Attorney General Hardy Myers and the Oregon Tobacco Tax Compliance Task Force today announced the resolution of a tobacco tax evasion case involving United Trading Company, Inc. (United), an Oregon tobacco products distributor. United owners Francisco and Nicolasa Osegueda pleaded guilty to state Racketeering charges, which allege evasion of over $12,000 in state taxes and the illegal sale of "gray market" cigarettes.
The case involved an investigation by officials from the Oregon State Police, Oregon Department of Justice, U.S. Immigration and Customs Enforcement and the Oregon Department of Revenue. During the course of the inquiry, officers determined United sold untaxed cigarettes to various retail stores throughout the Portland and Salem areas. In addition, they imported or caused to be imported, direct from Mexico, cigarettes that are illegal to sell in the United States. These cigarettes are known as "gray market" cigarettes *. The defendant also sold these cigarettes to retailers with Oregon tax stamps attached - which also constitutes an illegal act.
Finally, the Defendants filed false tax reports with the Oregon Department of Revenue. The reports hid the true amount of tax owed based on false reporting of the quantity and brand of cigarettes sold.
The Oseguedas pleaded guilty, in Marion County Circuit Court, to one charge of Racketeering. The state agreed to allow the husband and wife to be sentenced to optional probation for a period of 5 years and credit for time served, in lieu of a prison sentence. Both have already served more than 90 days in jail as they fled the state to avoid prosecution and were located and arrested in Las Vegas. They have been in custody since that time.
They have further agreed to pay restitution of $24,775 and a $5,000 fine. United Trading Company was dissolved by the court and the defendants have been divested of their interest in the company. They are prohibited from participating in any tobacco related business and their cigarette distribution licenses were revoked. Furthermore, they are restrained from applying for or obtaining a tobacco-related license in any state during their probation.
The Oregon Tobacco Tax Compliance Task Force was created by the 2001 State Legislature to investigate and bring to justice individuals and organizations engaged in the distribution and sales of untaxed and illegal tobacco products. The state estimates that between $15 million and $100 million or more are lost annually to illegal tobacco-related activities in the marketplace. Task force members include the Oregon State Police, the Oregon Department of Justice, and the Oregon Department of Revenue, as well as a number of federal agencies including U.S. Immigration and Customs Enforcement, the U.S. Department of Justice and the Bureau of Alcohol, Tobacco, Firearms and Explosives. The Task Force is the only one of its kind in the U.S.
Kevin Neely, Justice, (503) 378-6002