A Rockville Centre man has pleaded guilty to smuggling cigarettes from New York to Kentucky, causing New York to lose more than a $1 million in taxes, according to the U.S. Attorney’s Office.
Joseph Ruda, 62, admitted to a scheme where he shipped more than 58,000 untaxed cigarettes cartons to Kentucky, which were then mailed to other states. Kentucky lost nearly $175,000 in excise taxes due to the smuggling. The scheme was in violation of the Jenkins Act, which regulates mail-order sales of cigarettes.
Ruda also pled guilty on behalf of his company, Gutlove and Shirvint, Inc., which 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, according to a U.S. attorney release. The cigarettes were then resold in bulk to bootleggers who then hocked 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.
Ruda faces six months in prison at his sentencing, scheduled for Feb. 3.
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.
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 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.