Kentucky Business Agrees to Pay $750,000 in Restitution for Role in Contraband Cigarette Trafficking
Tantus Tobacco LLC Pleads Guilty to a Superseding Information
|U.S. Attorney’s Office April 01, 2014|
BOWLING GREEN, KY—A Russell Springs, Kentucky company pleaded guilty today before Chief Judge Joseph H. McKinley, Jr. to a single charge of conspiracy to engage in contraband cigarette trafficking, and the company has agreed to pay $750,000 in restitution and forfeitures, announced David J. Hale, United States Attorney for the Western District of Kentucky.
Tantus Tobacco LLC pleaded guilty to a superseding information and will pay restitution in the amount of $200,000 to the Kentucky Revenue Cabinet in lost taxes and $60,000 to the Kentucky Attorney General’s Office for its assistance in the investigation. Tantus Tobacco LLC will forfeit $490,000 to the United States.
Tantus Tobacco, a cigarette manufacturing facility located in Russell Springs, Kentucky, acting by and through its officers and employees, aided and abetted by Jerry Burke and Charles Wells, pleaded guilty to making false material statements in reports required to be made to governmental tobacco regulatory divisions of the United States and the state of Mississippi between October 2007 through July 2008.
According to the plea agreement, from at least January 2008 to May 2008, Tantus Tobacco manufactured Berley and Berkley brand cigarettes, which they sold to Charles Wells, a cigarette wholesale distributor in Kentucky. Escrow payments are due on the Berley cigarettes but not the Berkley. Wells would obtain the cigarettes directly from the Tantus Tobacco facility located in Russell Springs, Kentucky. However, Tantus Tobacco aided and abetted the creation of false documentation indicating that the cigarettes had been sold to J&B Wholesale (owned and operated by Jerry Burke) in Mississippi, which false documents were submitted to the State of Mississippi. These false documents allowed Tantus Tobacco to avoid making manufacturer Non-Participating Manufacturer escrow payments on the subject cigarettes and to sell the cigarettes to Wells at a discount. J&B Wholesale, in turn, submitted false and fraudulent Mississippi Tobacco Excise Returns reporting that the cigarettes were received and sold in Mississippi to the State Tax Commission in Mississippi in violation of tobacco sales reporting requirements. These false Mississippi Tobacco Excise Returns were submitted, in whole or in part, due to the cigarette diversion scheme described above in which Tantus Tobacco was an active participant.
A wholesaler selling cigarettes in Mississippi must file a monthly Tobacco Excise Return with the State Tax Commission showing the number of unstamped cigarettes received that month, plus the cigarettes stamped and available for sale that month, plus the cigarettes sold to licensed wholesalers and exempt persons that month, as well the cigarettes shipped or sold out of state and the net taxable cigarettes and other pertinent information.
This case was prosecuted by Assistant United States Attorney Randy Ream and was investigated by the Federal Bureau of Investigation (FBI) Jackson Division and the Bureau of Alcohol, Tobacco, Firearms, and Explosives (ATF).