- Associated Press - Friday, September 11, 2015

RICHMOND, Va. (AP) - A Fredericksburg businessman is scheduled for a plea hearing Tuesday to face federal charges he conspired to launder more than $12 million in proceeds from the trafficking of low-tax Virginia cigarettes.

The hearing in U.S. District Court is based on charges brought Thursday against Yinhau Chen, 33, who is also known as Steven Chen. Chen and unidentified co-conspirators allegedly used credit cards to purchase nearly $14 million worth of cigarettes from Virginia wholesalers dating to March 2014, The Richmond Times-Dispatch (https://bit.ly/1Kcy5k7) reports.

The government alleges the overwhelming majority of the cigarettes were sold to people who intended to smuggle them out of Virginia for illegal sale in other states. At 30 cents a pack, Virginia has the second-lowest cigarette excise tax in the country.

Chen allegedly sold the cigarettes for cash to the traffickers at a storage unit in Fredericksburg.

Reached Thursday, Chen declined to comment, the newspaper reported.

In March, however, he told the Times-Dispatch that he purchased large amounts of cigarettes from big-box stores for sale to the owners of mom-and-pop stores. He said he made 50 cents to $1 a carton on the sales.

Chen said he did not believe the store owners were trafficking cigarettes because the amounts they purchased were too small. He said he filed all the reports he was required to file with federal and state governments.

State records indicated Chen owned two businesses in the Glen Allen area of Richmond, besides business interests in the Fredericksburg area.

Illicit traffickers buy cigarettes in Virginia and take them to high-tax localities such as New York City, which imposes a $5.85 combined city and state tax per pack.

Chen faces a maximum of five years in prison if convicted.


Information from: Richmond Times-Dispatch, https://www.timesdispatch.com

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