John Tebbetts, Owner Of Tebb’s Head Shops, Pocketed Tax Receipts From Such Items Such As Herbal Incense, Hookahs, And Pipes
SYRACUSE – Attorney General Eric T. Schneiderman today announced the arraignment and charges against the owner and operator of “Tebb’s Head Shops” for stealing more than $50,000 from New York State by failing to pass along taxes that had been collected. John E. Tebbetts, 34, of Rome, New York, was charged with Grand Larceny in the Second Degree, and with two counts of Criminal Tax Fraud in the Second Degree, all class C felonies. If convicted, Tebbetts faces up to 5 to 15 years in prison.
The three year investigation, conducted jointly by the Attorney General’s office and the Department of Taxation and Finance, included extensive interviews and numerous site inspections of the “Tebb’s Head Shops” located throughout Central New York. DTF also conducted an extensive audit of Tebbetts’ businesses through the review of records such as Z-tapes, bank records, sales journals, tax returns and purchase invoices in order to substantiate business sales.
"After brazenly promoting the sale of dangerous synthetic drugs and polluting our communities, Tebbetts has now used his head shops to illegally profit off of New York taxpayers,” said Attorney General Schneiderman. “If any tax evader chooses not to play by the rules, my office will enforce the law to defend the necessary revenue that sales taxes provide to state services.”
Between March 2007 and September 2012, Tebbetts, as the sole owner of “Tebb’s Head Shops” located in Onondaga, Oneida, Herkimer, Madison and Jefferson counties, collected taxes on behalf of the State of New York from the sales of items such as herbal incense, pipes, hookahs, body jewelry and dart supplies, all of which are subject to sales tax under the New York State Tax Law. During that time, the defendant did not return to the State of New York the full amount of sales tax collected from his customers in excess of $364,000, with an intent to evade taxes due. Sales tax money collected by businesses from their customers belongs to the State, and businesses are responsible for ensuring that these funds are remitted in a timely fashion.
Tebbetts is also charged with failure to report taxable sales from Tebb’s Head Shops for the periods of March 2007 through August 2012, resulting in sales tax liability in excess of $500,000, which was not remitted to the State of New York.
In December 2012, Tebbetts plead guilty in United States District Court, Northern District of New York, to numerous federal criminal charges, including possession with intent to distribute a controlled substance. Tebbetts is currently awaiting sentencing on those charges.
The case was investigated by Associate Attorney Carla DiMarco, Revenue Crimes Specialists Robert Moskal and Auditor Kathleen Llewellyn of the Syracuse Criminal Investigations Division of the New York State Department of Taxation and Finance.
The case is being prosecuted by Assistant Attorney General Nicholas J. DeMartino of the Criminal Enforcement and Financial Crimes Bureau under the supervision of Deputy Bureau Chief Stephen Maher, Bureau Chief Gary Fishman, and Chief of the Criminal Division Kelly Donovan. The case is being investigated by OAG Investigator Joel Cordone, under the supervision of Deputy Chief Investigator Richard Doyle.
The charges against the defendant are accusations and the defendant is presumed innocent until and unless he is proven guilty in a court of law.