OAKLAND, Calif. (KRON) — Three owners of a tobacco distribution company were arrested Wednesday for conspiracy to evade $7 million in taxes, according to a news release from California Attorney General Rob Bonta.

“By failing to pay tobacco excise taxes, these defendants deprived communities in California of much-needed healthcare funding,” Attorney General Bonta said.

The suspects allegedly filed fraudulent tax returns and face multiple felonies including conspiracy to file false tax returns and money laundering, according to an investigation.

An investigation found that between August 2020 and March 2021, the three suspects allegedly bought and imported more than $12.7 million in tobacco products from different companies in Pennsylvania. The suspects then allegedly conspired to file false tax returns that did not show these transactions to avoid paying $7.27 million in taxes, according to the release.

KRON On is streaming live news now

“Smuggling illegal cigarette and tobacco products into California to avoid paying taxes harms the important programs funded with this revenue,” said California Department of Tax and Fee Administration Director Nick Maduros.

Tobacco taxes are used to fund breast cancer research, early childhood development, healthcare treatment and hospital services.

The suspects have not been identified.