Tobacco business busted for tax fraud
A Marietta tobacco business was found guilty Friday in Washington County Common Pleas Court of evading taxes on cigarette sales.
Acting as the secretary for Tobacco Road LLC, George F. Joseph Jr. entered a guilty plea on behalf of the company to a fourth-degree felony count of possessing cigarettes not bearing stamps.
According to Washington County Assistant Prosecutor Kevin Rings, Tobacco Road, at 228 Pike St., was selling cigarettes that it had rolled on-site using loose tobacco and was not collecting the required taxes on the cigarettes.
“An agent (from the Ohio Department of Taxation) went in and saw a number of cigarettes did not have the proper stamps,” said Rings. “The purpose was to sell them at a discounted rate and no tax was being taken.”
The business had been offering a carton of their store-rolled cigarettes for $24.95 and half-cartons for $12.95, said Rings. That is approximately half of what the same quantity of cigarettes would typically cost, he said.
Joseph had originally been indicted as an individual on three fourth-degree felony charges pertaining to the store’s sale of cigarettes.
“He is an owner. I believe there is more than one owner,” Rings said of the store.
Because Joseph entered a guilty plea on behalf of the corporation instead of as individual, the crime is subject to a higher fine.
An individual can be fined up to $5,000 for a fourth-degree felony. However, such fines are rarely levied against individuals, said Rings.
The corporation can be fined up to $10,000, he said.
Sentencing proceedings to order a fine will be held after related charges at Marietta Municipal Court had been resolved, said Washington County Common Pleas Court Judge Randall Burnworth.
As part of the plea agreement, Joseph will plead guilty in Marietta Municipal Court to a first-degree misdemeanor charge of possession of criminal tools in relation to three roll your own tobacco machines which the store had been using to produce the illegally sold cigarettes.
“The machines will be subject to forfeiture?” asked Burnworth.
Rings confirmed that the plea agreement included the forfeiture of the machines to the state.
“The defense claims these machines are worth $35,000 new,” he said.
There is no way to tell how much the state lost in unpaid taxes because of the scheme, said Rings.
However, they were able to collect unpaid taxes on all the products on the shelves when the store was investigated.
The Pike Street store is no longer open, said Rings.