CIGARETTE WHOLESALERS FACE CHARGES FOR TRAFFICKING IN UNTAXED CIGARETTES
Indictments Allege Various Suppliers Conspired to Traffic in Contraband Cigarettes
A grand jury in Seattle, Washington, has indicted seven people in connection with the sale of contraband cigarettes. In two different indictments returned by the grand jury, the suppliers of cigarettes to the Blue Stilly Smoke Shop in Arlington, Washington are charged with federal crimes.
RICK CONN, JAY D. SILVERMAN, CAROL M. SILVERMAN and MATTHEW M. CUNNINGHAM are charged in an indictment returned last week, with Conspiracy to Traffic in Contraband Cigarettes, and Conspiracy to Launder Monetary Instruments in connection with the sale of untaxed cigarettes to the Blue Stilly Smoke Shop. The indictment alleges that the defendants engaged in a scheme with the owner of Cowlitz Candy & Tobacco and the owners of the Blue Stilly Smoke Shop to ship more than a million cartons of untaxed cigarettes to the Snohomish County smoke shop. The conspirators took steps to disguise the ownership of the shipments and created false invoices to further their scheme to avoid more than $20 million in cigarette taxes. The conspirators sent shipments of cigarettes through a warehouse in Clackamas, Oregon controlled by the Silvermans after the Washington State Liquor Control Board notified Cowlitz Candy & Tobacco to stop delivering untaxed cigarettes. CONN is a cigarette broker who lined up the deals, and CUNNINGHAM is a tobacco products distributor in New Mexico. The conspirators made it appear the cigarettes were purchased from CUNNINGHAM’s company, MRC Enterprises LLC.
Last month, the grand jury returned a superseding indictment charging ARTHUR MONTOUR, PETER MONTOUR, KENNETH HILL and NATIVE WHOLESALE SUPPLY (NWS) of Perrysburg, New York, with Conspiracy to Traffic in Contraband Cigarettes and fifteen counts of Trafficking in Contraband Cigarettes. ARTHUR MONTOUR was also charged with seven counts of making a false declaration before the court. The indictment alleges that between March of 2003 and February of 2008, the defendants conspired to sell the Blue Stilly Smoke Shop more than 422,000 cartons of contraband cigarettes avoiding more than $8 million in taxes. The cigarettes were shipped from a trade zone near Las Vegas at the direction of NWS in New York. The orders were processed through a warehouse in New Mexico. NWS was in direct control of the warehouse during a portion of the time alleged in the conspiracy. The allegations of false statements by ARTHUR MONTOUR arise from statements he made in declarations filed with the court in a civil forfeiture case brought by the government to forfeit bank accounts related to proceeds generated from cigarette sales to the Blue Stilly Smoke Shop. For example, according to the indictment, MONTOUR denied owning the New Mexico warehouse, a statement he knew was false. In the indictment the government seeks to forfeit $4.1 million Blue Stilly paid to NWS for the contraband cigarettes.
KENNETH HILL was arraigned on the indictment last week, and pleaded “Not Guilty.” A Canadian citizen, HILL was released on $400,000 bond and allowed to return home to Canada.
Trial in the MONTOUR case is currently scheduled for November 2009.
The charges are punishable by up to five years in prison, three years of supervised release and a fine of $250,000 on each count.
The charges contained in the indictment are only allegations. A person is presumed innocent unless and until he or she is proven guilty beyond a reasonable doubt in a court of law.
The former owners of the Blue Stilly Smoke Shop were sentenced to prison in March 2009, for their scheme to profit from selling untaxed cigarettes. Edward Leverne Goodridge, Sr., 60, and Edward Goodridge, Jr., 33, both of Arlington, Washington, and Sara Lee Schroedl, 40, now of Prescott, Arizona pleaded guilty in November 2008, to Conspiracy to Traffic in Contraband Cigarettes and Engaging in Monetary Transactions involving criminal proceeds. The three tribal members were on the tribal council when they set up a corporation to run the Blue Stilly Smoke Shop for their own personal profit. The Goodridges were each sentenced to 14 months in prison and two years of supervised release. Schroedl was sentenced to eight months in prison and two years of supervised release.
The cases were investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the Internal Revenue Service Criminal Investigations (IRS-CI), and the Washington State Liquor Control Board. The cases are being prosecuted by Assistant United States Attorneys Mary K. Dimke, Richard E. Cohen, and J. Tate London.
For additional information please contact Emily Langlie, Public Affairs Officer for the United States Attorney’s Office, at (206) 553-4110 or Emily.Langlie@USDOJ.Gov.