RICHMOND, Va. (WAVY) — Two brothers from Rhode Island pleaded guilty Thursday to helping smuggle more than 6 million cigarettes into the state from Virginia.
Wissam and Bassam Khalil are two of seven people who have been arrested on a variety of federal charges since 2012, when a multi-jurisdictional investigation began, according Michael Kelly with the Office of the Attorney General of Virginia.
The investigation began when the Attorney General’s Tobacco Enforcement Unit learned of suspicious cigarette purchases. Investigators learned shell corporations using rented retail storefronts in Virginia bought thousands of cartons of cigarettes and then illegally transported them to Rhode Island.
The cigarettes were sold at full price in Rhode Island, and the businesses made profit from the difference in tobacco taxes in the two states, Kelly said. Throughout the two-year scheme, the participants avoided paying about $1.1 million in Rhode Island tax payments.
“Smuggling operations like this are essentially a form of organized crime that costs taxpayers millions of dollars in lost revenue each year,” said Attorney General Mark Herring. “Collaboration and coordination among state and federal partners were key to breaking up this multi-state operation. I appreciate the professionalism and hard work of my Tobacco Enforcement Unit in helping to put an end to this ring.”
Proceedings in the Khalil brothers’ federal trial halted last week when they admitted to their part in the scheme. They will be sentenced in September.