NEW CITY – The owner and several employees of five unlicensed cannabis smoke shops have pleaded guilty to tax fraud and must close the businesses as part of a plea agreement with Rockland prosecutors.
The Rockland District Attorney’s Office said investigators seized more than $415,000 from bank accounts affiliated with the businesses and 405 pounds of cannabis from five Zava stores across Rockland. None of the stores were licensed by New York State to sell cannabis.
The stores were under investigation for a year when local, state, and federal agencies executed search warrants on March 4 at multiple smoke shops and other locations across the county.
Zava owner Ibrahim Alfalahi, 36 of Nanuet pleaded guilty to felony, third-degree criminal tax fraud.
Pleading guilty to misdemeanor, fifth-degree criminal tax fraud were Abdo Alquhshi, 44 of Nyack, and Sadek Alfalahi, 29 of Nanuet.
These businesses pleaded guilty to felony, second-degree criminal tax fraud: Zava Lafayette Convenience Corp., 28 Lafayette Ave., Suffern; Zava Candy Inc., 214 Smith Road, Nanuet; Zava Flow Inc., 38-40 N. Middletown Road, Nanuet; Zava Central Convenience Corp., 46 E. Central Ave., Pearl River; and Zava Smoke, Inc., aka Zava Convenient Store Inc., Pearl River.
Their sentencing has been scheduled for Oct. 17 by County Court Judge Kevin Russo in the County Courthouse. Details outlining the plea agreement’s sentencing and restitution were not released immediately by the District Attorney’s Office on Friday. Executive Assistant District Attorney Michael Dugandzic and Assistant District Attorney Katherine Crispi are prosecuting.
DA: resident complaints outed the smoke shops
Complaints from the public about cannabis sales to minors led authorities to investigate the Zava businesses, Rockland District Attorney Thomas Walsh said.
The investigation uncovered that the businesses were unlicensed and not paying taxes, authorities said. A key component of allowing sales of recreational cannabis was the potential tax revenues for the state.
“By operating illegal cannabis shops and flouting their tax obligations, these businesses deprived their communities of revenue needed for vital programs and services and put other businesses at a competitive disadvantage,” said New York State Department of Taxation and Finance Acting Commissioner Amanda Hiller.
NYS cracking down on unlicensed smoke shops
The raids coincided with a crackdown on shops unlicensed to sell cannabis products across the state.
The investigation marked the first major takedowns of unlicensed marijuana dispensaries in the Hudson Valley region, said Ivan J. Arvelo, the special agent in charge of Homeland Security Investigations in New York.
Arvelo has said the arrests highlighted “the increased prevalence of illegal, unregulated smoke shops being opened throughout our state.”
Investigators executed seven court-approved search warrants, hitting two smoke shops in Clarkstown, two in Orangetown, and one in Suffern, Walsh said.
Law enforcement agencies involved in the investigation with the District Attorney’s Office included Homeland Security Investigations, New York State Tax and Finance, New York State Office of Cannabis Management, New York State Police, and the Clarkstown, Orangetown, and Suffern police departments.
Legal dispensaries were supposed to fill state coffers
New York State legislators and then-Gov. Andrew Cuomo legalized recreational cannabis use in 2021 for people older than 21.
The law allows New Yorkers to possess up to three ounces of cannabis for recreational use. People with certain marijuana-related convictions will have their records expunged. Stores selling the drug need to be licensed by the state.
Officials projected the creation of a billion-dollar industry that would fill state coffers with tax dollars. However, the state’s slow licensing of dispensaries has led to the proliferation of unlicensed sellers, officials have said.
Gov. Kathy Hochul reported in May that since an enforcement task force was launched, the state had shut down 114 stores and seized over $29 million worth of illegal products. New York City Mayor Eric Adams said the city had closed close to 400 smoke shops and seized $13.3 million in illegal products.
Steve Lieberman covers government, breaking news, courts, police, and investigations. Reach him at slieberm@lohud.com Twitter: @lohudlegal
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