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St. Louis couple accused of laundering cigarette money

Smoking has declined markedly in American life. But it is still big business - and the taxes on legal sales of cigarettes and other tobacco products involve a lot of money.

This is evident in a white collar case being brought against a husband and wife from St Louis. A federal grand jury charged them last week with conspiracy in an attempt to defraud the state of Kentucky of $2 million in sales taxes on cigarettes.

The specific charges include conspiracy to commit wire fraud and conspiracy to commit money laundering.

Federal investigators assert that the scheme goes back at least a decade. They say that the St. Louis woman is the brother of a 42-year-old Florida man who has been associated with a number of large-scale attempts to avoid paying taxes on the sale of cigarettes.

The man was previously indicted in Louisville in October 2011. Last week, a grand jury re-indicted him. His sister and his sister's husband were also charged.

Law enforcement authorities claim that the Florida man bought massive quantities of cigarettes in Kentucky, using bogus invoices from a Missouri company that he owned. The company was based in St. Louis.

These invoices supposedly made it appear that the source of the sales was Missouri, not Kentucky. When these cigarettes were sold around the country, prosecutors argue, the company was able to extend its profits by not paying tax on them.

According to the indictment, $12 million of cigarettes were involved.

Prosecutors say they intend to seek forfeiture of the $2 million dollars they claim resulted from the alleged money laundering by the cigarette brokers.

Source: "3 cigarette brokers face fraud charges over taxes," Wall Street Journal / Associated Press, 10-4-12

Our firm handles situations similar to those discussed in this post. To learn more about our practice, please visit our St. Louis white collar offenses page.

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