Puyallup Tribal smoke shops’ president sentenced for scheme to avoid millions in taxes
A man who is president of three Puyallup Tribal smoke shops was sentenced Friday in U.S. District Court in Seattle for a money-laundering scheme designed to evade millions of dollars in state taxes, the U.S. Attorney’s Office announced.
Anthony Edwin Paul, 43, was sentenced to 14 months in prison. He also was ordered to pay $1,764,818 in restitution to the Washington State Department of Revenue and a $5,000 fine. He pleaded guilty to conspiracy to commit money laundering in June.
Paul conducted the scheme with TK Mac, a non-tribal tobacco distributor, according to a news release. The owners of TK Mac, Hyung Il Kwon and Tae Young Kim have pleaded guilty to their roles in the crime. An employee at one of the smoke shops, Theodore Kai Silva, also pleaded guilty.
U.S. District Judge James Robart will sentence Kwon, Kim and Silva in January.
“This sophisticated scheme to avoid state tobacco taxes harms all our residents by cutting into state funds used to pay for healthcare and treatment for tobacco related illnesses,” U.S. Attorney Nick Brown said in a news release. “The scheme allowed non-tribal tobacco vendors to have a sales advantage over other retailers — encouraging tobacco use and boosting their profit while they avoided paying state taxes.”
Between 2009 and 2017, Paul was president of three smoke shops on the Puyallup reservation that sold “significant” quantities of tobacco products to TK Mac, a non-tribal tobacco distributor, according to a news release. The sales were mostly cash, and TK Mac did not report the purchases to the state, avoiding millions of dollars in excise taxes.
TK Mac resold the products, creating large deposits of cash that would have triggered state scrutiny of its tobacco business. To avoid scrutiny, the smoke shops wrote checks to TK Mac between 2013 and 2017 as if the shops had purchased tobacco products from the non-tribal store.
Instead, TK Mac provided the smoke shops with large amounts of cash equal to the checks. No tobacco changed hands, and TK Mac received an excise tax credit.
The U.S. Attorney’s Office said Washington State suffered losses of nearly $3.86 million as a result of the cash-for-check scheme. Paul’s overall fraud scheme caused the state to incur losses of several more million dollars.
According to the release, Paul had an interest in the success of TK Mac, evidenced by the fact he made loans totaling nearly $2 million to the owners of TK Mac, Kwon and Kim.
Following the indictment of Paul’s conspirators, the government seized more than $5 million from Kwon and Kim.
Editor’s note: A previous version of this story incorrectly described Anthony Paul’s relationship to the smoke shops on the Puyallup reservation.
This story was originally published December 14, 2021 at 2:16 PM.
