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Roanoke Times, VA
June 7 2005
Men sentenced, but judge frets over missing cash
Nine men were convicted in a conspiracy to avoid paying cigarette
taxes, but authorities don't know where the money ended up.
By Jen McCaffery
The case of nine men who were sentenced in federal court Monday went
beyond not paying taxes on more than 108 million cigarettes that were
transported from Virginia to California.
The "really dangerous" aspect of the case was the creation of a large
pool of untraceable assets, federal judge Samuel Wilson said at one
of the sentencing hearings in Advertisement
the case. These days, that can be problematic, he said.
But Wilson also pointed out that there was no evidence in the case
that the defendants had any ties to terrorism or organized crime.
The case began with a purchase of untaxed cigarettes at the Pilot
store in Troutville and grew into a four-year investigation that has
spawned additional prosecutions in California. Defendants drove
trucks to Virginia to buy less expensive cigarettes, then transported
them back to California, where they sold them to wholesalers and
retailers. They neglected to pay taxes on the cigarettes in either
state.
Noting that he thought "there's a tremendous profit being made here
somewhere," Wilson repeatedly asked prosecutors where the money had
gone.
"That, your honor, is an excellent question," said prosecutor Sharon
Burnham.
According to the prosecution's evidence in the case, the cigarettes
purchased as part of the conspiracy had a retail value of more than
$18.6 million. In the process, the defendants avoided more than $4.7
million in California taxes. The defendants in the case are mostly
Armenian immigrants who live in and around Los Angeles.
Burnham pointed out that the three leaders in the conspiracy - Vicken
Djeredjian, Akop "Jack" Chichyan and Mnatsakan "Mike" Grigoryan - had
agreed to the forfeiture of about $500,000 in assets as part of the
plea agreement in the case.
But she said that because of the "complex and convoluted" way the
defendants conducted their finances - having other defendants open up
separate bank accounts from which they drew funds, for example, and
paying for many things in money orders and cash - it is impossible to
know how much money they actually made.
"We'll never know where the rest of it is," Burnham acknowledged.
She pulled out a binder with plastic sheets filled with credit cards
that she said Chichyan used, along with cash and a check, to put a
down payment on a Mercedes worth almost $75,000.
But attorneys for Djeredjian, 31; Chichyan, 33; and Grigoryan, 39;
argued that their clients put most of the money they earned back into
buying more cigarettes and that they were now experiencing financial
hardship.
"There is not a treasure trove of hidden money out there," argued
attorney John Russell of Midlothian.
Wilson sentenced Djeredjian, Chichyan and Grigoryan to two years in
prison and three years of supervised release, and fined them $20,000
each.
He also sentenced six other defendants who he said were less culpable
in the case. Many were truck drivers and cooperated early on with
federal prosecutors.
Wilson sentenced Azat Stepanyan, 23, to six months in prison and two
years supervised release and fined him $250. He also faces an
outstanding warrant from the U.S. Immigration and Customs
Enforcement, according to federal prosecutor Craig Jacobsen.
Djeredjian is also facing deportation to Iraq, according to his
attorney.
Wilson also sentenced Serob Boyadzhyan, 36, and Manvel Iskandaryan,
47, to one year of probation and a $250 fine. Albert Asatryan, 47;
Masis Mirakyan, 57; and Armen Grigoryan, 28, were each fined $250. A
final defendant is still a fugitive.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms
and Explosives; the Internal Revenue Service; the Virginia state
police; and other agencies.
June 7 2005
Men sentenced, but judge frets over missing cash
Nine men were convicted in a conspiracy to avoid paying cigarette
taxes, but authorities don't know where the money ended up.
By Jen McCaffery
The case of nine men who were sentenced in federal court Monday went
beyond not paying taxes on more than 108 million cigarettes that were
transported from Virginia to California.
The "really dangerous" aspect of the case was the creation of a large
pool of untraceable assets, federal judge Samuel Wilson said at one
of the sentencing hearings in Advertisement
the case. These days, that can be problematic, he said.
But Wilson also pointed out that there was no evidence in the case
that the defendants had any ties to terrorism or organized crime.
The case began with a purchase of untaxed cigarettes at the Pilot
store in Troutville and grew into a four-year investigation that has
spawned additional prosecutions in California. Defendants drove
trucks to Virginia to buy less expensive cigarettes, then transported
them back to California, where they sold them to wholesalers and
retailers. They neglected to pay taxes on the cigarettes in either
state.
Noting that he thought "there's a tremendous profit being made here
somewhere," Wilson repeatedly asked prosecutors where the money had
gone.
"That, your honor, is an excellent question," said prosecutor Sharon
Burnham.
According to the prosecution's evidence in the case, the cigarettes
purchased as part of the conspiracy had a retail value of more than
$18.6 million. In the process, the defendants avoided more than $4.7
million in California taxes. The defendants in the case are mostly
Armenian immigrants who live in and around Los Angeles.
Burnham pointed out that the three leaders in the conspiracy - Vicken
Djeredjian, Akop "Jack" Chichyan and Mnatsakan "Mike" Grigoryan - had
agreed to the forfeiture of about $500,000 in assets as part of the
plea agreement in the case.
But she said that because of the "complex and convoluted" way the
defendants conducted their finances - having other defendants open up
separate bank accounts from which they drew funds, for example, and
paying for many things in money orders and cash - it is impossible to
know how much money they actually made.
"We'll never know where the rest of it is," Burnham acknowledged.
She pulled out a binder with plastic sheets filled with credit cards
that she said Chichyan used, along with cash and a check, to put a
down payment on a Mercedes worth almost $75,000.
But attorneys for Djeredjian, 31; Chichyan, 33; and Grigoryan, 39;
argued that their clients put most of the money they earned back into
buying more cigarettes and that they were now experiencing financial
hardship.
"There is not a treasure trove of hidden money out there," argued
attorney John Russell of Midlothian.
Wilson sentenced Djeredjian, Chichyan and Grigoryan to two years in
prison and three years of supervised release, and fined them $20,000
each.
He also sentenced six other defendants who he said were less culpable
in the case. Many were truck drivers and cooperated early on with
federal prosecutors.
Wilson sentenced Azat Stepanyan, 23, to six months in prison and two
years supervised release and fined him $250. He also faces an
outstanding warrant from the U.S. Immigration and Customs
Enforcement, according to federal prosecutor Craig Jacobsen.
Djeredjian is also facing deportation to Iraq, according to his
attorney.
Wilson also sentenced Serob Boyadzhyan, 36, and Manvel Iskandaryan,
47, to one year of probation and a $250 fine. Albert Asatryan, 47;
Masis Mirakyan, 57; and Armen Grigoryan, 28, were each fined $250. A
final defendant is still a fugitive.
The case was investigated by the Bureau of Alcohol, Tobacco, Firearms
and Explosives; the Internal Revenue Service; the Virginia state
police; and other agencies.