A Kentucky judge has sentenced the last of nine defendants in a $48 million domestic and international cigarette tax fraud scheme.
U.S. District Judge David L. Bunning on Thursday in Covington sentenced Anthony Cosica, 54, of Pinetop, Ariz., to 24 months in federal prison, according to the U.S. Attorney’s office in Lexington.
Eight other defendants, including three from Eastern Kentucky and two from Russia, have already been sentenced on charges including conspiracy to commit mail fraud, wire fraud and money laundering and violations of the PACT Act.
The case marks the first prosecution in the nation for violations of the PACT Act, a 2010 federal law enacted to prevent trafficking in untaxed cigarettes.
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According to court documents and evidence presented at trial, from 2008 to 2013, the defendants devised a scheme that defrauded federal, state and local governments across the country out of cigarette excise taxes totaling about $48 million.
The defendants operated mail order and Internet businesses engaged in the delivery sales of untaxed cigarettes to customers in all 50 states.
The leader of the conspiracy, John Maddux Jr., 56, formerly of Russell, operated mail order/online businesses that sold the cigarettes at discount prices. Maddux executed the scheme by forming a business with two Russian nationals, Alexander Sergeev and Mikhail Serov. Sergeev and Serov shipped cigarettes from Russia directly to customers of Maddux and his co-conspirators.
The previous defendants received the following prison sentences: Maddux, 10 years; Christina Carmen, formerly of Russell, 60 months; David H. White, formerly of Ashland, 24 months; Julie Coscia, of Pinetop, Ariz., 36 months; Michael E. Smith, of Escondido, Calif., 42 months; Sergeev, 46 months; Serov, 46 months; and Barbara Routh, of Prospect, two years’ probation.
Under federal law, all defendants must serve at least 85 percent of their prison sentence.