Federal agents arrested seven suspects Wednesday in an alleged complex plot that created fake businesses in Virginia to buy cigarettes cheaply and sell them in Rhode Island.
Federal prosecutors say the group used trucks with cargo compartments like drug dealers and a driver who wore his U.S. Army uniform to avoid police detection.
Federal agents and Rhode Island State Police fanned out across Providence in a predawn raid. They seized $100,000 in cash, four vehicles and large amounts of illegal cigarettes from 10 locations.
The indictment unsealed in federal court alleges the complex conspiracy was a family affair. Seven people were arrested, including many convenience store owners in Providence.
The 19-page indictment charges Wissam Khalil, 40, of Central Falls, a Providence convenience store owner; his brothers Bassam Khalil, 48, and Najd Khalil, 25, of Pawtucket; Abdullah Alnahas, 36, of Cranston, a Providence convenience store owner; Bassam Kiriaki, 45, a Pawtucket accountant; and Richard Larrain, 23, of Providence, an enlisted soldier in the U.S. Army Reserves, with allegedly participating in a conspiracy to possess, transport and distribute contraband cigarettes in Rhode Island.
A seventh defendant, Valeria Mendez (Khalil), 30, of Central Falls, the wife of Wissam Khalil, was charged with conspiring to make and making false statements to a government official.
The indictment says the group bought more than 30,000 cartons of discounted cigarettes from a Virginia Sam's Club using phony corporate accounts for businesses that never opened.
They moved the Virginia tax-stamped cigarettes to Rhode Island and sold them at full retail price, skirting Rhode Island sales tax of more than $1 million and pocketing huge profits.
In Virginia, cigarettes are taxed at 35 cents a pack; In Rhode Island, its $3.50 a pack.