US authorities have sentenced 48-year-old Nevada resident Hyung II Kwon to 26 months in jail. Kwon led a scheme to defraud Washington State of over $10 million in tobacco excise taxes. He also cheated the US Internal Revenue Service (IRS) out of $85,000 of federal income taxes.
Kwon secretly owned the company TK Mac, which ran two smoke shops in Washington. He carried out two fraud schemes during 2009-17. In both the schemes, two tribal smoke shops located on the Puyallup reservation – one of the Native American tribal nations recognized by the US government – sold large quantities of tobacco products to TK Mac, which was the non-tribal distributor. TK Mac made most of the payments in cash but did not report the purchases to the state, evading millions of dollars in excise taxes.
In order to then resell the products for cash without inviting scrutiny by the authorities, Kwon and his co-conspirators ran a money laundering scheme during 2013-17. The tribal tobacco suppliers wrote checks to falsely show that they had purchased tobacco products from TK Mac. TK Mac then provided the suppliers equivalent sums of money in cash, with no tobacco products actually being transferred. Overall, these schemes led to a loss of more than $10 million for Washington State.
Kwon’s co-conspirators have either already been sentenced or are set to be sentenced in the near future. Meanwhile, in addition to serving his jail sentence, Kwon will have to pay $10,000 as administrative fine, $5,098,249 in restitution to the Washington State Department of Revenue, and additional restitution to the IRS.
Source: US Department of Justice