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Posted March 15, 2012 | comments Leave a comment

Another guilty plea in illegal cigarette case

Man faces up to five years in prison for his role in smoke ring

By Alex Bridges -- abridges@nvdaily.com

HARRISONBURG -- Another defendant charged in an undercover sting targeting illegal cigarette sales has pleaded guilty to his role in the operation.

Hamid "Sam" Choudhry may serve up to five years in a federal prison for committing one count of conspiring with others to transport or sell more than 10,000 contraband cigarettes. Choudhry, age and address unavailable, pleaded guilty to the charge Tuesday in U.S. District Court in Harrisonburg. The conviction also carries a maximum fine of up to $250,000. Choudhry entered the plea under an agreement reached between Assistant U.S. Attorney Jeb Terrien and defense counsel Danny Onorato.

The agreement calls for the court to dismiss Choudhry's remaining counts of money laundering and trafficking of contraband cigarettes. U.S. District Judge Michael F. Urbanski accepted the agreement.

Choudhry remains free on bond. Urbanski set his sentencing for Aug. 14.

Authorities have explained in court documents that such a conspiracy involves the buying of taxed or untaxed cigarettes in a state with a low levy such as Virginia. The participants then stand to make money by reselling the taxed or untaxed cigarettes in a state which charges a higher levy without paying that state's requisite tax.

Participants use the profits from the sale of contraband cigarettes to perpetuate the enterprise, according to authorities. The participants also may engage in money laundering to conceal the illegal profits, authorities have said.

Choudhry and a co-defendant, Mohammad Atif, as well as other individuals, "engaged in [a] scheme to purchase and sell contraband cigarettes," according to a statement of facts submitted by U.S. prosecutors. The scheme began as early as April 2009 and continued through November 2011, according to the statement.

"During the conspiracy, Mohammad Atif and other defendants collectively paid undercover law enforcement agents more than $2,621,099 for contraband cigarettes," the document states.

Members of the conspiracy sold the contraband cigarettes to individuals in various states and localities, including New York and New York City, according to the statement, signed by Choudhry.

"In doing so, the conspiracy amassed substantial profits, primarily in the form of cash," the document states.

Additionally, Choudhry participated in multiple transactions involving the purchase of contraband cigarettes, according to the statement. For example the indictment charges Atif and Choudhry with buying contraband cigarettes on March 2, 2010, at a warehouse run by undercover agents, the statement notes. The men received approximately 840 cartons, each containing 200 untaxed cigarettes, after paying agents about $21,480 in cash, according to the statement.

Another count in the indictment accuses Atif and Choudhry of paying $48,360 in cash for 1,800 cartons of contraband cigarettes two days later from agents at the same warehouse. A third count alleged Atif and Choudhry paid $144,020 in cash for approximately 5,100 cartons of contraband cigarettes from agents at the warehouse on March 23, 2010, the document states.

Atif stands charged with eight counts of trafficking contraband cigarettes, and one count each of money laundering and conspiracy to defraud the United States.

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