Defendant Pleads Guilty to Mail Fraud and Conspiracy to Commit Money Laundering
Anchorage, Alaska - U.S. Attorney Karen L. Loeffler announced today that Kyong Hee Kim, 56, entered a guilty plea to mail fraud and conspiracy to commit money laundering. Kim joined with Sun Sims, 52, and others to defraud the Municipality of Anchorage by evading the payment of cigarette excise tax. Sun Sims pleaded guilty on September 5, 2014, for her role in the crimes..
According to the plea agreement, Kyong Hee Kim knowingly purchased illegally obtained tax exempt cigarettes from Sun Sims and her business partner who owned, operated, and managed Up in Smoke, located in the Municipality of Anchorage, and Golden Eagle Tobacco and Longmere Lake Grocery and Liquor, both located outside the Municipality of Anchorage. Because they owned Golden Eagle Tobacco and Longmere Lake Grocery and Liquor, Sun Sims and her partner could legitimately purchase Municipality of Anchorage excise tax exempt cigarettes from tobacco wholesale distributors located in the Municipality, but only if those cigarettes were actually transported outside of the Municipality and offered for sale at those two stores. However, cigarettes that they purchased within the Municipality and intended to sell at Up in Smoke or distribute to others within the Municipality were not excise tax exempt.
Between 2009 and October 10, 2012, Sun Sims and her partner used their Golden Eagle Tobacco and Longmere Lake Grocery and Liquor store accounts with tobacco wholesale distributors within the Municipality to purchase excise tax exempt cigarettes that they intended to sell and distribute within the Municipality. Thus, they avoided paying the excise tax and increased their own profits.
Kyong Hee Kim, who owns and operates the Mini Stop, paid a fee to Sun Sims and her business partner for the purchase of excise tax exempt cigarettes. Kyong Hee Kim paid this fee for the tax exempt cigarette in an effort to avoid paying the tax owed to the Municipality. Sun Sims and her partner would collect payment from Kyong Hee Kim and other retailers. They would then convert the money collected into cashier’s checks that appeared to be purchased by either Golden Eagle Tobacco or Longmere Lake Grocery and Liquor. They then used these cashier’s checks to purchase more tax exempt cigarettes, which they delivered to Kyong Hee Kim and the other retailers within the Municipality.
“When individuals attempt to evade their lawful tax obligations, be it federal, state, or local, they really steal from all of us,” said Assistant Special Agent in Charge Steve Bellis of IRS Criminal Investigation. “In this case, the conspirators effectively stole excise tax from the municipality of Anchorage; monies that would have been used to support important local infrastructure. IRS Criminal Investigation is proud to partner with the Bureau of Alcohol, Tobacco, Firearms and Explosives and the Anchorage Police Department to bring this criminal conspiracy to justice.”
As part of the plea, Kim agreed to forfeit $1,214,802 in currency as well as 500 1-ounce silver coins. Mail fraud carries a sentence of up to 20 years imprisonment and fines up to $250,000. Conspiracy to money launder carries a sentence of up to 20 years imprisonment and fines up to $500,000.
The case was jointly prosecuted by Assistant U.S. Attorneys Stephan A. Collins and Erin W. Bradley of the U. S. Attorney’s Office for the District of Alaska. The case was investigated by the Internal Revenue Service Criminal Investigation, the Bureau of Alcohol Tobacco, Firearms and Explosives, and the Anchorage Police Department.