Anthony Cosica Sentenced in $48M Cigarette Tax Fraud

COVINGTON, Ky. — The final chapter in a sprawling $48 million cigarette tax fraud operation closed Thursday as Anthony Cosica, 54, of Pinetop, Ariz., was sentenced to 24 months in federal prison. The ruling marks the end of a years-long investigation into a domestic and international conspiracy that exploited mail and internet channels to flood all 50 states with untaxed tobacco.

Cosica was the last of nine defendants to be sentenced in the scheme, which ran from 2008 to 2013 and systematically evaded federal, state, and local excise taxes. The U.S. District Judge David L. Bunning handed down the sentence after a trial that exposed a labyrinthine network of shell businesses, forged shipping labels, and transnational smuggling. Charges included conspiracy to commit mail fraud, wire fraud, money laundering, and violations of the PACT Act — the first such prosecution under the 2010 law.

The ringleader, John Maddux Jr., 56, formerly of Russell, Ky., orchestrated the operation through online and mail-order outlets that sold discounted cigarettes. He partnered with two Russian nationals, Alexander Sergeev and Mikhail Serov, who shipped cartons directly from Russia to U.S. customers. The packages were falsely labeled as ‘gift items’ to bypass U.S. customs and postal regulations — a direct violation of the PACT Act, which requires tobacco vendors to register and report sales for tax collection.

Maddux not only supplied his own customers but fulfilled orders for other co-conspirators running parallel businesses. The entire scheme was built on deception: no taxes paid, no reporting filed, and millions in illicit profits. Over five years, the group dodged approximately $48 million in tobacco excise taxes, draining public coffers across the country.

Sentences for the defendants reflect the scale of their roles: John Maddux received 10 years; Christina Carmen, formerly of Russell, Ky., 60 months; David H. White, formerly of Ashland, Ky., 24 months; Julie Coscia, of Pinetop, Ariz., 36 months; Michael E. Smith, of Escondido, Calif., 42 months; Alexander Sergeev, 46 months; Mikhail Serov, 46 months; and Barbara Routh, of Prospect, Ky., two years’ probation. Under federal law, all imprisoned defendants must serve at least 85 percent of their sentences.

“This case represents a milestone in enforcement of the PACT Act,” said Kerry B. Harvey, U.S. Attorney for the Eastern District of Kentucky. “Mr. Cosica and his co-conspirators devised a complex criminal enterprise of international proportions which cost public treasuries millions of dollars. Congratulations to the law enforcement agencies and our trial team for their superb work in unwinding this criminal scheme.” The probe was led by ATF, IRS-Criminal Investigations, U.S. Department of Labor OIG, and FDA, signaling a coordinated federal crackdown on tobacco trafficking networks.