In a significant crackdown on excise tax fraud in California, Naperville, Illinois resident Rahman Lakhani has been sentenced to a four-year prison term, as reported by the United States Attorney's Office. Lakhani, along with his two business entities, N. Ali Enterprises Inc. and 21st Century Distribution Inc., faced charges for their participation in a scheme defrauding the State of California of over $5.9 million through the sale of other tobacco products (OTP).

Lakhani's operations involved falsifying excise tax returns to hide the movement and value of OTP shipments between states, namely Illinois, Nevada, and California. U.S. District Judge Daniel J. Calabretta ordered the restitution of the defrauded amount in addition to imposing Lakhani’s prison sentence. The corporate defendants are now on a three-year probation term. The evasion of paying rightful taxes enabled the defendants to illegally profit and strategically outprice competitors who complied with the tax laws.

According to the Justice Department, forge invoices were used to sell the OTP into the California market under the guise that all taxes were accounted for. What unfolded was a profit scheme at the expense of not just the state but also critical public funding for programs like First 5 California, which supports early childhood development—a service crucial to the foundations of future generations.