An Independence couple are among 17 people in eight states and two countries who have been indicted in what federal authorities describe as a $17 million conspiracy to sell hundreds of thousands of cartons of contraband cigarettes.
Most of the cigarettes, valued at millions of dollars, passed through a warehouse in Independence on their way to New York, where they were generally sold on Indian reservations – without the $4.35-a-pack excise tax levied in that state – authorities say. That cost the state of New York more than $8 million.
A federal grand jury handed up the 44 indictments on Tuesday, and the U.S. attorney’s office for the Western District of Missouri announced them Wednesday. Also, a shop in New York was indicted, but its owner was neither indicted nor named.
Craig Sheffler, 43, and Nicole Sheffler, 35, both of Independence, are among those indicted. Craig Sheffler owns Cheap Tobacco Wholesale in Independence. Harry Najim, 65, of Wichita, was an attorney for Craig Sheffler and Cheap Tobacco Wholesale, and he also has been indicted.
As federal officials describe it, the conspiracy lasted about a year and a half, from July 2010 through late January 2012. This is what they say happened:
Craig Sheffler regularly bought contraband cigarettes from undercover Bureau of Alcohol, Tobacco and Firearms agents in Kansas City. These were typically sales of thousands of cartons – 10 packs to a carton – and hundreds of thousands of dollars. In September 2011, for example, he bought 15,576 cartons for $613,131 – $33,000 of that with a check and the rest in cash. Sheffler was falsely reporting that he was buying the cigarettes from a defunct Florida company.
He would sell some to Gholamreza “Reza” Tadaiyon, 50, of Weston, Fla. Neither Tadaiyon nor his company were licensed New York tobacco wholesalers. Tadaiyon and two of his drivers were among those indicted. Authorities say Tadaiyon made approximately $1.28 million in gross profit in the conspiracy.
Sheffler would ship the rest to New York, either from the undercover ATF warehouse in Kansas City or from his warehouse in Independence. At first, they would pass through the Seneca Cayuga Tobacco Company in Oklahoma and then go on to three reservation smoke shops in New York. Later, the cigarettes were instead shipped to HCI Distribution in Nebraska and then go to the three New York shops. Many of the others indicted had connections with the Oklahoma. Nebraska or New York companies.
Also indicted were the owner and two drivers of a company in Montreal, Quebec, Canada, that made wire transfers, as well as a Quilcene, Wash., man who was paid “brokerage fees.”
The U.S. attorney has entered into a non-prosecution agreement with HCI Distribution, the Nebraska company, which acknowledges its role in the conspiracy and has agreed to take several steps as a follow-up.
In May, Keith Donald Stoldt, pleaded guilty in Kansas City to federal charges of conspiracy to commit wire fraud and contraband cigarette trafficking, also part of this investigation. He and his wife operate a smoke shop on the Tonawanda Secena Indian Reservation, a small reservation with fewer than 500 residents in western New York.
Federal authorities also have seized money and property in the case, including $399,206.22 from a bank account in the name of Cheap Tobacco Wholesale; a 2009 Cessna airplane sold at auction for $450,000, and four 2012 Peterbilt trucks sold for more than $100,000 each.