A federal judge on Friday threw out an indictment against a Kansas tobacco wholesaler and business associates who were charged with trying to avoid paying $25 million in cigarette taxes to the state of Oklahoma and Indian tribes.

U.S. District Judge Monti Belot in Wichita ruled that the defendants had met their burden in showing indictment against them was unconstitutionally vague and should be dismissed.

Belot also derided the government’s case — saying it was based on the government’s opinion and not on any federal, Kansas or Oklahoma statute.

The decision clears all charges against Gary Hall, the president and owner of Sunflower Supply Co. in Galena, along with seven other people. Also cleared were Discount Tobacco Warehouse Inc. of Joplin, Mo., and Rebel Industries Inc. of Galena.

Charges were dismissed without prejudice, meaning prosecutors could seek another indictment. They also could appeal Belot’s decision, but the judge “strongly discouraged” prosecutors from seeking reconsideration.

“We will have to review his action and evaluate it,” said Jim Cross, spokesman for the U.S. attorney’s office in Kansas.

Jim Pratt, one of the defense attorneys representing Hall, said they still were reviewing the decision and had no immediate comment.

The 43-count indictment filed in October 2008 included charges of conspiracy to divert cigarettes, mail and wire fraud, record-keeping violations of the Cigarette Trafficking Act, interstate transportation in aid of racketeering, transporting contraband cigarettes, conspiracy to commit money laundering, money laundering, and engaging in unlawful monetary transactions. The government also had sought asset forfeiture.

The indictment alleged that from January 2005 through May 2007, the defendants defrauded the state of Oklahoma and Indian tribes that share revenue from cigarette taxes. Prosecutors contended Hall’s companies stamped cigarettes for sale at smoke shops in lower tax rate areas when they actually were sold at shops with higher tax rates.

Belot noted in his 43-page decision that the cigarettes had tax stamps and that records were made and maintained. Those records also were accurate, the judge said.

“The crimes charged are founded not upon facially-false entries on records but instead upon the government’s and its case agent’s opinion regarding what the records should have shown: the ‘ultimate destination’ of the cigarettes,” Belot wrote.

But such language was nowhere in any federal, Kansas or Oklahoma statute or regulation during the relevant period. Belot said “especially troubling to the court” was the government’s admission that it had decided the term “destination” really means “ultimate destination” — in other words, the place where the cigarettes were sold to the consumer — by its use of a dictionary definition.

Belot said the court had never encountered such an approach, saying it would mean that if the court allowed the jury to hear the agent’s opinion then it would have to instruct the jury on the government’s interpretation of a statute by inserting a dictionary definition.

The investigation started in 2006 after the Kansas Highway Patrol stopped a vehicle in Coffeyville that was allegedly carrying cigarettes worth more than $200,000 without appropriate tax stamps. Federal and state agents raided Sunflower and Rebel Industries in May 2007.

In October 2009, Belot also tossed much of the evidence after ruling that a Kansas Highway Patrol officer had no reason to suspect the driver of a U-Haul van that was found to be loaded with cigarettes was violating any laws, and the search was therefore illegal.


A judge said Wednesday that if prosecutors take Sam Holton to trial on double murder charges, they will do so without most of the evidence seized at his house — and his confession.

Sedgwick County District Judge David Kaufman ruled that Wichita police illegally entered Holton’s home in Mulvane to arrest him in connection with two killings last Thanksgiving.

In doing so, Kaufman said, detectives tainted any evidence they would later obtain, including Holton’s admission that he was involved in the shooting deaths of Adrian Jackson and Jessie Foust near Central and Hillside in Wichita.

Kaufman said detectives entered the Mulvane house without a warrant or consent of the residents and illegally arrested Holton, 18.

The judge suppressed property from the dead couple’s home found inside Holton’s house.

Kaufman also suppressed evidence police took from the house of Trevor Cox, 17, after Holton took detectives there. That includes the   murder weapon: a 9mm handgun retrieved from Cox’s  closet.

Kansas law states residents must give explicit permission to police before they enter a home, Kaufman said.

“They weren’t asked to come in, and they didn’t ask if they could come in,” Kaufman said.

Sal Intagliata, Holton’s lawyer, asked the judge to suppress the evidence during a hearing last week. Intagliata said that by entering the house without permission, Wichita police violated search and seizure protections under the Fourth  Amendment of the U.S. Constitution.

After such a violation, all further evidence and statements become suspect. Courts have compared it to picking “fruit from a poisonous tree.”

Kaufman agreed.

Although the judge ruled Holton made a voluntary confession at police headquarters, and that police acted properly in interviewing him, the illegal entry made the subsequent statements inadmissible during trial.

Prosecutor Marc Bennett, however, still has statements made to police by Joshua Duque, 16, who is also charged with murder and robbery in the case. Duque has been ordered to stand trial as an adult.

Holton’s trial was set for next week, but Bennett said he will ask for a continuance to pursue his options.

But Bennett is left with little more from the house in Mulvane than a pair of Jackson’s earrings and a piece of paper listing other evidence from the dead couple’s house. Holton’s mother, who put together the list, gave those items to police  before they went inside.

Bennett had argued that Holton’s mother invited police into the house. But Rebecca Flagler testified at last week’s hearing that she did not give detectives permission to go inside.

Kaufman pointed out that while detectives said a supervisor told them they had consent to search the house, no one testified who it was that gave them permission.

Jackson, 26, and Foust, 25, were found dead by a family member on Thanksgiving 2009. Their children, ages 4 and 1, were unharmed and had apparently been left overnight with the bodies of their slain parents.

Holton and Duque gave police conflicting accounts of what happened, according to testimony from detectives in previous court hearings.

Detectives testified that Holton said he and Cox went to the house on North Chautauqua the night before Thanksgiving. Holton said Cox shot Jackson multiple times and then ordered Holton to shoot Foust to stop her screaming.

The same detectives said Duque told them he went to the house with Holton. Duque said he took a gun into the house but never fired it. Duque said he heard the gunshots from another room.

Cox pleaded guilty to aiding a felon and misdemeanor theft.

For story click here.

The Wichita Eagle – By Ron Sylvester