- Associated Press - Friday, June 19, 2015

KNOXVILLE, Tenn. (AP) - State Rep. Joe Armstrong of Knoxville has pleaded not guilty to federal fraud and tax evasion charges connected to an increase in the state’s cigarette tax.

According to media accounts, the Knoxville Democrat was restrained by handcuffs and leg shackles when he appeared before U.S. Magistrate C. Clifford Shirley Jr. on Friday.

“I plead not guilty, your honor,” Armstrong said loudly in court.

Armstrong was released pending trial was set for Aug. 25

The indictment filed Tuesday alleges that Armstrong devised a scheme beginning in 2006 to profit from the cigarette tax hike planned by then-Gov. Phil Bredesen.

According to the charges, Armstrong borrowed $250,000 to buy tax stamps at the old 20-cent rate, and then sold them at a profit after lawmakers approved a 42-cent increase.

The lawsuit says Armstrong failed to report more than $318,000 in income in 2008.

A jovial Armstrong cracked jokes with assembled reporters after the hearing and said he looked forward to proving his innocence.

“I believe in the justice system,” he said once the cameras were turned on “I believe the truth will come out, and I will be vindicated in this.”

The House Ethics Committee is likely to look into the allegations against Armstrong, but a meeting has not yet been scheduled.

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