2 plead guilty in cig case

Two businessmen pleaded guilty Tuesday to their involvement in a cigarette distribution scheme to defraud the federal government and several states, including Mississippi, out of more than $20 million in taxes and fees.

Jerry Burke, 67, of Tupelo and Randy Benham, 43, of Cordova, Tenn., waived indictment and pleaded guilty before U.S. District Judge W. Allen Pepper in Greenville to carrying out a scheme to defraud federal and state governments, making false monthly tobacco reports and money laundering, U.S. Attorney Jim Greenlee said in a news release.

Burke agreed to forfeit more than $1.6 million in cash along with a 1982 Beech C90 Turbo Prop Airplane, valued at more than $700,000, and two Chevrolet Suburbans.

“The two guilty pleas entered (Tuesday) mark the beginning of the end of a tremendously complex scheme to defraud multiple states of tax proceeds from the illegal distribution of cigarettes,” Daniel McMullen, special agent in charge of the FBI in Mississippi, said in a statement.

Benham, owner of Globe Distributing in Tupelo, created false documents to make it appear tobacco products were being sold in Mississippi when they actually were being sold elsewhere, according to court records.

Burke, president of Globe Wholesale, sold the company in October 2006 to Benham but remained as a consultant and “was engaged in an ongoing conspiracy” to distribute the contraband cigarettes, according to court documents.

In April, a two-year multi-jurisdiction investigation led to the discovery of nearly 1 million cartons of contraband cigarettes and small cigars in two Tupelo area warehouses. Authorities also raided facilities in South Carolina and Kentucky. The cigarettes seized in Tupelo were sold at auction there in October and generated $1.9 million, according to the auditor’s office. But only $277,635 went to Mississippi.

The plea deal also calls for Burke and Benham to cooperate with authorities in their ongoing investigation, State Auditor spokeswoman Lisa Shoemaker said.

“This was the largest known discovery of contraband in American history,” Shoemaker said. “These two individuals are not the end of this case.”

Burke and Benham are expected to be sentenced in 60 days. Each faces up to 20 years in prison for defrauding the government and money laundering and up to three years for making false reports and a maximum $250,000 fine on each of the three counts.

source: www.clarionledger.com

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