Cigarette smuggling case ends in guilty pleas 4-23-07

YAKIMA, Wash. (AP) - A cigarette smuggling case in which authorities said Washington state lost about $56 million in tax revenue has ended in plea agreements with the man described as the ringleader and three other defendants.

Louie Mahoney, 61, who was said to have directed dealings in untaxed cigarettes from his home on the Coeur d'Alene Indian Reservation in Idaho, pleaded guilty Friday in U.S. District Court to racketeering conspiracy and other charges.

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 before Judge Robert H. Whaley.

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.

Louie Mahoney, doing business as JKL Enterprises, did not have a Coeur d'Alene tribal license to sell tobacco, according to documents filed in court by government lawyers.

He and the others were accused of money laundering, mail fraud, interstate transportation in aid of racketeering and cigarette record-keeping violations.

Investigators wrote that he ordered untaxed cigarettes from wholesale suppliers in Spokane and elsewhere, using two retail stores owned by relatives on the Coeur d'Alene reservations as fronts but arranging for deliveries to his home on U.S. Highway 95.

Preparing shipments to Washington state, JKL workers made sure that “the cigarettes were hidden so that if the vehicle was stopped by law enforcement in Washington, the contraband cigarettes would not be observed and seized,” according to court filings.

Kathleen Mahoney's relationship to Louie Mahoney has not been specified in court filings, nor were the terms of the plea agreements immediately filed in court or released as public documents.

The case stems from an investigation into shipments of untaxed cigarettes from July 1999 to May 2003, when federal agents raided Indian smoke shops on the Coeur d'Alene reservation, the Yakama reservation in central Washington and the Puyallup reservation near Tacoma.

U.S. Attorney James A. McDevitt has estimated that Washington state lost about $56 million dollars in tax revenue.

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.

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