Sheriff: Operation received more than $11 million

WOODSTOCK – Newly unsealed court documents from Shenandoah County Sheriff Timothy C. Carter show his agency received more than $11 million in proceeds during a prolonged undercover investigation into cigarette smuggling that led to the arrests of two defendants.

The documents also reveal that expenses during the operations totaled almost $10 million from Jan. 1, 2011 to Dec. 31 2013.

Assistant Commonwealth’s Attorney Louis Campola and Carter have battled defense attorney David Downes for more than a year over how much information about the elaborate investigation should be publicly disclosed. The unsealed documents, which Judge Dennis L. Hupp ordered opened at a hearing Thursday, also make clear that Downes continued to question figures about the expenses and proceeds that Carter provided under court order.

Campola and Carter have argued that information sought by Downes would jeopardize the safety of law enforcement officers and undermine existing investigations. Downes has insisted the information is necessary for him to mount a proper defense of his clients, John Taveras and Thaer Khashman, both of New York City. Taveras is scheduled to go on trial Aug. 31 and Sept. 1.

Taveras and Khashman are facing a long list of charges pertaining to the alleged smuggling of untaxed cigarettes between Shenandoah County and New York. The prosecution has accused them of buying the cigarettes in Shenandoah County, taking them to New York and selling them at a large profit, thanks to the difference in cigarette taxes between the two states. Virginia’s tax of 30 cents per pack is the lowest in the nation and New York state’s of $4.35 per pack ranks as the highest.

Downes has been seeking evidence that would show law enforcement officials improperly lured his clients into violating laws, a tactic known in legal circles as “entrapment.”

As the case has unfolded, Hupp has sealed and unsealed court files and on two occasions was preparing to order the closing of a hearing before deciding to keep it open. At one hearing, Campola asked Hupp to place a gag order on Downes to prevent him from talking to newspaper reporters, a motion Hupp rejected.

On Thursday, Hupp, at the request of Downes, ordered the unsealing of several files containing documents previously deemed too sensitive for disclosure.

One of them was a letter from Carter on Dec. 18 responding to an order from Hupp that the sheriff produce an accounting of all money flowing in and out of all undercover cigarette transactions between Jan. 1, 2011 and Dec. 31, 2013.

Carter’s letter stated that he was providing two sets of figures, one of which “includes all proceeds of contraband received by this undercover criminal operation.”

Carter cited proceeds totaled $11.347 million and a corresponding figure for expenses of $9.955 million, both of which dwarf the Sheriff’s Office’s annual budget of slightly more than $5 million.

The unsealed documents provide no breakdown of the proceeds and expenses, and Downes remained dissatisfied with Carter’s response.

In February, Downes filed a motion that Carter be held in contempt of court for failing to provide all the information called for in the order Hupp issued in December. Downes cited a vast disparity between the $9.995 million expense figure listed most recently by Carter and an expense figure of $112,896 that the sheriff had provided in a court filing months earlier in 2014.

In other documents, Downes also cited a major difference in the $11.347 million in proceeds appearing in Carter’s December letter to Hupp and a figure of $4.209 million listed in court documents months before.

Hupp denied Downes’ motion that Carter be cited for contempt of court. But the judge also ordered that Carter reply in writing to the issues Downes raised in his letter.

In an interview Tuesday, Carter said he had complied with the judge’s orders and attributed the disparity in the proceeds and expenses figures to differences in wording and dates contained in requests that Downes has filed at different times throughout the case.

“We gave him everything,” Carter said, “and we accounted for everything.”

Downes did not reply to a voice mail message seeking comment about the case.

Carter refused to comment on questions Downes raised in a letter to Campola on Jan. 30 about the possibility that the Sheriff’s Office or a dummy corporation acting on behalf of the agency could have bought real estate or personal property with money generated from undercover cigarette transactions.

“This information would be relevant . . . information that could be used for impeachment, bias, and motive of the police to unnecessarily perpetuate this reverse sting operation,” Downes wrote.

Campola did not reply to Downes’ letter. He refused to comment Tuesday, citing a desire to avoid pre-trial publicity.

Carter said the need to protect ongoing investigations prevented him from commenting on the questions raised by Downes about whether the Sheriff’s Office or any related entity was benefiting from money raised in the undercover operation.

Carter said he was concerned that the clashes in the courtroom over the specific charges of cigarette smuggling and failure to pay taxes were obscuring larger crime and public safety issues that explain why such cases are important to his agency.

Cigarette smuggling has been a big money-raising tool for organized crime, Carter said, adding, “It’s far more complicated than someone just picking up a load of cigarettes in a van, taking them home.”

Cigarette trafficking has been connected to narcotics and human trafficking, public corruption and murder for hire schemes orchestrated by organized crime figures, Carter said.

“The reasons they do this is because the penalties, quite frankly, aren’t very serious,” Carter said, referring to cigarette smuggling offenses. “The risk they take is minimal.”

Contact staff writer Joe Beck at 540-465-5137 ext. 142, or jbeck@nvdaily.com