TUPELO – New allegations have come to light about an unnamed informant and the use of a Tupelo man’s airplane by a multi-state black market cigarette ring, U.S. District Court documents show.
As yet, there’s no public news on who may be criminally charged in the federal government’s investigation, which apparently has continued across nearly two years.
New court documents offer more details about what the U.S. Attorney’s Office in Oxford claims has been going on.
Sources close to the case, who asked not to be identified, say indictments ultimately could cross international borders for modern-day criminal activity akin to Prohibition in the early 20th century.
Prosecutors are asking the U.S. District Court to allow seizure of $1.89 million and an airplane, already in the government’s possession, allegedly used to carry thousands of cartons of cigarettes to avoid paying federal taxes on them.
The plane, a 1982 Model C90 Beech turbo-prop, is registered to Globe Wholesale Inc. of Tupelo, according to the Federal Aviation Administration.
Globe Wholesale was owned by Jerry G. Burke of Tupelo until he sold it in October 2008 to Randy Benham of Memphis. Benham changed the name to Globe Distributing.
Prosecutors say Burke and others diverted and distributed non-taxed or stolen cigarettes in a multimillion-dollar scheme for profit.
Benham’s Globe Distributing at 120 N. Front St. was raided by federal agents May 26. A still undisclosed Tupelo location was raided April 14 in the widespread investigation.
The FBI said the raids are part of a wider investigation into a tobacco black market with ties to Mississippi, Kentucky and South Carolina.
The estimated value of the seized cigarettes is $20 million.
A second court document, seeking the $1.89 million, explains how the alleged conspirators in the cigarette case moved non-taxed cigarettes into states where the tax wasn’t required – like Mississippi – and “diverted” them throughout the southeastern U.S.
“I don’t know anything about it,” said Jerry G. Burke when he was called for comment.
Benham referred all calls to his attorney, Steve Farese of Ashland, who neither confirmed nor denied that his client had met with prosecutors.
U.S. Attorney Jim Greenlee wants the plane declared forfeit, which allows the government to sell it and keep the money.
In asking to seize the plane, Greenlee and Assistant U.S. Attorney Samuel D. Wright say they believe it was used to move around and sell the contraband cigarettes.
The ‘paid consultant’
Even though Burke sold out to Benham, they accuse Burke of staying in the business “as a paid consultant.” They also say he used the plane as he conspired with others in the scheme.
The details turn a little cloak-and-dagger in the document seeking the money, when prosecutors reveal the FBI and ATF used a “confidential informant” from May 17, 2007, until Feb. 27, 2009, to broker tobacco and related products between the alleged conspirators.
This informant was paid $1,890,524.12 for services to the conspirators in the diversion scheme, the document claims.
Because the money was made during the investigation, it should be subject to forfeit, just like the airplane, prosecutors say.
Calls to the U.S. Attorney’s Office in Oxford went unanswered about criminal indictments.
Plans are under way to auction about 855,000 cartons of contraband cigarettes as early as September, the Associated Press reported recently.
Auditor’s Office spokesman Lisa Shoemaker said the cigarettes are from the Tupelo raids.
State officials say their sale could yield more than $5 million in unpaid state taxes.
Contact Patsy R. Brumfield at (662) 678-1596 or email@example.com.
Patsy R. Brumfield/NEMS Daily Journal