A federal court jury has convicted a South Carolina man of participating in a conspiracy to manufacture 500 million untaxed cigarettes on the St. Regis Mohawk Reservation and then smuggle them into Canada.
William D. Humphries, 67, Lake City, S.C., was found guilty Friday following a two-week trial in U.S. District Court, Syracuse, of 44 felony counts, including interstate travel in aid of racketeering, a wire fraud conspiracy to defraud Canada of tax revenue, a conspiracy for the unlawful manufacture of tobacco products and money laundering, according to a prepared statement issued by Richard S. Hartunian, U.S. attorney for the Northern District of New York.
Mr. Hartunian said that from 2005 to 2006, Mr. Humphries, a tobacco broker and wholesaler, conspired with others on the reservation to defraud Canada of tax revenue. In 2005, Mr. Humphries began working with an unspecified major manufacturer of cigarettes that was operating on the reservation without the federally required bond and permit. Mr. Humphries provided Canadian Blend cut-rag tobacco and cigarette-making supplies to the unlicensed manufacturer. This tobacco was used to manufacture cigarettes and subsequently taken into Canada without the payment of any required taxes to Canada.
Between the summer of 2005 and May 2006, Mr. Humphries supplied the unlicensed manufacturer with about one load of cut-rag tobacco per week, Mr. Hartunian said. In all, Mr. Humphries supplied about 44 loads of tobacco, with each load producing 13.2 million contraband cigarettes, causing a significant tax loss to Canada.
Mr. Hartunian said the unlicensed manufacturer was also engaged in a conspiracy to distribute marijuana smuggled in from Canada and then distributed throughout the United States. The proceeds of that marijuana distribution were used to fund the cigarette smuggling conspiracy, which used the same smuggling routes used to bring marijuana into the United States from Canada.
In February 2006, after delivering a load of tobacco to the unlicensed manufacturer on the reservation, Mr. Humphries was stopped on the reservation for a traffic infraction. Law enforcement seized about $88,000 in American currency paid to Mr. Humphries for the sale of tobacco. A narcotics detection canine alerted to the currency and officers were able to smell marijuana on the money. At trial, witness testimony established that the money found on Mr. Humphries was the proceeds from marijuana distribution, according to Mr. Hartunian.
In May 2006, the unlicensed manufacturers dealing with Mr. Humphries were arrested on federal marijuana charges and thereafter cooperated with prosecutors. However, Mr. Humphries continued to sell tobacco and cigarette-making supplies to other unlicensed cigarette manufacturers on the reservation. Mr. Humphries continued to receive payments in the form of proceeds of marijuana sales from unlicensed manufacturers to whom he had sold Canadian blend tobacco and supplies, Mr. Hartunian said.
In an attempt to disguise the source of the money, which Mr. Hartunian said were criminal proceeds, Mr. Humphries began taking substantial sums of American money to the Mohawk Bingo Palace on the reservation. In recorded conservations with a government informant, recordings of which were played for the jury, Mr. Humphries was heard explaining that he was inserting large sums of cash into electronic bingo machines and then repeatedly cashing out at the cashiers window in an attempt to remove the smell of marijuana from the money he retained.
According to federal court documents, Mr. Humphries was released on his own recognizance Friday following the verdict. He is due to be sentenced March 10.