. Quintero was ordered to pay an additional $43,806 to the IRS individually.
The Texas Comptroller's Criminal Investigation Division assisted the U.S. Army Criminal Investigation Command and the Defense Criminal Investigative Service on the investigation. The case, filed as EP-11-CR2587, was prosecuted by the U.S. Attorney's Office for the Western District of Texas in El Paso.
SB 934 Punishes Sales Tax Cheats Same as Theft
When a consumer pays sales tax, he or she does so trusting the retailer will forward that money to the state. When an unscrupulous retailer obtains that tax money, then breaks the trust by intentionally failing to remit that money -- perhaps keeping, investing, or spending it -- the consumer and the entire state are victimized. SB 934 dramatically raises the stakes for anyone caught defrauding Texas taxpayers in this way.
Senate Bill 934 (2011), signed by the Governor, amends the Tax Code to treat tax cheats the same as property thieves. Beginning Sept. 1, 2011, anyone who collects and intentionally doesn't remit sales tax will face the same criminal penalties as property theft.
- Sales tax cheats pocketing amounts from $50 to $1,500 could face county jail time.
- Felony penalties carrying possible prison time can be assessed for sales tax fraud if as little as $1,500 is pocketed; that's down from the minimum threshold of $10,000 under the existing statute.
- Stiffer penalties have been authorized right up the scale with a first-degree felony defined, which can bring a punishment of five to 99 years or life in prison for failing to remit $200,000 or more.
SB 934 also amends the Penal Code to allows investigators to:
- Use state organized crime laws to pursue groups of three or more persons who collaborate to commit tax felonies, which enhances the severity of charges by one degree;
- Pursue sales tax cheats under state Money Laundering statutes when the trail of the criminal proceeds (unremitted sales tax) is known; and
- Charge retailers that intentionally fail to produce legally required records of taxable retail sales of alcohol and tobacco products to the Comptroller and base the punishment on the amount of tax avoided when the goods were purchased wholesale.
Sales tax fraud harms all Texans. Now with SB 934, this scam can be punished in tough new ways in the criminal justice system just as strongly as theft and pursued as money laundering and organized crime when appropriate.
State Tax Evader Sentenced to Federal Prison
The owner of a Lubbock business has been sentenced to six months in federal prison and ordered to pay the state Comptroller $200,000 in restitution for a scheme involving state tax evasion and wire fraud.
Mike Wooten, 48, the owner of West Texas Lighting Management, pled guilty in Lubbock federal court to misprision of a felony, which is defined in the U.S. Code as having knowledge of the commission of a felony and failing to report the crime to authorities. His sentence, handed down on Oct. 15, includes a year of supervised release after completing his prison term.
Court documents allege that in 2006, Wooten began underreporting his company's taxable sales to the state Comptroller's office, knowing the amounts shown on his tax returns were materially false and fraudulent, and using wire communications to file the tax returns. Wooten admitted in his guilty plea that he did not disclose the actual amount of his company's sales to the Comptroller.
Filing falsified state tax returns and failing to remit taxes collected from a business's customers are state law violations. When a false tax return is filed electronically, the filer can be charged with the federal offense of wire fraud or misprision of a felony based on wire fraud, which is what happened in the Wooten case.
"This was a complex case involving multiple serious crimes and state and federal jurisdictions," said Texas Comptroller Susan Combs. "I am pleased that investigators in our Criminal Investigation Division were able to work with the FBI and the U.S. Attorney's office in Lubbock to see that justice was done."
Combs reports that the number of felony tax cases filed by her office increased dramatically in fiscal 2010, after the Criminal Investigation Division streamlined its caseload to focus on the most serious tax law violators. The Comptroller's office filed 129 felony charges in fiscal 2010, compared to 25 in fiscal 2009.
South Texas Convenience Store Owner Sentenced For Tax Fraud Detected Under New Law
Hidalgo County convenience store owner Rogelio Ramirez this week received a punishment of 10 years deferred adjudication after pleading guilty to two counts of sales tax fraud. Ramirez admitted to intentionally failing to remit more than $100,000 of sales tax collected from customers, a second degree felony. Ramirez also admitted to intentionally making false entries in and failing to make entries in sales tax records, a third degree felony.
In December 2009, Ramirez, the owner of two Pepe's Drive In stores, was the first person arrested for tax fraud under a new law giving the Comptroller a new audit tool for detecting tax fraud.
"This case should send a strong message that we are serious about prosecuting those who commit tax fraud," Texas Comptroller Susan Combs said. "By going after the bad guys, we protect the good guys -- the honest business owners -- against unfair competitors."
Ramirez agreed to pay the state more than $116,000 in restitution as part of his plea bargain, paying $60,000 prior to sentencing. He will pay the balance of $56,290 as a condition of his deferred adjudication. Ramirez will also perform 200 hours of community service under the agreement.
The case was prosecuted by the Travis County District Attorney's Office.
House Bill 11 passed by the 2007 Legislature requires distributors of alcohol and tobacco products to report sales to retail outlets monthly, giving the Comptroller's auditors the ability to compare the distributors' reports against taxable sales reported by retailers.
"Since alcohol and tobacco distributor reporting began in January 2008, our auditors have used this new tool to identify nearly $164 million in sales tax due to the state," Combs said. "This tax might have gone unreported without the fraud detection capability offered by HB 11 and the deterrent effect of the new law on those who might be tempted to underreport sales tax."
The End of the Road for a
Motor Fuel Tax Evader
A Houston area man has received a 12-year prison sentence and an order to pay $1 million in restitution to the state for his part in a scheme to blend and sell untaxed motor fuel to unsuspecting gas stations. Sidney Baldon II, 47, pled guilty in a Travis County court to three indictments for motor fuel tax crimes connected to the scheme that operated in 2002 and 2003. He was sentenced June 23.
Baldon owned a company that transported kerosene and other motor fuel products. The company purchased kerosene from a Louisiana refinery and, to avoid paying excise taxes, falsely claimed the fuel would be exported to Mexico. Instead, Baldon trucked the kerosene to Texas and blended it with other additives to produce more than 22 million gallons of diesel fuel. Baldon distributed the diesel to retail gas stations, where it was sold as taxable motor fuel. State taxes were collected from consumers, but were never remitted to the state, defrauding taxpayers of $4.5 million.
"When a business collects tax and keeps the money, it not only defrauds the state, but also steals from every customer who pays the tax in good faith that the money will be used to benefit Texas," Comptroller Susan Combs said.
Convenience Store Owner Arrested for Tax Fraud Under New Law
A new audit tool used by Texas Comptroller Susan Combs has led to the indictment and arrest of a South Texas convenience store owner for tax fraud.
Rogelio Ramirez, owner of two Pepe's Drive In stores in McAllen, was arrested today after being indicted for four felony counts of failure to remit sales tax collected on alcohol and tobacco and two felony counts of falsifying records.
According to the indictment issued Nov. 30 by a Travis County Grand Jury, Ramirez is alleged to have collected and not remitted $100,000 or more in sales tax in 2008, and between $20,000 and $100,000 in the first eight months of 2009. He is charged with collecting but failing to pay the state $100,000 or more in calendar years 2006 and 2007 as well.
The indictment is the first in Texas based on an investigation using a fraud detection tool initiated by Combs and passed by the Legislature in 2007. The law requires distributors of alcohol and tobacco products to report sales to retail outlets monthly, giving the Comptroller's auditors the ability to compare the distributors' reports against taxable sales already reported by retailers. Distributor reporting under the law began in January 2008.
"This law passed with the overwhelming support of convenience store operators," Combs said. "It helps protect legitimate, law abiding convenience store owners against competitors who attempt to profit from tax fraud."
So far, the Comptroller has assessed nearly $90 million in sales tax that might have gone unreported without the fraud detection capability offered by the new law.
Houston Man Sentenced to 25 Years For Role in Forgery Ring
A Houston man has been sentenced to 25 years in the state penitentiary for check forgery, including forgery of state government checks.
On Oct. 14, 2009, Dwaine Allen Collier, 38, pled guilty in Harris County state district court to the third degree felony offense of Engaging in Organized Criminal Activity - Forgery. As part of the plea, Collier admitted to serving two previous sentences for forgery, increasing his minimum prison sentence due to his criminal history. He was sentenced in the current case, filed as cause number 1204040, on Dec. 9, 2009.
Collier admitted being involved with six others forging checks, including checks that appeared to be issued by the state Comptroller's office. The counterfeit checks were made out to Collier and the other co-defendants, and were cashed at Houston-area stores, including major grocery and discount chains, before the forgeries were detected. Collier has been ordered to pay $15,000 restitution to these stores.
Co-defendants Latasha Brown, 29; Wanda Brown, 48; Steve Brown, 21; and Kimbra Lockridge, 21, all of Houston, pled guilty and were placed on deferred adjudication probation in spring 2009. The cases against co-defendants Willie Roy Tolder and Josie Ekoh are still pending in Harris County.
Abilene Man Receives Prison Sentence for State Tax Evasion
An Abilene man has been sentenced to prison for two years for trying to avoid paying motor fuel tax. Tommy Eugene Aaron, 51, pled guilty to the second degree felony offense of evading motor fuel tax on March 3 in a Travis County court. Aaron was charged with stealing dyed diesel fuel valued between $1,500 and $20,000, storing it without a required permit, using it in vehicles driven on the highway and failing to pay motor fuel tax.
Dyed diesel is untaxed diesel fuel intended to be used in off-road vehicles such as farm tractors and construction equipment. It is colored so law enforcers can easily tell when untaxed fuel is illegally used in highway vehicles.
In fiscal 2009, the state collected about $3 billion in gasoline and diesel fuel taxes.
"Through the motor fuels tax, drivers pay to build and maintain Texas highways," Texas Comptroller Susan Combs said. "We will continue to pursue tax evaders to the full extent of the law to ensure that revenue for state operations gets collected."
The Criminal Investigation Division of the Comptroller's office, the Winkler County Sheriff's Office, the Loving County Sheriff's Office, the Jones County Sheriff's Office and the Commercial Vehicle Enforcement Service of the Texas Department of Public Safety participated in the investigation. The case was prosecuted by the Motor Fuel Tax Fraud Division of the Travis County District Attorney's Office.
To find out more about the Criminal Investigation Division of the Texas Comptroller of Public Accounts, visit www.window.state.tx.us/about/cid/.