New York Man Sentenced for Trafficking in Over $4 Million of Contraband Cigarettes
KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced that a New York man was sentenced in federal court today for his role in a multi-million dollar, multi-state conspiracy to transport hundreds of thousands of cartons of contraband cigarettes from the Kansas City, Mo., area to the state of New York, where they were sold primarily on Indian reservations.
Keith Donald Stoldt, 62, of Cowlesville, N.Y., was sentenced by U.S. District Judge Fernando J. Gaitan to five years of probation and ordered to forfeit $247,080 to the government, representing the profit from the sale of contraband cigarettes. Stoldt paid the forfeiture at today’s court hearing.
On May 7, 2013, Stoldt pleaded guilty to participating in a conspiracy to commit wire fraud and contraband cigarette trafficking from July 1, 2011 to Jan. 28, 2012. Stoldt and his wife operate the Totem Smoke Shop, located on the Tonawanda Seneca Indian Reservation in Basom, N.Y.
Stoldt placed orders for more than $4.1 million of unstamped cigarettes (that is, cigarettes that did not carry the mandated tax stamps because the New York excise tax of $4.35 per pack of cigarettes was not paid) from Gerald E. Barber, 68, of Virginia. Barber was the president of the Seneca-Cayuga Tobacco Company (SCTC) in Grove, Okla., which is a corporation operated by the Seneca Cayuga Tribe of Oklahoma, a federally recognized Indian tribe. Although SCTC manufactures its own brands of native cigarettes, Barber was interested in selling unstamped and untaxed premium-brand cigarettes to smoke shops on other Indian nations, specifically in the state of New York.
Barber, who has pleaded guilty in a separate but related case to his role in the conspiracy, also sold those premium-brand cigarettes to other smoke shops located on New York Indian reservations, including Jan’s Smoke Shop and AJ’s Candy & Tobacco, LLC, both of whom have pleaded guilty to their roles in the conspiracy.
The contraband cigarettes were transported to New York without prior approval by the New York Department of Taxation and Finance and without first paying the required $4.35 per pack excise tax. The benefit to those smoke shops was that they did not pay New York state cigarette taxes; thus, they could undercut the prices charged by off-reservation cigarette retailers by over $40 per carton.
Barber ordered premium-brand contraband cigarettes from Gholamreza “Reza” Tadaiyon, 51, of Weston, Fla. Tadaiyon owns Brand Name Connoisseurs, Corp., a business located in Florida. Tadaiyon, who has pleaded guilty to his role in the conspiracy, purchased those cigarettes from co-defendant Craig Sheffler, 45, of Independence, through his business, Cheap Tobacco Wholesale.
Sheffler, who has pleaded guilty to his role in the conspiracy, made regular purchases of contraband cigarettes from undercover agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives. Conspirators purchased more than $17 million worth of contraband cigarettes from ATF agents during the undercover operation. Approximately 620,600 cartons of cigarettes – containing 10 packs per carton – were transported to New York without paying the required $4.35 per pack excise tax. The untaxed cigarettes were sold by New York retailers and smoke shops on the reservations in the state of New York. The total state excise tax lost to the state of New York was more than $8 million.
This case was prosecuted by Assistant U.S. Attorneys Paul S. Becker and Justin G. Davids. It was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives, IRS-Criminal Investigation, the Kansas City, Mo., Police Department and FDIC-Office of Inspector General.