More pleas in scheme of contraband cigarettes

By Patsy R. Brumfield/NEMS Daily Journal

OXFORD – Two more men pleaded guilty Tuesday to involvement in a multi-state black market tobacco ring.
Robert Ammerman, 69, of Falmouth, Ky., and his son, Mike Ammerman, 47, of Cynthiana, Ky., face up to three years in prison and a $25,000 fine each. They pleaded guilty to making false monthly tobacco reports.
They admitted to being part of a contraband tobacco scheme to avoid paying federal excise and state sales taxes on various tobacco products.
Prosecutors say their arrests came from cooperating statements from, among others, Jerry Burke of Tupelo and Randy Benham of Cordova, Tenn., the first people arrested in the scheme.
Burke ran Globe Wholesale on East Franklin Street, then sold it to Benham in 2006. Burke admitted flying in untaxed tobacco products to be distributed through the Tupelo operation. They pleaded guilty in late November.
All the charges have been brought by the U.S. Attorney’s Office in Oxford, with the FBI and U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives.
The Ammermans, who did business as Farmers Tobacco in Cynthiana, also agreed to forfeit $8 million in cash, which Acting U.S. Attorney William C. Martin said represents the proceeds of their unlawful activity.
The AFT also said it’s one of the largest, single-cash forfeitures in its history.
Local law enforcement involved with the investigation include the Tupelo Police Department and Marshall County Sheriff’s Office.
The Ammermans admitted that from April 2004 until April 2009, they lied about cigarette shipments on which taxes should have been paid.
In April-May 2009, two Tupelo area tobacco distribution warehouses were raided and millions of tobacco products were seized. They later were sold at auction by the state Auditor’s Office and the Mississippi Tax Commission.
The tobacco products were brought to Mississippi to avoid taxes paid in states that were not part of an agreement separate from a national tobacco industry settlement.
Prosecutors say evidence shows the men received “loans” from cigarette wholesaler Charles Wells totaling $1.8 million per year across five years, and repaid the “loan” by selling their cigarettes to Wells for less than wholesale prices.
Wells then sold these cigarettes to Burke in Tupelo, and then he and Benham sold them into the Mississippi market and elsewhere.
Wells of Hopkinsville, Ky., and Mitchell Sivina of Doral, Fla., pleaded guilty to their part in the scheme in May.
None of the defendants has been sentenced yet.

Contact Patsy R. Brumfield at (662) 678-1596 or patsy.brumfield@djournal.com.