A federal judge has tossed out key evidence in the case against a Kansas tobacco wholesaler and his business associates who are accused of trying to avoid paying $25 million in cigarette taxes to Oklahoma and Indian tribes.
U.S. District Judge Monti Belot ruled Thursday in Wichita that a Kansas Highway Patrol officer had no reason to suspect that the driver of a U-Haul van that was found to be loaded with cigarettes was violating any laws, and the search was therefore illegal.
"The officer testified that he was curious, and that does not rise to the level required by the Constitution," said Jack Focht, the attorney representing van driver Danny Davis.
The traffic stop in April 2006 outside of Coffeyville sparked a federal investigation that led to a 43-count indictment against Gary Hall, the owner of Sunflower Supply Co. in Galena, along with seven other people at the indicted companies. In addition to Sunflower, two other companies were indicted: Discount Tobacco Warehouse Inc. of Joplin, Mo., and Rebel Industries Inc. of Galena.
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Charges include conspiracy to divert cigarettes, mail and wire fraud, interstate transportation in aid of racketeering, transporting contraband cigarettes, and money laundering. The government is also seeking to seize assets from the defendants.
Focht had sought to suppress evidence against his client based on the Fourth Amendment protection against unreasonable searches. Sgt. Randall Trease had testified that he did not see Davis violate any law and stopped him simply to see if he was hauling a commercial load.
Belot noted in his ruling that after listening to the trooper's testimony, even the government conceded that the stop violated Davis' Fourth Amendment rights. Belot suppressed any statements made by Davis, along with all searches of him and the U-Haul under a warrant derived from the stop.
U.S. Attorney's Office spokesman Jim Cross downplayed the significance of the ruling, saying many motions are pending in the case.
"With respect to that one ruling, no, it does not mean the case is going away," Cross said.
Defense attorney Lee Thompson, who represents accountant Keith Dion Noe, said the ruling's effect on other defendants has not been determined.
Prosecutors say that from January 2005 through May 2007, the defendants defrauded Oklahoma and Indian tribes that share in the revenue from cigarette taxes.
Kansas and Oklahoma require a tax stamp on each pack of cigarettes representing the appropriate tax for the location in which the cigarettes are sold, according to the indictment. Prosecutors contend Hall's companies stamped cigarettes for sale at smoke shops in lower tax rate areas when they were sold at shops with higher tax rates.
In addition to the three companies, other defendants named in the indictment include Hall, of Galena; Thomas Anthony Grantham of Joplin; Noe, of Joplin; Justin Boyes of Galena; Davis, of Galena; Jeremy Hooker of Salina, Okla.; James Coble of Galena; and Justice Michael Berry of Joplin.
All have pleaded not guilty.