KANSAS CITY, Mo. – Tammy Dickinson, United States Attorney for the Western District of Missouri, announced today that a Wichita, Kan., attorney is among five defendants who have pleaded guilty in federal court this week to their roles in a multi-million dollar 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.
Harry Najim, 67, of Wichita, pleaded guilty before U.S. District Judge Brian C. Wimes to failing to file a Form 8300 related to his representation of a client involved in the scheme, who was actually an undercover federal agent.
William F. Parry, 54, of Irving, N.Y., pleaded guilty today to contraband cigarette trafficking. Philip Christ, 55, of Hamburg, N.Y., pleaded guilty today to participating in a conspiracy to commit wire fraud and contraband cigarette trafficking.
Nicole Sheffler, 37, of Independence, Mo., and Gholamreza “Reza” Tadaiyon, 51, of Weston, Fla., pleaded guilty on Wednesday, Feb. 18, to their roles in the conspiracy.
USA v. Najim
Najim was a lawyer employed by the Adams Jones Law Firm in Wichita. By pleading guilty today, Najim admitted that he provided legal services for an undercover ATF agent from March 2011 through January 2012. The undercover agent sold large quantities of untaxed cigarettes to a group of individuals who transported the contraband cigarettes to retail outlets in the state of New York. Those individuals were engaged in a conspiracy to commit wire fraud and contraband cigarette trafficking.
The undercover agent paid Najim $16,500 for his legal services when they met at the McCormick and Schmick’s restaurant on the Country Club Plaza in Kansas City, Mo., on June 23, 2011. Najim knew federal statutes required the law firm to file a report with the Financial Crimes Enforcement Network upon receipt of more than $10,000 in a single transaction. Najim, however, did not report the $16,500 payment to the law firm, which caused it to fail to file a report.
Najim was also the attorney for co-defendant Craig Sheffler, 45, of Independence, and Sheffler’s business, Cheap Tobacco Wholesale. Sheffler pleaded guilty on Dec. 19, 2014, to participating in the conspiracy to commit wire fraud and contraband cigarette trafficking and forfeited $599,206 to the government.
Sheffler admitted that he made regular purchases of contraband cigarettes from undercover ATF agents. 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 unstamped, untaxed cigarettes were then sold to smoke shops on the reservations in New York, which sold the contraband cigarettes at a considerable discount and deprived the state of its tax revenue.
According to the indictment, conspirators purchased more than $17 million worth of contraband cigarettes from ATF agents during an undercover operation. Sheffler admitted in his plea agreement that the amount of loss exceeded $7 million. Cigarettes 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.
USA v. Sheffler
Nicole Sheffler, the wife of Craig Sheffler, admitted that she collected and transported the money used to purchase the contraband cigarettes from the ATF undercover operation. Nicole Sheffler collected the money from customers of Cheap Tobacco Wholesale and cashed checks at a check cashing business. She delivered the money to the ATF undercover warehouse in Kansas City, Mo., for the cigarette purchases by Cheap Tobacco Wholesale.
USA v. Parry
Parry owns and operates Wolf’s Run, a business that, among other things, operates a gas station, convenience store, and trucking transport business. Parry purchased contraband Marlboro and Newport cigarettes in September and December 2011. Parry admitted that he purchased unstamped cigarettes with the intent that the New York state excise tax would not be pre-collected, thus allowing the cigarettes to be sold at a considerable discount and depriving New York State of its tax revenue. Parry sold those unstamped, untaxed cigarettes at Wolf’s Run and to other smoke shops on the reservations in New York.
Under the terms of today’s plea agreement, Parry must forfeit $459,876, representing the profits he received for his role in the conspiracy, to the government.
USA v. Christ
Christ was the chief executive officer of P.D.C. Consulting, LLC, located in Irving, N.Y. Christ admitted that he brokered sales of contraband cigarettes to Native American businesses located in the state of New York. The tax due and owing to New York State on these cigarette transactions was approximately $2.4 million.
USA v. Tadaiyon
Tadaiyon owns Brand Name Connoisseurs, Corp., a business located in Florida. Neither Tadaiyon nor Brand Name Connoisseurs was a licensed New York tobacco wholesaler authorized to bring cigarettes into the state of New York.
Tadaiyon admitted that he and Sheffler made regular purchases of contraband cigarettes from undercover ATF agents in Kansas City, Mo. They coordinated the cigarette orders from the vendors in New York and assisted in transporting the contraband cigarettes. Tadaiyon received approximately $1,280,000 in gross profit on these transactions.
Under federal statutes, these co-defendants are each subject to a sentence of up to five years in federal prison without parole, plus a fine up to $250,000. Sentencing hearings will be scheduled after the completion of presentence investigations 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.