State Auditor Returns Over $200,000 to State General Fund Following Contraband Tobacco Sale

(Jackson, Miss.) State Auditor Stacey Pickering along with the Mississippi State Tax Commission has recovered $211,737.65 that will be returned to the State’s General fund following a lower-than-expected collection at the contraband tobacco auction held October 27 in Tupelo.

“At a time when all state and local government entities are looking for ways to save money, I am pleased that our efforts were able to contribute $211,737 to the State’s General Fund,” said State Auditor Stacey Pickering. The auction of over 900,000 cartons of cigarettes brought in $1.9 Million; however, only $211, 737 will be available to the State. “Over $1.6 Million was taken by the Alcohol and Tobacco Tax and Trade Bureau for Federal Excise Tax believed by TTB to be owed on the product. Since discovering this product in April and taking possession earlier this fall, we have petitioned the federal government for a waiver of the Federal Excise Tax. Our Congressional Delegation has been very supportive in our request for this waiver; however, the request was denied by the TTB resulting in the Federal Government taking the majority of the proceeds of the sale.”

In addition to the over $200,000 returned to the State, the Tupelo Police Department and Marshall County Sheriff also received $2,776 each in addition to other forfeited property owned by those associated with the warehouses. “On behalf of the State law enforcement community, I am very appreciative of the leadership of Chief Harold Chaffin and Sheriff Kenny Dickerson that led to their involvement in this case,” said Auditor Pickering. “Both had agents assigned to this case from the beginning and played a major role in bringing to a close the largest known discovery of contraband tobacco in U.S. history.”

On November 24, Jerry Burke, 67 of Tupelo, and Randy Benham, 43 of Cordova, Tenn., waived indictment and entered guilty pleas before US District Judge W. Allen Pepper in Greenville. The counts charged them with executing a scheme to defraud the United States, the State of Mississippi, as well as other states, and the National Association of Attorneys General, of millions of dollars of taxes and fees due and owing from the unlawful distribution of cigarettes; making and causing to be made false monthly tobacco reports; and money laundering . In connection with his guilty plea, Burke forfeited to the United States over $1.6M in cash; a 1982 Beech C90 Turbo Prop Airplane valued at over $700,000; a 2006 Chevrolet Suburban; and a 2007 Chevrolet Suburban.

“This case remains ongoing,” said State Auditor Stacey Pickering. “The State Auditor’s Office will continue to be of assistance to the federal agencies involved in investigating and prosecuting this case and will work to protect the reputation, integrity and tax dollars belonging to all Mississippians.”

State Auditor Stacey Pickering Press Release
12/19/9