Indian American liquor store owners in Illinois caught in bootlegging scam

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NEW YORK – The federal government has seized $1 million from Columbia Liquors, a liquor store in Illinois, owned by Indian Americans Shreyas Patel and Dipteben Patel, who according to an NWTimes report, are alleged to have sold alcohol to other liquor stores in the state so they could avoid having to pay higher state alcohol taxes.

According to the NWTimes report, the owners of Columbia Liquors apparently “devised a scheme to defraud or obtain money by false or fraudulent pretenses” thus prosecutors allege that they bought liquor from three Indiana distributors and in turn sold it for cash to liquor stores across the south suburbs in Illinois, where liquor taxes are much higher.

“Specifically, the Patels, through their Indiana liquor store, purchased large quantities of liquor and sold them to seventeen Illinois liquor stores, at least five of which they own, for subsequent retail sale thereby depriving the State of Illinois of excise and sales taxes to which it was entitled,” Assistant U.S. Attorney Orest Szewciw charged in the federal complaint.

“By selling liquor purchased without payment of excise taxes in Illinois, the Illinois liquor-store owners, including the Patels, increased their profits. In furtherance of the scheme to defraud or obtain money by false pretenses, the Patels caused the use of interstate wire communications,” the complaint added.

According to court documents, the Patels operated a “front door register” for legitimate retail sales as well as a separate “back door register” for sales to Illinois liquor stores.

The “front door register” brought in an average of $1,570.12 a day, when authorities caught them in June and the “back door register” brought in $42,347.76 per day.

The Patels’ attorney Glenn Seiden argued in court that the Patels’ ran a legal business and that some of money that was seized was from lottery sales.

“Plaintiff is (stopped) from obtaining a forfeiture judgment because it obtained the seizure warrant through incorrect, misleading, or incomplete allegations. Plaintiff cannot obtain a forfeiture judgment because it has not acted in good faith,” Seiden said.

According to the NWTimes report, liquor excise tax rates are significantly lower in Indiana than in Chicago.

“The $2.68 per gallon Indiana tax rate on hard liquor is $8.37 per gallon less than the tax in Cook County, and $11.05 per gallon less than in Chicago. If a liquor-store owner in Cook County and Chicago avoids paying the excise taxes imposed by the state, county and city, the cost of his products would be less than that of his competitors in the same area. With reduced purchase costs, a liquor-store owner would keep more profit. If the liquor-store owner did not pay the cost of excise tax, the liquor-store owner could offer a much lower retail price of products to increase sales volume, and effectively undercut the price charged by other liquor stores in the area,” the U.S. attorney’s office wrote in its forfeiture complaint.

The Wine and Spirits Distributors of Illinois Trade Association added that the cross-state bootlegging costs Illinois nearly $30 million in lost tax revenue every year.

“The continued brazen disregard for Illinois law by these modern-day bootleggers is putting the health and safety of Illinois consumers at risk and costing our state millions in much-needed tax revenue. Any out-of-state retailer may set up shop in Illinois as long as they follow existing state laws and compete fairly. The issue is that retailers who avoid paying their fair share of taxes expose Illinois residents to alcohol shipments that can’t be tracked or recalled in the wake of a safety incident,” WSMI Executive Director Karin Lijana said.