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3 Held on Suspicion of Cigarette Tax Scheme

November 20, 2001|KENNETH REICH and NANCY VOGEL | TIMES STAFF WRITERS

State and federal investigators Monday arrested three men on suspicion of cutting cigarette tax stamps in half to cheat the state out of $2.8 million.

By putting a half stamp on each pack, what should have been $5.6 million paid to California in excise taxes became half that, said Monte Williams, chief of the investigations division of the state Board of Equalization.

Facing felony charges of tax evasion are Gregory Anastas, 29, of Anaheim Hills; Donald Lewis Sevey, 45, of Lakewood, and Samir Anastas, 56, of Cypress. Gregory Anastas and Sevey were arrested by Department of Alcoholic Beverage Control agents. Samir Anastas was arrested in the Virgin Islands by U.S. customs agents.

If convicted, the three could get up to 10 years in prison each.

At 87.5 cents a pack, California's cigarette tax is the fourth highest in the nation. Williams estimated that smuggling and various kinds of counterfeiting cost the state $130 million to $262 million in lost taxes each year.

Sometimes, Williams said, cigarettes are driven or flown into California from other states, or smuggled in from Mexico or China. Parceled out to gas stations, bars, liquor stores and other retail outlets, the smuggled cigarettes might be missing the official orange sticker intended to serve as proof that the distributor paid California's tax.

Sometimes, he said, the stamp is entirely counterfeit, but in this case, half the stamp was there.

The Board of Equalization investigation in this case began more than a year ago after a consumer tip that cigarettes were being sold at two liquor stores operated by the Anastas brothers in Bellflower and Hawaiian Gardens.

As part of the investigation, 76,000 cartons of cigarettes with half stamps were seized in February of last year. The liquor license of Emilio's Beverage Warehouse in Hawaiian Gardens has been transferred to another person, and the license of the Bellflower store may be revoked.

The Board of Equalization is not a law enforcement agency and therefore could not make the arrests. The Department of Alcoholic Beverage Control came in, because such a violation entails a liquor license violation. U.S. customs was interested because of an investigation into smuggling of cigarettes into the United States.

Extradition proceedings will be undertaken against Samir Anastas, while the others were being held in Los Angeles County Jail in lieu of $2.8-million bail each.

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