Joint Task Force Investigation into Tobacco Distributors Continues

On 06/04/2009, an authorized search warrant was executed on HOLLEY SALES GROUP, a cigarette distributing company, located at 126 East Shockley Ferry Road, Anderson, South Carolina. The search warrant was issued by the United States District Court for the District of South Carolina. The warrant was executed without incident by members of a federal task force and representatives from the South Carolina Attorney General's Office, and the South Carolina Department of Revenue.

This search, together with the 05/26/2009, search of Global Distributing, a tobacco distributor in Tupelo, Mississippi; the 05/19/2009, search executed on Farmers Tobacco, a cigarette manufacturer located at 636 US Highway 27 North, Cynthiana, Kentucky; the 04/28/2009, search warrant executed on Tantus Tobacco, another cigarette manufacturer located in Russell Springs, Kentucky; and the discovery of a warehouse containing millions of dollars worth of cigarettes in Mississippi on 04/14/2009; was conducted in support of an ongoing, two-year investigation into the diversion of tobacco products into and through Mississippi. These searches were conducted by a federal task force working the case in northern Mississippi, and also South Carolina, Kentucky and other states.

The task force is comprised of federal, state and local law enforcement agencies, including the Federal Bureau of Investigation (FBI), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), the Mississippi Auditor’s Office, the Mississippi Tax Commission, the Tupelo Police Department and the Marshall County Sheriff’s Office. Its focus is to administer and enforce all laws and regulations pertaining to the shipment, sale and distribution of cigarettes. It is supported, to a great extent, by other federal, state and local law enforcement agencies in each respective search location.

It is unlawful, under federal law, to conspire to falsify records related to the sale of cigarettes, evade Federal Cigarette Excise Taxes, impede a federal agency’s performance, or unduly hinder the administration of justice, using the mails, wires or interstate carriers in furtherance of a scheme to defraud.

Frederick T. Brink, Special Agent in Charge of the FBI in Mississippi, recognizes the importance of cooperation between law enforcement agencies in investigating the large scale abuse of federal and state laws. Specifically, full-time task force officers have been provided to the task force by the Tupelo Police Department and the Marshall County Sheriff's office. In addition, sheriff's offices and police departments at each search location have provided assistance in coordinating and organizing these operations. SAC Brink stated, “The cooperation of our partners in the task force, together with the federal and state agents, police officers and sheriff's deputies of the respective search locations, is vital to the success of an investigation of this scope.”

Stacey Pickering, Mississippi State Auditor added, “I appreciate the opportunity to be a part of this joint task force, along with the FBI, ATF, State Tax Commission, Marshall County Sheriff and Tupelo Police. As State Auditor, my involvement in this case, as well as any other investigation, centers around protecting the taxpayers of Mississippi and to assist in any recovery on behalf of the State.”

Tupelo Police Chief Harold Chaffin said, “I would like to thank the FBI and other agencies involved for their support during this important and long term investigation. I am committed to maintaining good relationships with our federal, state and local law enforcement partners. Considering the scope of this matter and its impact on our state and local economy, we felt it was essential to provide one of our officers to work with the FBI as a full-time, federally deputized task force officer assigned to work on this case at its inception. The Tupelo Police Department and I remain committed to this investigation for the long term.”

“The Tax Commission’s primary objective, in cooperation with the joint task force, is to ensure that we collect taxes that are due to the state of Mississippi. These types of investigations are necessary to protect the state and its taxpayers, and our staff is working hard to that regard in this matter,” said Ed Morgan, Commissioner of Revenue.

Marshall County Sheriff Kenny Dickerson stated, “A special thank you to the FBI, ATF, and other agencies involved in this important investigation. I remain now, as in the past, committed to maintaining a good working relationship with all our law enforcement agencies. This investigation and the impact surrounding the investigation totally exemplifies how working together and sharing resources impacts and expedites the arrests of many criminals whose behavior adversely affects our good hardworking taxpaying citizens. The Marshall County Sheriff's Department is honored to have been asked to be a part of this major investigation.”

“Trafficking in contraband cigarettes is a global problem,” said David G. Harper, Special Agent in Charge of ATF’s New Orleans Field Division. “This task force was formed specifically to prevent criminal networks from profiting and flourishing from tax evasion through the interstate transportation and sales of contraband cigarettes. With such enormous potential for profit, at the expense of the public, such schemes are becoming bigger and more complex than ever. ATF has seen significant increases in this type of fraud. Dismantling the head of an organization will have a huge impact, but the best way to address this problem is by attacking the entire network. Cigarette trafficking investigations are long-term, cover large geographical areas, cross a multitude of jurisdictional boundaries and are resource intensive. With Federal, state and local entities all working together, we are accomplishing just what we set out to do. This task force looks forward to completing this investigation, seizing the proceeds of these enterprises and placing the culpable parties behind bars.”

This investigation is ongoing and all resources of the federal, state and local agencies involved are being utilized. No arrests have been made as yet; however, a number of subjects have been interviewed.