Don't Mess With Taxes

A tobacco distributor who's been under federal scrutiny for a decade was charged last week with using phony invoices to avoid paying taxes on millions of dollars' worth of cigarettes that he sold in several states.

Pedro Bello has been linked to several large-scale investigations and even named in a civil lawsuit over untaxed cigarettes brought by New York City, but Bello avoided criminal charges until they were filed last week in Kentucky.

Bello's alleged tax evasion is this week's Follow-up Friday item. No, it's not because it's the second cigarette tax post today or because it culminates a long-standing investigation, but because it sheds some light on earlier tobacco tax losses in the Bluegrass State.

The Miami, Fla., man was arrested Oct. 4 on a charge of conspiracy to commit wire fraud. Investigators allege that he bought substantial amounts of cigarettes in Kentucky but used invoices written by a company he owned in Missouri to avoid paying sales taxes.

Bello then allegedly sold the cigarettes around the country, allowing him to pocket bigger profits by avoiding the Kentucky tax.

The indictment charges that Bello's Louisville-based company GT Northeast avoided paying $2 million in taxes on $12 million worth of cigarettes it sold.

About six weeks ago, an earlier Follow-up Friday noted that Kentucky tax officials were bemoaning a dramatic drop in their tobacco tax collections.

At that time, the thought was that the declining cigarette tax revenue was because more smokers were planting and harvesting their own tobacco for personal consumption.

But now, if federal tax agents are correct about Bello, there's another reason that the Kentucky Department of Revenue saw a drop in its tobacco tax collections.

You also might find these items of interest:

• New York tax collector says thanks for smoking
• Smoke 'em if you can afford 'em
• Smoking out cigarette smugglers