Anoka County tobacco wholesaler charged with skirting $1.3 million in taxes

A Fridley tobacco wholesaler has been charged with skirting more than $1.3 million in taxes, according to felony charges filed in Anoka County District Court.

Fady Bshara Daw, of North Oaks, the owner of tobacco wholesaler Cedars Inc., is charged with three felony counts of filing false or fraudulent tax returns for cigarettes.

A criminal complaint filed July 7 alleges that between 2019 and 2021, Daw sold tobacco products without invoices to retailers, allowing them to sell untaxed products for a higher profit. The complaint further alleges that Daw knowingly filed his company's tax returns without the required invoices, avoiding $1.3 million in taxes.

"This is an example of the department's ongoing efforts to uniformly enforce the state's cigarette and tobacco laws," The Minnesota Department of Revenue said in a news release. "Although most taxpayers comply with tax laws voluntarily, the Minnesota Department of Revenue takes enforcement action against noncompliant taxpayers to ensure that tax laws are administered fairly."

According to charges, Department of Revenue investigators were made aware that Cedars Inc. was selling tobacco products without an accompanying invoice.

"Retail establishments would buy tobacco products without an invoice because in turn they would make more money selling untaxed tobacco products due to the higher profit margin," the complaint said.

Investigators determined that Cedars Inc. was purchasing more tobacco products than was shown on the company's monthly tax returns. An examination of monthly tax returns from January 2019 through April 2021 showed that the company only paid 73.6% of its owed tobacco taxes, resulting in the $1.3 million shortfall. There were 69 omitted invoices during the tax periods, 50 of which were in Daw's possession, the complaint said.

Charges say that Cedars Inc. had previously been audited by the Minnesota Department of Revenue for omitting invoices from monthly tax returns.

"Throughout 2019, Fady received extensive education about ensuring all invoices on the monthly tobacco tax returns," the complaint said.