ALBANY, N.Y. — An investigation by Homeland Security Investigations (HSI) Albany, in coordination with foreign and domestic law enforcement partners, led to the Dec. 4 sentencing of three men from North Carolina in connection with a scheme to smuggle cut rag tobacco into Canada from the United States.
Jeffrey Doctor, age 52 of Charlotte, was sentenced to 14 months in prison, Samuel Baker, age 46 of Laurinburg, was sentenced to 30 months imprisonment. Edgar M. Baker, age 51 of Southern Pines, was sentenced to three years’ probation.
HSI Buffalo Special Agent in Charge Erin Keegan made the announcement alongside United States Attorney Carla B. Freedman, of the Northern District of New York; Harry Chavis, Acting Executive Special Agent in Charge of the Internal Revenue Service, Criminal Investigation, New York Field Office; and the Sûreté du Québec in Canada.
“Today’s sentencings underscore the unwavering importance of cross-border coordination in dismantling transnational criminal organizations seeking to evade government regulations and exploit the American public,” said Keegan. “For years, HSI Albany and our law enforcement counterparts have pursued every aspect of this sweeping and far-reaching criminal scheme. I commend our law enforcement and prosecutorial partners, both foreign and domestic, for their continued pursuit of justice on behalf the public.”
Keegan praised the outstanding investigative coordination of the IRS-CI’s New York Field Office, the Canadian Border Services Agency and the Sûreté du Québec, and the U.S. Attorney’s Office for the Northern District of New York.
As part of their previously entered guilty pleas, Doctor and Samuel Baker each admitted that from approximately 2013 to 2016, they worked with co-conspirators to acquire cut rag tobacco and smuggle it into Canada, where it was used to make contraband cigarettes. Members of the conspiracy sold the contraband cigarettes, making substantial profits by avoiding taxes and duties, and used some of their profits to buy more cut rag tobacco that they sent into Canada. Cut rag tobacco is tobacco cut into fine strips and used to make smoking tobacco.
Funds to purchase the cut rag tobacco were sent from Canada, often through the Northern District of New York, to North Carolina. Once purchased, the cut rag tobacco was delivered to warehouses and buildings in the Northeastern United States, including on the St. Regis Mohawk Akwesasne Reservation, where it was staged for smuggling into Canada.
These sentences are the result of a multi-year cross-border undercover investigation, named Project Mygale, targeting transnational criminal organizations involved in contraband tobacco smuggling, drug trafficking and international money laundering. In 2016, Project Mygale culminated with coordinated enforcement activities executed simultaneously by over 700 law enforcement officers in both the U.S. and Canada executing over 70 search and arrest warrants.
Samuel Baker admitted he laundered more than $19 million as part of the scheme, and previously agreed to an administrative forfeiture of $738,442 in proceeds from his crime. He was also fined $100,000.
Doctor admitted that he obtained more than $503,850 in unrecovered proceeds, which he agreed to forfeit as a money judgment. He was also issued a $503,860 money judgment.
Edgar Baker previously pleaded guilty to misprision of a felony, for failing to report the conspiracy to authorities once he learned about it. He was also fined $75,000.
Senior United States District Judge Frederick J. Scullin, Jr. also imposed a two-year term of post-imprisonment supervised release on Doctor and Samuel Baker.
Carey Terrance, another co-conspirator involved in the same scheme, was previously sentenced to time served, to pay a $350,000 fine and previously agreed to an administrative forfeiture of $221,860.20 in proceeds from his crime.