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Tobacco Wholesaler Sentenced For Defrauding Connecticut

U.S. District Court in New Haven.
U.S. District Court in New Haven. Photo Credit: Google Maps

A tobacco wholesaler from India living in Connecticut has been sentenced for his role in a scheme attempting to skirt out of millions of dollars in taxes that were due on products imported into the state.

Pavan Vaswani, who was last known to live in West Haven, was sentenced in New Haven district court to 18 months in prison, followed by two years of supervised release for scheming to defraud the state out of more than $5.8 million in taxes.

Fairfield resident Rishi Malik - who has already been sentenced to 36 months in prison - and a partner opened and ran Connecticut Discounts LLC, a tobacco wholesale business in Bridgeport. Malik would eventually sell that company to Vaswani.

Through that company, Malik obtained tobacco products from out-of-state suppliers and distributed the products to a network of clients who offered tobacco products for retail sale.

While operating Connecticut Discounts, Malik underreported the amount of tobacco he was importing into the state to the Connecticut Department of Revenue Services.

In June 2012, Malik sold Connecticut Discounts to Vaswani, who continued the tobacco wholesale business under the name KDV Discounts. From approximately June 2012 through April 2017, Malik frequently assisted Vaswani in importing tobacco products from out-of-state suppliers.

On occasion, Malik drove to Pennsylvania to pick up products that he delivered to KDV in Connecticut. He also participated in making orders, and sometimes delivered payments in cash.

Between January 2013 and April 2017, KDV acquired nearly $12 million in tobacco products, primarily cigars, from suppliers in Pennsylvania, and distributed these products to hundreds of customers in Connecticut that stocked tobacco products for retail sale.

On tax forms that Vaswani filed with the Department of Revenue Services on behalf of KDV, the amounts reported were a small fraction of what KDV actually acquired. Through this scheme, Vaswani failed to report approximately $5,821,057 in tax to the State of Connecticut.

As part of their sentencing, Vaswani and Malik were also ordered to pay $5,821,057 in restitution.

Malik and Vaswani were arrested on Jan. 11 last year.  On Aug. 21, Vaswani pleaded guilty to one count of conspiracy to commit wire fraud and to violate the Contraband Cigarette Trafficking Act and one count of wire fraud. Malik pleaded guilty to the same charges in October last year and has been sentenced to 36 months in prison.

Vaswani remains released on a $250,000 bond. He has been scheduled to report to prison on May 30.

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