Three Canadian Men Plead Guilty to $17 Million Scheme to Traffic Contraband Cigarettes

KANSAS CITY, Mo. – Tom Larson, Acting United States Attorney for the Western District of Missouri, announced that three Canadian men pleaded guilty in federal court today to their roles in a $17 million scheme 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.

Mark Bishop, 42, and Piotr Hoffmann, 43, both of Montréal, Quebec, Canada, pleaded guilty today before U.S. District Judge Brian C. Wimes to aiding and abetting contraband cigarette trafficking. Co-defendant David Bishop, 46 (the brother of Mark Bishop), of Montréal, pleaded guilty on Wednesday, June 7, 2017, to participating in a conspiracy to commit wire fraud and contraband cigarette trafficking.

David Bishop owned and operated DKB Trade Concepts, a Canadian corporation located in Montréal. David Bishop admitted that he aided and abetted in the sale, possession, transportation, and reception of contraband cigarettes from July 2010 to January 2012. Mark Bishop and Hoffman admitted to transporting contraband cigarettes. They are among 18 co-defendants who have pleaded guilty to participating in a scheme to purchase premium-brand cigarettes in Kansas City and transport them to retailers on Indian reservations in New York, without the appropriate $4.35 per pack excise tax being paid or the appropriate tax stamps being applied to the cigarettes.

Conspirators purchased more than $17 million worth of contraband cigarettes from ATF agents during an 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 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. The total state excise tax lost to the state of New York was more than $8 million, which has been paid in restitution to the state by the perpetrators of the scheme.

David Bishop admitted that he received commissions or “brokerage fees” for coordinating contraband cigarette orders between co-defendant Craig Sheffler of Independence, Mo., the owner of Cheap Tobacco Wholesale, and Gholamreza Tadaiyon of Weston, Fla.

Mark Bishop and Hoffman each admitted that he transported a load of contraband cigarettes from the ATF undercover warehouse in Kansas City. Hoffman was paid $11,000, which he must forfeit to the government. Mark Bishop did not receive any substantial financial benefit or payments for his participation in the conspiracy.

Under federal statutes, David and Mark Bishop and Hoffman are each subject to a sentence of up to five years in federal prison without parole. The maximum statutory sentence is prescribed by Congress and is provided here for informational purposes, as the sentencing of the defendant will be determined by the court based on the advisory sentencing guidelines and other statutory factors. A sentencing hearing will be scheduled after the completion of a presentence investigation by the United States Probation Office.

This case is being 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 Federal Deposit Insurance Corporation – Office of Inspector General and the Kansas City, Mo., Police Department with substantial assistance provided by the Department of Justice Office of International Affairs.