Feds seeking nearly $4 million from WA smokeshop operator 5-18-07

SPOKANE, Wash. (AP) - Federal prosecutors want to seize nearly $4 million from an Okanogan woman indicted on cigarette trafficking and money laundering charges.

A U.S. District Court grand jury in Yakima handed up a 62-count indictment Tuesday accusing Joann Cook, 60, of laundering nearly $4 million from sales of untaxed cigarettes through her J&J's Smokeshop in Okanogan from 1999 to 2006.

Cook was scheduled to be arraigned here Friday.

James A. McDevitt, U.S. attorney for Eastern Washington, has estimated that Washington state lost about $56 million in tax revenue in schemes to bring untaxed cigarettes from Indian reservations in Idaho.

The indictment seeks forfeiture of more than $3.9 million: the amount federal prosecutors allege Cook laundered from September 1999 to May 4, 2006, when federal and state agents raided the business.

Prosecutors allege the 4,500 cartons of untaxed cigarettes seized from the smokeshop came from an Idaho distributor who recently pleaded guilty to federal conspiracy charges.

Reservation smoke shops can legally sell untaxed cigarettes only to tribal members. In Washington, the state tax amounts to $14.25 a carton.

The indictment alleges Cook and “unindicted co-conspirators” conspired to ship, transport, receive, possess and distribute contraband cigarettes.

The indictment also seeks the forfeiture of contraband cigarettes, more than $8,300 from a bank account, more than $20,000 in seized cash, as well as a $3.9 million judgment representing the laundered money.

The indictment charges Cook with a count of conspiracy to traffic in contraband cigarettes, 20 counts of contraband cigarette trafficking, a money laundering conspiracy count and 40 counts of money laundering.

Several federal and state law enforcement agencies joined to investigate the untaxed cigarette scheme.

The maximum penalty for a conviction for trafficking in contraband cigarettes is five years in prison. Conviction for money laundering carries a maximum term of 20 years.

The federal Bureau of Alcohol, Tobacco, Firearms and Explosives; Internal Revenue Service; the Washington State Liquor Control Board; Washington state attorney general's office and the U.S. attorney's office helped investigate the case.

Last month, the reputed “ringleader,” Louie Mahoney, pleaded guilty to racketeering conspiracy and other charges stemming from the two-state investigation into untaxed cigarettes being smuggled into Washington from an Idaho reservation.

In that case, agents raided Indian smoke shops on the Coeur d'Alene reservation in Idaho, the Yakama reservation in central Washington and the Puyallup reservation near Tacoma in May 2003.

Mahoney, 61, was alleged to have directed dealings in untaxed cigarettes through a business called JKL Enterprises from his home on the Coeur d'Alene reservation.

Similar pleas also were entered in U.S. District Court by his sisters, Margaret R. Jose, 61, and Christine Mahoney-Meyer, 55, also of Plummer, Idaho, and by Roger Fiander, 67, of Wapato, Wash.

All four remained free on bond or other conditions pending sentencing Aug. 28.

Four others - Gerald G. George, 60, and Lyle W. Conway, 70, of Fife, Lyle Shawn Conway, 34, of Tacoma, and Kathleen S. Mahoney, 58, of Walla Walla - pleaded guilty to racketeering conspiracy earlier and also await sentencing.

As part of the plea agreements, the eight defendants and six involved in an earlier related case agreed to forfeit $5.1 million in cash and more than 200,000 cartons of cigarettes that were seized in the raids.