TUPELO – “This is a smoke free facility,” reads a small two-color sign on the outside of a large, otherwise undistinguished warehouse out Highway 178 northwest of where McCullough Boulevard and Highway 78 intersect.
Ironically, it’s been packed with untaxed smokes for at least the past six months while the FBI and other law enforcers guarded it as a key to breaking a multi-state, multi-country contraband cigarettes ring.
“Pure tax evasion” is how State Auditor Stacey Pickering described the alleged operation Wednesday as he announced that the state and federal government have agreed to let his office and the State Tax Commission sell the nearly 1 million cartons of tobacco products.
The public auction is set for Oct. 27 at the warehouse at 278 Highway 178. Cigarettes and small cigars will be offered in lots, and early viewing is planned for buyers.
Investigators estimate the value of the 956,900 cartons at $20 million, although the actual per-carton price varies widely depending on whether it’s bought at a discount store, a regular retailer or online.
Proceeds will be divided by a formula among Mississippi’s general fund, the U.S. Department of Treasury and local agencies, such as Tupelo Police Department and Marshall County Sheriff’s Office, which aided the two-year investigation.
Authorities declined to discuss if any criminal charges are pending. However, federal records show that Tupeloan Jerry G. Burke will plead guilty to his involvement Nov. 24.
Documents accuse him of flying a plane to traffic the cigarettes and insist he continued involvement with the business, even after he sold it to a man from Memphis.
Pickering said the Department of Justice will handle the criminal prosecutions.
“Like Paul Harvey said, ‘Stand by for news,’” he quipped during a news conference at the warehouse.
The case became public April 14 when the FBI raided the Highway 178 warehouse, although its location was not revealed until late Tuesday.
It was the first location to be raided; on May 26, agents hit 120 N. Front St. in Tupelo.
All of the confiscated cigarettes and small cigars are stored at the Highway 178 site.
Pickering declined to say who owns the rural warehouse, but records show the property manager to be Tupelo attorney Michael Greer.
Tax Commission documents, posted at the facility, claim the cigarettes belong to eight people:
– Barry Sales of Clarksdale, Ga. – 34,549 cartons.
– Allan Frank Harris Jr. and Karen Kamperman of Salamanca, N.Y. – 14,640 cartons.
– Kent Klee of Newport, Ky., and Salamanca, N.Y. – 135,180 cartons.
– Charles H. Wells of Hopkinsville, Ky. – 446,149 cartons.
– Pete Karfias of Elgin, Ill. – 19,080 cartons.
– Peter Bello of Sellersburg, Ind., – 278,400 cartons.
– Jeff Uvezian aka Jeff Avo of Great Neck, N.Y. – 24,420 cartons.
Sales referred calls to his attorney. Wells’ attorney, Ken Coghlan in Oxford, declined to comment. Attempts were unsuccessful to reach the rest of them for comment Wednesday.
Klee and Wells reportedly have businesses in Oxford. Klee’s are listed as Wholesale Direct and Smokes-Spirits. Wells’ is listed as H&W Wholesale. Their attorneys did not return calls to the Journal.
Tupelo Mayor Jack Reed Jr., who attended the news conference, said he learned about the operation on the second day in his new job in early July.
He’s not sure how much money the city will receive from the auction proceeds but he hopes to gain the Front Street property for a new police headquarters.
“If you have to be glad about this, be glad they did it in Mississippi so we can benefit from it,” Reed said.
He and Pickering said they believed the Lee County locations were chosen because they are central distribution hubs for the Southeast.
Marshall County Sheriff Ken Dickerson, who provided an investigator to the federal-state case, said his office also expects to get something for its involvement.
Many of the cigarettes were brought into the U.S. The thousands of crates, stacked and shrink-wrapped, show they were manufactured from Armenia and Colombia to the Philippines and Canada. Some were manufactured by American Indian businesses.
State taxes were not paid on them, Pickering said.
The U.S. Treasury also inventoried the cigarettes to determine what federal excise taxes, if any, were paid.
Contact Patsy R. Brumfield at (662) 678-1596 or firstname.lastname@example.org.
Patsy R. Brumfied/NEMS Daily Journal