RICK CONN, a cigarette broker based in California, pleaded guilty today in U.S. District Court in Seattle to Conspiracy to Traffic in Contraband Cigarettes, and Conspiracy to Launder Monetary Instruments. CONN was indicted in September 2009, in connection with a scheme to sell contraband cigarettes to Blue Stilly Smoke Shop, located on the Stillaguamish reservation, near Arlington, Washington. In the statement of facts in the plea agreement, CONN admits to brokering a cigarette deal between Cowlitz Candy and Tobacco and Blue Stilly Smoke Shop, where Cowlitz Candy illegally sold untaxed cigarettes to Blue Stilly.

In his plea agreement, CONN admits that he conspired with the owner of Cowlitz Candy & Tobacco, the owners of the Blue Stilly Smoke Shop, and others to ship more than a million cartons of untaxed cigarettes to Blue Stilly. After Cowlitz Candy received a notice from the Washington State Liquor Control Board instructing it to stop selling untaxed cigarettes to Blue Stilly, the conspirators took steps to evade detection and further their scheme to avoid more than $20 million in cigarette taxes. They created false invoices and routed the shipments of cigarettes through a warehouse in Clackamas, Oregon to disguise the fact that they were making sales to Blue Stilly.

Two other defendants have pled guilty. Carol M. Silverman, who controlled the Clackamas, Oregon warehouse, pleaded guilty in October 2009. Matthew Cunningham, who provided the falsified invoices, pleaded guilty earlier this month. CONN, Silverman and Cunningham are all scheduled for sentencing on April 16, 2010. One defendant, Jay D. Silverman, is 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, CONN 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.

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