ROBERT STUBER, 60, of Reno, Nevada, was sentenced today in U.S. District Court in Seattle to nine months in prison, two years of supervised release and $20,664,813 in restitution for Conspiracy to Traffic in Contraband Cigarettes and Conspiracy to Launder Monetary Instruments. STUBER pleaded guilty February 18, 2009, admitting his participation in a scheme to cheat the State of Washington of taxes owed on cigarettes. STUBER admitted that between January 2005, and May 2007, his business, Cowlitz Candy & Tobacco Co., Inc., of Longview, Washington, sold more than a million cartons of contraband cigarettes to the Blue Stilly Smoke Shop near Arlington. Neither STUBER’s company, nor Blue Stilly paid the applicable state taxes on the cigarettes, which totaled more than $20 million. By not paying the taxes, both STUBER and the owners of the Blue Stilly retained larger profits for themselves. At sentencing U.S. District Judge James L. Robart noted that STUBER “was an integral part in the conspiracy to traffic in contraband cigarettes.... His good judgment was overcome by the money.”

In March 2009, three Stillaguamish Tribal members, who owned and operated Blue Stilly, were sentenced to prison for selling contraband cigarettes and avoiding $25 million in taxes. Between January 2005, and May 2007, Cowlitz Candy & Tobacco Co., Inc was the primary supplier of cigarettes to the Blue Stilly Smoke Shop. STUBER conspired with the owners of the Blue Stilly, as well as others, to traffic in contraband cigarettes. The other conspirators were a cigarette broker in California, and cigarette distributors in New Mexico and California. Those defendants have now been indicted and are scheduled for trial in June 2010. See press release.

In late 2005, the Washington State Liquor Control Board notified Cowlitz Candy & Tobacco that it was illegal to sell untaxed cigarettes to the Blue Stilly Smoke Shop. Cowlitz Candy & Tobacco had been selling the untaxed cigarettes to Blue Stilly, but repeatedly failed to record the sales on its books. After being put on notice about the illegal sales, Cowlitz Candy & Tobacco continued to sell the cigarettes to Blue Stilly but attempted to conceal the deliveries by going through other co-conspirators. The owners of Blue Stilly would place orders with Cowlitz Candy & Tobacco, but the cigarettes would first be shipped to an Oregon warehouse controlled by two of the co-conspirators. The cigarettes were loaded into different trucks, and the invoices indicated the cigarettes were purchased from the New Mexico distributor. Evidence recovered when a search warrant was served on May 15, 2007, revealed that Cowlitz Candy & Tobacco sold Blue Stilly more than 1,052,751 cartons of contraband cigarettes on which no state tax was ever paid.

Cowlitz Candy & Tobacco was paid more than $17 million for the cigarettes, and STUBER sent more than a hundred checks totaling over $830,000 to his co-conspirators for their role in the scheme. STUBER is forfeiting more than four million cigarettes and more than $275,000 seized at the time of the searches in May 2007.

At sentencing STUBER told the court “it was nothing more than greed,” that prompted the scheme.

In asking for prison time for STUBER, Assistant United States Attorney Mary K. Dimke noted the damage to the state, the marketplace and the Stillaguamish Tribe of the contraband cigarette trade. “By not charging the requisite tax per pack of cigarettes, Blue Stilly and Stuber gained the ability to undercut their competition by large margins and thus lure a large customer base to their shops exclusively.... Suppliers, like Stuber, who provided Blue Stilly untaxed cigarettes gave Blue Stilly this competitive advantage, and enabled them to inflict the damages they caused to the State of Washington in tax losses as well as to Blue Stilly’s competition..... (For the Stillaguamish Tribe there was a) devastating loss of revenues that would have been available for social services for Tribal members had the Tribal Council taken steps to negotiate a cigarette tax compact with the State of Washington...,” Ms. Dimke wrote in her sentencing memo.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms & Explosives (ATF), the Internal Revenue Service Criminal Investigation (IRS-CI),and the Washington State Liquor Control Board. The case was prosecuted by Assistant United States Attorneys Mary K. Dimke, J. Tate London, and Richard E. Cohen.

For additional information, please contact Emily Langlie, Public Affairs Officer, United States Attorney’s Office, Western District of Washington at (206) 553-4110.

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