Dominican Cigar Exporters Plead Guilty to Excise Tax Evasion

The U.S. Department of Justice (DOJ) has announced that two Dominican cigar exporters have pleaded guilty and have been sentenced on charges related to a scheme designed to underpay federal excise taxes for cigars.

Remberto Antormachy Estrella Jimenez, 38, was recently sentenced to eight months in prison. His father, Remberto Andres Estrella Gomez, 64, was previously sentenced to 14 months in prison. Each pleaded guilty to one count of conspiracy to defraud the United States. In addition, the two are required to pay nearly $2 million in restitution.

Both were managers of Dominican Tobacco Products, LLC, a Florida company that imported cigars and cigarillos from the Dominican Republic. According to the grand jury indictment, Dominican Tobacco Products, LLC worked with Akrum Alrahib of Trendsettah USA, Inc., the company behind the Splitarillos brand of cigarillos.

In the U.S., “large cigars” are required to pay a federal excise tax of 52.75 percent of the “first sale price,” not to exceed 40.26 cents per cigar. That first sale price isn’t necessarily the same as a wholesale price that retailers pay as a “first sale” could be the transaction between the importer and the distribution; in this case, Dominican Tobacco Products selling the cigars to Trendsettah was the “first sale.”

The government alleged that the defendants created false invoices showing that the first sale prices were between 1.7-3.3 cents per cigar. Alrahib allegedly paid Productos del Tabaco Sir Albert, SRL—another entity owned by the defendants—4-6 cents per cigar. In total, $5.615 million was paid to Productos del Tabaco Sir Albert, SRL, according to the indictment.

It’s unclear how much connection any of the above has to the premium cigar industry, but Andres Estrella Gomez is listed as an agent for Asociación Dominicana de Cigarros y Tabaco, a Dominican cigar manufacturer’s association.

Last June, Alrahib was sentenced to five years in prison and ordered to pay more than $10 million in restitution as part of charges related to a scheme to underpay California’s tobacco taxes.