CONTRABAND CIGARETTE FORFEITURE TO BENEFIT WASHINGTON STATE LIQUOR CONTROL BOARD
Spokane – James A. McDevitt, United States Attorney for the Eastern District of Washington, along with the Internal Revenue Service and the Bureau of Alcohol, Tobacco, Firearms and Explosives, announced the sharing of over one-half million dollars to the Washington State Liquor Control Board. The Washington State Liquor Control Board received $501,270 as its share of a cash forfeiture that was just recently finalized.
The money was distributed as part of the federal forfeiture program which shares forfeiture proceeds with local law enforcement agencies that assist in federal investigations. “Not only does the distribution of funds bolster local law enforcement, it also shows that crime does not pay,” said James A. McDevitt, United States Attorney for the Eastern District of Washington. “The focus of the forfeiture program is to take the profit out of crime. Because the sale of untaxed cigarettes impacts the state coffers, it is a pleasure to turn these illegal proceeds over to state agencies.”
In October 2007, Peter Mahoney and Peggy Mahoney, husband and wife, of Plummer, Idaho, were sentenced for trafficking in contraband cigarettes. Peter Mahoney was sentenced to 33 months in prison for his participation in a conspiracy to traffic in contraband cigarettes and money laundering. Peggy Mahoney was sentenced to 6 months home detention as a condition of her 3-years of probation, based on her plea to one count of contraband cigarette trafficking. In May 2003, $1,432,200 in cash was seized from the Mahoneys, which they agreed to forfeit because it was proceeds of illegal cigarette trafficking.
According to the plea agreements, Peter and Peggy Mahoney operated the Warpath Smoke Shop/One Stop in Plummer, Idaho, which sold cigarettes at retail. The Warpath also sold wholesale cigarettes to Washington Indian retailers without reporting those sales to Washington State, thus avoiding the payment of Washington cigarette taxes. Over the years, illegal smuggling of cigarettes has resulted in losses to the state of Washington of hundreds of millions of dollars in tax revenues, which revenues are used for social services and other purposes.
The Bureau of Alcohol, Tobacco, Firearms and Explosives; the Internal Revenue Service - Criminal Investigation; the Washington State Liquor Control Board; the Washington State Attorney General’s Office and the Drug Enforcement Administration participated in the investigation. Assistant United States Attorney Jane Kirk prosecuted the cases.
Permissible Uses of Equitably Shared Property under the Federal Equitable Sharing Program.
Distributed funds can only be used to increase and cannot supplant an agency’s appropriated operating budget. Permissible state and local law enforcement uses include, but are not limited to:
- Purchase of vehicles and equipment necessary for law enforcement functions;
- Purchase of weapons and protective gear;
- Purchase of investigative communications equipment;
- Payment of salaries and overtime for law enforcement officers;
- Purchase of ADP equipment and software to be used in support of law enforcement purposes;
- Payment of expenses for training of law enforcement personnel;
- Payment of expenses for travel and salaries of law enforcement personnel;
- Use as reward money; and
- Costs associated with construction, expansion, improvement or operation of detention facilities.