CHARLOTTE, N.C. -- A federal jury in Charlotte on Monday convicted two men for their roles in a conspiracy to pay more than $9.3 million in cash for over 486,000 cartons of Marlboro cigarettes they believed had been stolen.
Kamal Zaki Qazah, 33, of Columbia, and his uncle, Nasser Kamal Alquza, 57, of Mount Pleasant, S.C., were also found guilty on money laundering charges.
Qazah was acquitted on two of three counts of receiving or selling stolen property and acquitted on two counts of transporting stolen property.
The undercover investigation was launched in 2009 when federal and state law enforcement authorities learned that Khaled Ibrahim, who operated mobile telephone stores in Charlotte, was interested in purchasing cigarettes at prices far below market wholesale value for resale in stores in the Carolinas.
The illegal sale of cigarettes was recognized in 2009 as a law-enforcement problem throughout the United States. Criminal organizations were known to purchase large quantities of cigarettes from low-tax states such as North Carolina and South Carolina and illegally transport them to high-tax-rate states and sell them without paying state taxes to make a considerable profit.
Qazah and Alquza were among 11 men indicted in 2011 and accused of conspiring to pay undercover agents millions of dollars for hundreds of thousands of cartons of cigarettes.
Qazah and Alquza owned and operated convenience stores, Subway brand franchises, a used-car lot and other businesses in and around Columbia and Charleston, prosecutors said. Both men immigrated to the United States from Jordan in the Middle East, where they maintain family and business relationships. They are now United States citizens.
Prosecutors alleged that through their businesses in South Carolina and Jordan, Qazah and Alquza and their family members had ready access to substantial amounts of cash, a network of retail businesses and associates willing to purchase illegally obtained cigarettes at prices substantially below market value and an ability to launder the proceeds of their illegal activity through their businesses and bank accounts in Jordan.
Qazah broke down on the witness stand, burying his face in his hands, while telling the jurors that he had a wife and two young children.
He testified that nobody at first told him the cigarettes had been stolen. He said he thought the cigarettes might have been counterfeit or produced in other countries.
Then, when told the cigarettes had been stolen, Qazah said he didn’t believe it. “No one can steal that many cigarettes,” he told the jurors.
During closing arguments Monday, Assistant U.S. Attorney Michael Savage challenged Qazah’s testimony that he didn’t know the cigarettes were stolen. There is “no doubt at all,” the prosecutor told the jurors, that the defendants agreed to sell stolen cigarettes.
“You can’t stick your head in the sand and ignore what is obvious,” Savage said
Greed took over, Savage said. He flashed photographs of stacks of money on the monitors in front of the jurors.
“That’s what $1 million looks like,” Savage said. “Nobody gives $1.3 million to somebody they don’t believe.”
Defense attorney Richard Harpootlian told the jurors there was no evidence that Qazah knew he was trafficking in stolen cigarettes.
“There was no stolen-cigarette ring,” Harpootlian said. “It’s all a lie … He’s not guilty of what the government has charged him with.
“The government created this crime. They started it from scratch. There was no crime. This was a made-up scenario by ATF.”
Alquza’s attorney, Jack Swerling, argued that there was no evidence that his client conspired with anyone. “Mr. Alquza had no reason to believe the cigarettes were stolen,” he said.
Swerling reminded the jurors what Qazah told authorities when he was arrested: “My uncle had nothing to do with the cigarettes.”
Qazah was accused of talking about how to launder the large amount of cash the agents were receiving for their stolen cigarettes. Prosecutors said he offered to introduce them to his uncle who owned several businesses and could launder $100,000 a month for 10 months – a total of $1 million.
Qazah explained that the agents would give cash to his uncle who would then give the agents checks from five different stores, according to the indictment. The uncle would charge 6 percent as his laundering fee. Qazah offered to launder $50,000 a month using his car lot and two gas stations, prosecutors said.
Some of the other allegations outlined in the indictment:
• Qazah purchased 37,860 cartons of cigarettes for $825,655 in June 2011. He resold most of the cigarettes for about $1,187,040 in cash. He made a profit of about $360,000.
• In September 2011, undercover agents sold Qazah 48,600 cartons of cigarettes. He paid the undercover agents $1,093,500 in cash for the cigarettes.
• The undercover agents told Qazah in a text message in November 2011 that they would soon have 82,600 cartons of cigarettes available for his purchase and that they expected a payment of $1,858,950.
• Qazah replied in a text message that he would have between $1.3 million and $1.5 million available immediately and the rest a week later. Qazah was arrested before the sale of the cigarettes went down. Agents searched Qazah’s residence and found $1,299,990 in a cardboard box in the garage.