A federal judge has levied up to $1 million fines, forfeitures and restitution in a contraband cigarette case with connections to Independence.
In a plea-bargain agreement before a U.S. district judge in Kansas City, A.J.’s Candy & Tobacco of Irving, N.Y., on Thursday admitted ordering contraband cigarettes and causing them to be transported to New York, knowing that the $4.35-per-pack excise tax would not be paid, a violation of state and federal law.
Last August, 17 people in eight states and two countries were indicted in what federal authorities describe as a conspiracy to sell hundreds of thousands of cartoons of cigarettes on which excise taxes had not been paid. Also, last May, the owner of a smoke shop on the Tonawanda Secena Indian Reservation in western New York pleaded guilty in Kansas City to federal charges of conspiracy to commit wire fraud and contraband cigarette trafficking, also part of this investigation.
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, authorities say. Craig and Nicole Sheffler, both of Independence, were among those indicted. Authorities listed Craig Sheffler as the owner of Cheap Tobacco Wholesale in Independence.
The unpaid taxes cost the state of New York more than $8 million, prosecutors say. The excise tax on cigarettes in Missouri is 17 cents per pack, the lowest in the nation.
The indictments resulted from an undercover operation by the U.S. Bureau of Alcohol, Tobacco and Firearms in 2010 through early 2012. The ATF ran a cigarette warehouse in Kansas City.
AJ’s Candy and Tobacco – its owner was not named or indicted – cost New York $535,050 in excise taxes. The company must forfeit its proceeds from the crime, $221,550, and pay a fine of $243,400. The court also could order it to make restitution of the $535,050 to New York. The company cannot sell premium cigarettes for two years.
At the time of the indictments last summer, federal authorities said that they had 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 – a $3.5 million civil forfeiture overall.