- Associated Press - Tuesday, March 25, 2014

ABERDEEN, Miss. (AP) - A North Carolina man has been sentenced to 40 months in prison and $5.1 million in restitution payments for his involvement in a multi-state scheme to avoid taxes and fees on tobacco sales.

Calvin Phelps, who operated four tobacco sales businesses in Mocksville, N.C., pleaded guilty to three counts of wire fraud, contraband cigarette trafficking and money laundering in 2012. The Northeast Mississippi Daily Journal reports (https://bit.ly/1nX2ldA ) Phelps was sentenced Monday in U.S. District Court in Aberdeen, Miss.

Phelps was accused of bilking the U.S., Mississippi and some other states out of more than $4 million.

In his plea agreement, he admitted reporting that certain brands of cigarettes were to be exported and consumed outside the U.S., when, in fact, they were to be sold domestically.

The plea document states that from 2007 into 2009, Phelps sold some 16,022 cases of these cigarettes for $3.19 million through G-Corp and evaded nearly $5 million in fees and taxes.

He also agreed to forfeit up to $2 million he acquired with his illegal profits.

Without the plea deal, he faced up to 43 years in prison and more than $1 million in fines, in addition to restitution.

Prosecutors said Phelps worked to develop a fake paper trail giving the illusion he shipped tobacco products out of the U.S. and avoid paying Master Settlement Agreement money owed from participating tobacco companies to states involved in the tobacco settlement.

The agreement between participating states and certified tobacco manufacturers and brands required the manufacturers pay a per-carton sold settlement fee to the settling states at the end of each year.


Information from: Northeast Mississippi Daily Journal, https://djournal.com

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