Two plead guilty to illegal cigarette sales

By Joe Beck -- jbeck@nvdaily.com

A Berryville husband and wife accused by the federal government of participating in a ring that sold hundreds of thousands of cigarettes illegally pleaded guilty to a total of three felony counts in U.S. District Court in Harrisonburg, according to court documents filed Tuesday.

Mohammad Syed Lone Kashmiri pleaded guilty to selling and distributing contraband cigarettes and money laundering -- promotion. Farhat Jabeen Lone Kashmiree pleaded guilty to selling and distributing contraband cigarettes.

The money laundering charge carries a maximum sentence of 20 years in prison and a $500,000 fine. The maximum penalty for sale and distribution of contraband cigarettes is five years in prison and a $250,000 fine.

The pleas are the result of an agreement between defense attorneys and Assistant U.S. Attorney Ronald M. Huber. Gregory W. Bowen represented Kashmiree and John Zwerling represented Kashmiri.

In exchange for the guilty pleas, Huber agreed to drop hundreds of other counts against the two defendants.

Kashmiri and Kashmiree were among six people listed in an indictment that described a federal investigation spanning four states from early 2009 through late 2011.

The court documents state that the defendants violated federal law by establishing a conspiracy by which they would buy large quantities of cigarettes in Virginia, which has low cigarette taxes, and then make a profit by selling them in New York, a high cigarette tax state.

"The difference in the price of a carton of cigarettes in Virginia as compared to New York and other high cigarette tax states is such that individuals engaged in the illegal trafficking of cigarettes can make a substantial amount of money by buying cigarettes in Virginia, paying the Virginia cigarette tax, and selling them in other states that levy a greater tax," the indictment states. "Individuals engaged in the trafficking of contraband cigarettes can make even more money by buying untaxed cigarettes and selling them in states that levy a greater cigarette tax."

The indictment describes Kashmiri as owner and operator of the 340 Quick Shop, a convenience store at 304 N. Buckmarsh St. in Berryville. From June 1, 2009 through May 31, 2011, the defendants "purchased from law enforcement officers approximately 339,510 cartons of cigarettes, of which approximately 338,366 cartons were untaxed," the court documents said.

The document also states that the defendants' payments for the cigarettes reached $8.7 million for all the cigarettes and $8.6 million for the untaxed cigarettes.

The indictment pegs the 2010 retail value of the contraband cigarettes purchased in the conspiracy at $7.4 million in Virginia and $19.1 million in New York and $22.9 million in New York City.