Up in Smoke Owner Convicted of Mail Fraud and Money Laundering

image06-11-2014 13.16.58It was reported by the Justice Department, that Michael Butler, the owner/operator of Up in Smoke, an Anchorage tobacco shop, “was convicted by a jury on charges of mail fraud, conspiracy to commit money laundering, and conspiracy to make false statements regarding the distribution of cigarettes.”

The convictions come as the result of actions by Butler and his co-conspirators Kyong Hee Kim, Sun Sims, Kimberly Sims, Jae Ho Lee, Jae Gak Lee, and Jerry Lee. Together, the group evaded the payment of the cigarette excise tax leveled by the municipality of Anchorage.

Butler, along with Sun Sims, used tobacco shops, Golden Eagle Tobacco, in Kenai, and Longmere Lake Grocery and Tobacco in Sterling to purchase tax exempt cigarettes and skirt the municipality of Anchorage tax.

After purchasing cigarettes for these two businesses outside the Anchorage city limits, those cigarettes were sold within the municipality tax free by businesses owned by Butler’s co-conspirators. The money was converted to cashiers checks in the names of the Kenai and Sterling businesses then used to purchase additional tax exempt cigarettes.

The tobacco businesses in Anchorage were listed by the Justice Department as follows:

  • Up in Smoke, owned and operated by Michael Butler and Sun Sims and managed by Kimberly
    Sims
  • Mini Stop, owned and operated by Kyong Hee Kim
  • Arctic/Tudor Shell and Mountain View Shell, owned and operated by Insook Baik
  • Party Time Liquor, owned and operated by Jae Gak Lee
  • Cheap Smokes, owned and operated by Jae Ho Lee
  • Lucky Seven Foodmart, owned and operated by Jerry Lee
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“Like the American tax system, taxes levied by the Municipality of Anchorage are designed to
provide vital government services to our people. Tax fraud victimizes honest citizens who are paying their fair share,” said Special Agent in Charge Teri Alexander of IRS Criminal Investigation. “This verdict represents the commitment of the Department of Justice and the IRS to protect the integrity of not only our national tax system, but also that of our local communities.”

According to the Justice Department, “Mail fraud carries a sentence of up to 20 years imprisonment and fines up to $250,000. Conspiracy to money launder carries a sentence of up to 20 years imprisonment and fines up to $500,000. As part of their pleas and the guilty verdict of Michael Butler, the defendants also face criminal forfeitures of the proceeds of the crime.”