North Carolina man sentenced to prison, ordered to pay over $1 million in restitution for tobacco smuggling and tax scheme
A Pink Hill man was sentenced May 20 to 78 months in prison for conspiring to commit money laundering and filing a false 2014 tax return, after he pleaded guilty to the charges on October 7, 2020, according to a press release from the Department of Justice, Eastern District of North Carolina.
According to court documents and other information presented in court, Phil Caprice Howard, 55, arranged on at least 221 different occasions for cut-rag tobacco to be transported by trucks from Wilson, North Carolina to an area on or near the Akwesasne Mohawk Nation Reservation (“Akwesasne Reservation”) as part of a conspiracy to smuggle the tobacco into Canada without paying Canadian federal excise duties and provincial taxes. The Akwesasne Reservation straddles the United States and Canada borders on both banks of the St. Lawrence River. Co-conspirators then smuggled the cut-rag tobacco over the St. Lawrence River and onto the Kahnawake Mohawk Nation Reservation in Quebec. There, the cut-rag tobacco was manufactured into contraband cigarettes. Many of the co-conspirators possessed ties to organized crime syndicates, according to the release.
In all, the conspiracy smuggled more than 6 million pounds of cut-rag tobacco into Canada, resulting in a tax loss to Canada exceeding $600,000,000, according to the release. “Howard received payment in the form of cash and cigarettes that were driven back to the Eastern District of North Carolina, as well as in the form of wires, in all obtaining more than $2 million dollars in criminal proceeds, which he laundered through a series of financial transactions. Howard failed to file Forms 8300 for his receipt of cash,” stated the release. “In addition, Howard failed to report his criminal profits on his tax returns, including by filing false tax returns for tax years 2014-2018. In all, the defendant’s tax crimes, which date back to tax year 2008, caused a tax loss to the United States of more than one million dollars.”
“This prosecution demonstrates the far-reach of organized crime and the success of international and multi-district law enforcement cooperation in holding those individuals responsible for their criminal conduct, whether it be obstruction of justice, money laundering, or tax evasion,” said Acting U.S. Attorney G. Norman Acker III. “Our office will continue to vigorously pursue the investigation and prosecution of such crimes.”
“To build faith in our nation’s tax system, honest taxpayers need to be reassured that IRS Criminal Investigation is diligent when it comes to enforcing the tax laws, such as Howard’s attempt to underreport his income,” Acting Special Agent in Charge of the Charlotte Field Office Mona Passmore stated. “By joining forces with our law enforcement partners and the Department of Justice to investigate financial related crimes, the IRS uncovers tax crimes which are equally as important to pursue.”
The release stated that Howard also provided false testimony under oath to a federal grand jury investigating federal crop insurance fraud as part of a joint investigation by the U.S. Department of Agriculture’s Office of Inspector General (USDA-OIG) and Internal Revenue Service (IRS).
“Truthful testimony to a federal grand jury is a critical part of any criminal investigation including this investigation which involved in part Federal Crop Insurance Program fraud,” said Special Agent in Charge Jason M. Williams for U.S. Department of Agriculture’s Office of Inspector General (USDA-OIG). “The sentencing in this case emphasizes that giving false statements is an obstruction to the administration of justice and will not be tolerated.”
In addition to the term of imprisonment, U.S. District Judge James C. Dever III ordered Howard to serve three years of supervised release and to pay approximately $1,062,192 in restitution to the United States. Howard was also ordered to forfeit $2,232,814 as proceeds of his money laundering activity.
Acker and Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division made the announcement after sentencing by U.S. District Judge James C. Dever III. USDA-Office of Inspector General and IRS-Criminal Investigation investigated the case with assistance from Canadian Border Services Agency – Enforcement and Intelligence Operations Division, Intelligence Section; Surete du Quebec Police; the Buffalo Homeland Security Investigations (HSI) Office and HSI Massena’s Border Enforcement Security Task Force; Bureau of Alcohol, Tobacco, Firearms and Explosives, Charlotte Field Division; and the United States Attorneys’ Offices for the Northern District of New York and the Western District of New York. Former Assistant United States Attorney Banumathi Rangarajan and Tax Division Trial Attorney Will Guappone prosecuted the case.