EIGHT INDICTED FOR SMUGGLING AND TRAFFICKING IN CONTRABAND CIGARETTES AND MONEY LAUNDERING
A federal Grand Jury in Seattle returned a multiple count Indictment against several persons for Conspiracy, Smuggling and Trafficking in Contraband Cigarettes, and Money Laundering. The 44 count indictment charges STORMMY V. PAUL, 40, of Marysville, LYLE SHAWN CONWAY, 32, of Tacoma, LYLE WAYNE CONWAY, 68, of Fife, SILAS CROSS, 64, of Fife, GERALD GEORGE, 56, of Tacoma, ELIZABETH "VICKI" GORD, 48, of Tacoma, DAVID TURNIPSEED, 49, of Fife and JOSHUA TURNIPSEED, 26, of Fife in connection with a scheme to import and to obtain contraband cigarettes from China, and elsewhere, and sell them to the public at large without paying the applicable State of Washington taxes. Contraband cigarettes are a quantity of cigarettes which bear no Washington tax stamp and for which no Washington cigarette tax has been paid.
All those indicted, except PAUL, are the owners and operators of several smoke shops doing business on the Puyallup Tribal Reservation in Western Washington during the years 2001 through June 8, 2004. PAUL imported and brought into the State of Washington millions of contraband cigarettes and sold them to the other conspirators, who in turn sold them unlawfully to the public.
The indictment alleges that PAUL sold at least 2.4 million packs of contraband cigarettes in over six hundred transactions to the conspirators. During most of the period alleged in the indictment, PAUL was not licensed to distribute cigarettes in Washington. PAUL smuggled contraband cigarettes from China, through Oregon, and then into Western Washington, where they were distributed to the conspirators for unlawful sale through their smoke shops to the public at large. By failing to pay the applicable cigarette taxes, the conspirators avoided paying approximately $3.3 million in tax to the State of Washington, resulting in substantial profits they kept for themselves. The conspirators are alleged to have engaged in as many as 900 financial transactions designed to launder $7.4 million in proceeds of the illegal sales of the contraband cigarettes.
On June 8, 2004, raids conducted primarily by U.S. Immigration and Customs Enforcement (ICE), with the assistance of the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF) and the Washington State Liquor Control Board, netted more than 130,000 cartons of contraband cigarettes (approximately 26 million cigarettes) at thirteen different locations. In addition to the contraband cigarettes, investigators seized nearly $600,000 in currency from the various smoke shops and other locations.
It is a federal crime to transport, possess, or sell contraband cigarettes, whether on federal land, including tribal reservations, or elsewhere. "The law does not grant tribal enterprises or individual shop owners on the reservation, which sell goods to non-members, an artificial competitive advantage over all other businesses in the State," said John McKay, United States Attorney for Western Washington. McKay stressed that this is not a criminal action brought against the Puyallup Tribe, or any other tribe, but instead is an action naming several individuals who are alleged to have been trafficking in substantial quantities of contraband cigarettes and reaping substantial profits for themselves.
The Supreme Court of the United States already has held that Washington's cigarette taxes are reasonably designed to prevent the Tribes, or tribal members, from marketing their tax exemption to non-members who do not receive significant tribal services and who would otherwise purchase their cigarettes outside the reservations.
"The illegal cigarette trade represents a real threat to government revenues and economies," said Leigh Winchell, Special Agent in Charge of the Seattle office of U.S. Immigration and Customs Enforcement (ICE). "This collaborative investigation targets the smuggling and trafficking of cigarettes and the associated money laundering utilized to conceal illicit profits."
"The Tobacco Tax Enforcement Program has been interested in Stormmy Paul and his business ventures involving untaxed, unstamped contraband cigarettes for several years," stated Carter Mitchell, Tobacco Tax Program Manager for the State of Washington Liquor Control Board. "Our officers spent a lot of hours conducting surveillances on Stormmy Paul and many of his associates who were also named in the indictment."
"This is a prime example of state and federal agencies effectively combining resources to identify and stop those illegally importing and trafficking cigarettes. In addition to facing prison time, violators are also subject to seizure of illegally obtained assets," emphasized Special Agent in Charge Kelvin N. Crenshaw, Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF).
If convicted, the conspirators face up to five years in prison and a $250,000 fine on each count in connection with the smuggling and trafficking charges. If convicted of money laundering, the conspirators face up to twenty years in prison and a $500,000 fine.
The public is reminded that an indictment contains allegations that have not yet been proven at trial beyond a reasonable doubt.
Most of the defendants will make their first appearance at 2:30 today in U.S. District Court in Seattle.
Assistant United States Attorneys Janet Freeman and Richard Cohen are prosecuting the case.
For additional information please contact Mike Milne at ICE (206) 553-6944 (x614), Julianne Marshall at ATF (206) 389-5876, and/or Lawrence Lincoln at the United States Attorney's Office, Western District of Washington at (206) 553-7970.