Rockville Center Man and Long Island Company Plead Guilty to Cigarette Smuggling
BUFFALO, N.Y.– Joseph Ruda, 62, of Rockville Center, N.Y., and Ruda’s closely held corporation, Gutlove and Shirvint, Inc. of Long Island City, N.Y., pleaded guilty to cigarette smuggling before Chief U.S. District Judge William M. Skretny on February 3, 2014.
According to Assistant U.S. Attorney Anthony M. Bruce, Ruda was part of a scheme to ship untaxed cigarettes from New York to Kentucky. The cigarettes were then mailed to other states without the filing of proper forms with the Commonwealth of Kentucky and the states where the untaxed cigarettes were shipped. The scheme is in violation of the Jenkins Act which regulates mail-order sales of cigarettes. It resulted in the shipment of over 58,000 cartons of untaxed cigarettes to Kentucky with a corresponding loss to the Commonwealth of Kentucky of nearly $175,000 in excise taxes.
The defendant also pleaded guilty on behalf of his company, Gutlove and Shirvint, Inc. The company used the ruse of shipping the untaxed cigarettes to several smoke shops on the Cattaraugus Indian Reservation where they were immediately transferred to a second truck and sent back to the Peace Pipe Smoke Shop on the Poospatuck Indian Reservation on Long Island. The cigarettes were then resold in bulk to cigarette bootleggers who then sold them in New York City. This resulted in a loss to the New York State Office of Finance and Taxation of more than $1,440,000.
The scheme was developed after Gutlove and Shirvint entered into an agreement with the Phillip Morris Corporation to stop selling cigarettes to the Peace Pipe Smoke Shop, the company’s biggest customer at the time. Phillip Morris determined that Peace Pipe Smoke Shop was allegedly engaged in criminal activity and threatened to stop selling cigarettes to Gutlove and Shirvint if the corporation did not cease doing business with the Peace Pipe Smoke Shop.
Ruda faces six months in prison. Gutlove and Shirvint, Inc., faces a fine of up to $250,000. The company previously made restitution in the amount of $1,446,000 to New York State. In addition, Ruda and Gutlove and Shirvint, Inc. agreed to forfeit their profits from the scheme. This includes a $600,000 monetary judgment that both Ruda and his corporation are equally obligated to pay to the Government. Ruda will also personally forfeit $325,000 to the government, in cash, prior to his sentencing.
The pleas are the result of a joint investigating by the Bureau of Alcohol, Tobacco, Firearms and Explosives, under the direction of Resident Agent in Charge Frank Christiano, and by the New York State Department of Taxation and Finance, Criminal Investigations Division, under the direction of Chief Investigator Patrick Simet.
Ruda’s actions resulted in significant financial losses for both the Commonwealth of Kentucky and the State of New York, totaling over $1,615,000 in lost excise taxes. The scheme also highlights the ongoing issue of cigarette smuggling in the United States, a crime that continues to plague communities across the country.
The case is a reminder of the importance of enforcing laws and regulations related to tobacco sales, and the need for continued vigilance in combating cigarette smuggling and other forms of organized crime.
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Key Facts
- State: New York
- Category: White Collar Crime|Organized Crime
- Source: DOJ Press Release â†â€â€
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