January 6, 2011 - As part of a plea arrangement entered this morning in Wake County (North Carolina) Superior Court, two South Carolina cigarette distributors agreed to pay $6.5 million in restitution and fines to settle a protracted and complicated tax fraud case that could have resulted in prison time.
Larry Phillips, 62, and John M. June Jr., 38, each entered Alford pleas to two counts of obtaining property by false pretense. June and Phillips, who operated J & E Distributors Inc.and Tobaccoville USA Inc., were accused of trying to avoid a 2005 state cigarette tax increase in a complicated scheme in which sales records and invoices were created to show they sold 958,000 cartons of cigarettes in August 2005 shortly before the tax jumped from 50 cents per carton to $3.00 per carton. Prosecutors said the men overstated their 2005 cigarette sales and understated their 2006 sales to sidestep the tax increase.
Under the arrangement, Phillips and June did not admit guilt, but acknowledged that prosecutors had sufficient evidence to bring convictions.
Reference: Wake schools to get $3m windfall from cigarette tax case settlement by Anne Blythe - Staff writer, newsobserver.com, 1/6/2011.
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