SEATTLE — A Port Orchard man is in federal custody on charges that his wholesale non-cigarette tobacco trading company evaded excise taxes when he bought and sold products illegally, reported The Associated Press on March 7.
The Associated Press reported that Hyun Seung Kim, owner of CP Trading Company since 2009, was charged with wire fraud and money laundering in a scheme that federal agents said resulted in about $1.2 million in unpaid excise taxes.
Kim made his initial court appearance last week. An email message sent to his lawyer on March 7 seeking comment was not returned, reported The Associated Press.
Internal Revenue Service Special Agent Joseph Lopez said in an affidavit in a criminal complaint filed in federal court that an investigation and surveillance found that Kim would often pay cash when he bought tobacco products from the Riverside Smoke Shop on the Puyallup Indian Reservation.
He said Kim would then deliver the products to gas stations and smoke shops in the Puget Sound area. The shops would usually pay cash for the goods, The Associated Press reported.
When Kim used checks for the transactions, he deposited the funds in his company’s bank account and reported the transactions to the Washington State Department of Revenue, Lopez said.
Under state law, Kim was required to pay taxes on the tobacco products. The rate is based on the product — one rate for snuff, another rate for cigars.
When the tobacco products were bought or sold with cash, it was not reported to the state, Lopez said.
His company paid $410,002 in excise taxes from 2009-13, Lopez said. But investigators who watched Kim move goods around and tallied boxes of products in his garage estimated that he should have paid about $1.2 million in excise taxes, Lopez said.
When agents searched his home on Feb. 27, they found about $70,000 worth of tobacco products and about $100,000 in cash, Lopez said.
Kim gave a statement to the agents during the search, Lopez said. Kim said the company receives checks from retailers for about 15 percent of the tobacco sales, and receives cash for 85 percent of sales.
The cash receipts were not reported to the state department of revenue, Kim allegedly said in his statement, the Associated Press reported.
