SECOND CIGARETTE WHOLESALER PLEADS GUILTY FOR TRAFFICKING IN UNTAXED CIGARETTES
New Mexico Tobacco Distributor is the Latest to Plead Guilty in Contraband Cigarette Conspiracy
MATTHEW M. CUNNINGHAM, a tobacco products distributor in New Mexico, pleaded guilty today in U.S. District Court in Seattle to Conspiracy to Traffic in Contraband Cigarettes, and Conspiracy to Launder Monetary Instruments. CUNNINGHAM was indicted in September 2009, in connection with a scheme to sell contraband cigarettes to Blue Stilly Smoke Shop in Arlington, Washington. In the statement of facts in the plea agreement, CUNNINGHAM admits illegally selling untaxed cigarettes to smoke shops in the Frank’s Landing Indian Community and on the Swinomish Indian Reservation as well. CUNNINGHAM is scheduled to be sentenced by U.S. District Judge John C. Coughenour on April 16, 2010.
In his plea agreement, CUNNINGHAM admits that he was part of a conspiracy 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, after the Washington State Liquor Control Board notified Cowlitz Candy & Tobacco to stop delivering untaxed cigarettes. CUNNINGHAM’s company, MRC Enterprises LLC,. was to be reimbursed for the shipping expenses and paid an additional $500 for every shipment of untaxed cigarettes shipped from the Clackamas warehouse under the MRC name. The paperwork was falsified to make it appear the cigarettes were purchased from MRC Enterprises LLC.
In his plea agreement CUNNINGHAM further admits that after search warrants were served on the Blue Stilly Smoke Shop in May 2007, CUNNINGHAM continued for a year to sell contraband cigarettes to the smoke shop, resulting in a tax loss of more than $3 million to Washington State. From May 2004 to June 2006, CUNNINGHAM and co-defendant Jay Silverman sold at least 268,896 cartons of contraband cigarettes to Frank’s Landing, resulting in a tax loss of more than $4 million to the State of Washington. Additionally, CUNNINGHAM sold more than 6,000 cartons of contraband cigarettes to The Trading Post at March Point on the Swinomish Indian Reservation near Anacortes, Washington. The tax lost to Washington State was more than $120,000.
Another defendant, Carol M. Silverman pleaded guilty in October 2009. Two defendants, Ray Conn and Jay D. Silverman, are scheduled for trial in June 2010.
Robert Stuber, who owned Cowlitz Candy & Tobacco Co., Inc, was sentenced last month to nine months in prison for his role in the conspiracy. 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. All are jointly responsible for more than $21 million in restitution to Washington State. Under the terms of the plea agreement, CUNNINHAM is also liable for the restitution.
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.