S.C. businessmen charged with tax fraud
Posted February 5, 2010 5:22 p.m. EST
Updated February 5, 2010 9:52 p.m. EST
Raleigh, N.C. — Two South Carolina businessmen were arrested in Raleigh Thursday on felony charges following indictments handed down by a Wake County grand jury.
John M. June, Jr., 37, of 240 Journeys End Road, Darlington, S.C., and Larry Phillips, 62, of 6902 Flat Creek Rd., Kershaw, S.C., were each charged with one count of attempting to evade or defeat tax, two counts of obtaining property by false pretenses and one count of conspiracy to commit obtaining property by false pretenses.
The indictments allege that June and Phillips, acting as principals of and agents for Tobaccoville USA, Inc. and J & E Distributors, Inc. overstated sales of cigarettes for 2005 and understated sales of cigarettes for 2006 to take advantage of two distinct but intertwined changes in North Carolina.
The laws took effect Sept. 1, 2005 – the increase in the Tobacco Products Excise Tax – and Jan. 1, 2006 – the end of the allocable share release provision under the North Carolina Tobacco Reserve Fund and Escrow Compliance Statutes.
The indictments also allege that June and Phillips fraudulently conspired to obtain money, a release of money, a fraudulently reduced tax liability, and non-contraband status of its cigarettes from the state of North Carolina and others, valued at approximately $6,030,085.
June and Phillips appeared before a Wake County magistrate and each was released after posting a $100,000 bond.
The charges against these individuals resulted from an investigation by special agents with the Department of Revenue’s Criminal Investigations section, the State Bureau of Investigation and an investigator with the Wake County District Attorney’s Office.