(SPOKANE) - Two Idaho residents have forfeited $1.4 million as part of a guilty plea to charges of trafficking in contraband cigarettes in a case prosecuted by the U.S. Department of Justice and the Washington State Attorney General’s office. This brings the number of people pleading guilty in the case to five people.

A team from the U.S. Bureau of Alcohol, Tobacco, Firearms, and Explosives led an investigation of the illegal trafficking between September 2002 and March 2003. Tobacco Tax Officers from the Washington State Liquor Control Board provided surveillance assistance during the investigation and additional staffing resources in support of the execution of 12 search warrants in May of 2003.

A December 13, 2005 "Superseding Indictment" brought by United States Attorney for the Eastern District of Washington James McDevitt charged Peter and Peggy Mahoney of Plummer, ID, with selling contraband cigarettes to Washington Indian retailers. The indictment alleged the Mahoneys and three other individuals conspired to avoid paying the state of up to $7 million in tobacco taxes.

In all, $3.1 million in cash, $2 million in seized bank accounts, and 200,000 cartons of cigarettes have been confiscated during the related investigation. Sentencing is expected to take place in April 2007 for the individuals who have pled guilty. The maximum penalty for contraband cigarette trafficking is five years imprisonment and the maximum penalty for money laundering is 20 years imprisonment.

The WSLCB is eligible to share in the distribution of 80 percent of the confiscated funds from the case under the federal asset-sharing program. Based on the amount of work provided by tobacco tax officers, the WSLCB will request 25 percent of the proceeds from the case be returned to its Tobacco Tax Unit. The unit will use these funds to support further investigations of un-taxed cigarettes.

The WSLCB’s Tobacco Tax Unit has returned more than $1.5 million to the state based on its auctioning of contraband cigarettes in the last six years.

Agencies participating in the investigation and prosecution were the U.S. Department of Justice, the Bureau of Alcohol, Tobacco, Firearms and Explosives, the Internal Revenue Service Criminal Investigation Unit, the Washington State Liquor Control Board, the Unites States Attorney’s Office for the Eastern District of Washington, and the Washington State Attorney General’s Office.

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