GREENVILLE – More arrests are likely in a multi-state, multi-year black market tobacco conspiracy that yielded two guilty pleas Tuesday.
Assistant U.S. Attorney Clay Joyner told District Judge W. Allen Pepper Jr. that Jerry G. Burke, 67, of Tupelo and Randy L. Benham, 43, of Cordova, Tenn., worked a scheme with a New York tobacco importer and a South Carolina warehouser to avoid millions of dollars in federal and state taxes, while making millions for themselves.
The others have not been charged yet but the investigation continues, U.S. Attorney Jim Greenlee said immediately after the two-hour hearing.
Burke and Benham pleaded guilty to three federal counts:
– Defrauding the U.S., Mississippi, New York, South Carolina and others of more than $20 million in cigarette taxes and fees.
– Making false statements to U.S. and Mississippi authorities about the cigarettes they were selling.
– Using wire transmissions and the U.S. mail to further their scheme.
They each face up to 43 years in prison and $750,000 fines, plus millions in restitution and forfeiture of property gained from their profits.
Pepper will decide their sentences, likely in about six weeks after completion of a pre-sentencing guidelines report by the U.S. Probation Service.
More charges possible
Both men agreed to cooperate with the investigation and to testify before grand juries and at trials, if necessary. They still can face tax-related charges and state charges.
Burke agreed to forfeit more than $1.6 million in cash and two SUVs, in addition to the 1982 Beech C90 Turbo Prop airplane the government seized from him last spring, after it raided a warehouse he once owned at 120 E. Franklin St., in Tupelo.
Benham’s attorney, Steve Farese of Ashland, told Pepper his client will make a cash forfeit, but details weren’t immediately available. Burke was represented by Tony Farese of Ashland and Frank Russell of Tupelo.
The men’s identities became public after the Tupelo warehouse raid in May.
An earlier raid, whose Highway 178 location was not revealed until months later, made public the identify of that warehouse’s tenant, Jerry Gammons.
Tuesday, Joyner said Gammons’ business, GCorp, operated “under cover” to conduct business with Benham, Burke and the contacts in New York and South Carolina.
Earlier documents stated the U.S. seized $1.89 million in payments to an undercover informant, although that person’s identify was not specified.
While Greenlee declined to discuss Gammons’ role, case documents show a “cooperating witness” with GCorp recorded phone and other conversations with the investigation’s subjects.
When asked if Benham and Burke were the scheme’s masterminds or just players, Greenlee answered, “This was their scheme – they knew what they were doing.”
But he also noted the pair were not the only ones involved.
The scheme involved bringing tobacco products into Mississippi, where certain fees can be avoided because of its separate settlement with national tobacco manufacturers years ago. The products, mostly cigarettes, then were sent to South Carolina, part of a different settlement, thus avoiding more taxes and fees.
During the course of the scheme, documents allege, the New York importer shipped and sold some 1,075,000 cartons of cigarettes, worth more than $10 million, to the South Carolina wholesaler.
By diverting the cigarettes through Mississippi, the New York importer avoided some $5.4 million in escrow payments to South Carolina. The scheme worked from Jan. 1, 2003, to June 23, 2008, prosecutors say.
Greenlee thanked the various agencies involved with bringing the case to this point – FBI, ATF, the State Auditor’s Office, Tupelo Police Department and Marshall County Sheriff’s Department.
Several weeks ago, the Mississippi Tax Commission auctioned off nearly 1 million cartons of cigarettes at the Highway 178 warehouse. The sale yielded $277,635 and most of the tobacco products went overseas for sale.
Contact Patsy R. Brumfield at (662) 678-1596 or firstname.lastname@example.org.
Patsy Brumfield/NEMS Daily Journal