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United States of America Plaintiff v. David B. Cooper Defendant

May 15, 2013

UNITED STATES OF AMERICA PLAINTIFF
v.
DAVID B. COOPER DEFENDANT



MEMORANDUM OPINION AND ORDER

This matter comes before the Court on the Defendant's motion to dismiss. (Def.'s Mot., Docket Number ("DN") 16.) The motion was exhaustively briefed by the parties. The Government responded. (Gov't's Resp., DN 19.) The Defendant replied. (Def.'s Reply, DN

20.) The Government then filed a surreply. (Gov't's Surreply, DN 23.) The Defendant rebutted the surreply. (Def.'s Rebuttal, DN 26.) In addition, the Court heard oral arguments by the parties on March 5, 2013. After oral argument, the Defendant further supplemented its motion to dismiss. (Def.'s Supplement, DN 36.) This matter is now ripe for adjudication. For all of the following reasons, the Defendant's motion is DENIED.

I.

Defendant David Cooper ("Cooper") is charged with one count of conspiring to possess and receive contraband cigarettes in violation of the Contraband Cigarette Trafficking Act ("CCTA"), 18 U.S.C. § 2341 et seq. (Indictment, DN 1, ¶ 6.) The CCTA makes it "unlawful for any person knowingly to ship, transport, receive, possess, sell, distribute, or purchase contraband cigarettes[.]" 18 U.S.C. § 2342(a). For the purposes of the CCTA, the term "contraband cigarettes" is defined as "a quantity in excess of 10,000 cigarettes, which bear no evidence of the payment of applicable State or local cigarette taxes in the State or locality where such cigarettes are found," subject to certain inapplicable exceptions. Id. § 2341(2).

Cooper's alleged violation of the CCTA stems from his involvement in several tobacco companies. First, Cooper owned and operated Tantus Tobacco, LLC ("Tantus Tobacco"), a manufacturer of cigarettes. (Indictment, DN 1, ¶ 2.) Second, Cooper was the operator and part-owner of DS Marketing, LLC ("DS Marketing"). (Id. ¶ 1.) "DS Marketing's principal mode of business was the sale of cigarettes by mail order and telephone." (Id.) According to the Government, Tantus Tobacco "supplied DS Marketing with a substantial portion of its cigarettes, later sold to retail customers." (Id. ¶ 2.) Third, although not plainly apparent from the indictment, Cooper admits that a third party, an "intermediate wholesaler," facilitated transactions between Tantus Tobacco and DS Marketing. (See, e.g., Def.'s Reply, DN 20, p. 6; Def.'s Rebuttal, DN 26, p. 7.) According to Cooper, Tantus Tobacco sold cigarettes to the intermediate wholesaler, which in turn sold some or all of the cigarettes to DS Marketing.

As part of the conspiracy to violate the CCTA the indictment alleges that Cooper participated in several overt acts. Most importantly for the matter under consideration, the Government claims that "Cooper, as an owner and operator of DS Marketing, knowingly received, acquired and possessed contraband cigarettes, that is quantities of cigarettes greater than 10,000, which bore no evidence of the payment of the applicable state excise tax stamps." (Indictment, DN 1, ¶ 7.) The indictment does not allege that DS Marketing was the entity that should have paid the applicable excise taxes on the cigarettes or otherwise affixed the tax stamps. Rather, the Government asserts that DS Marketing received, acquired, and possessed contraband cigarettes. In other words, the indictment charges that the cigarettes at issue were already contraband (i.e., excises taxes were due but not paid on the cigarettes) when they came into DS Marketing's possession. Accordingly, DS Marketing is alleged to have violated the CCTA, not because it failed to pay state excise taxes on the cigarettes, but because it possessed contraband cigarettes on which taxes were already due but had not been paid. See 18 U.S.C. § 2342(a) ("It shall be unlawful for any person to knowingly . . . possess . . . contraband cigarettes[.]").

In light of the foregoing, Cooper seeks dismissal of the indictment on two grounds. First, Cooper argues dismissal is warranted because the cigarettes were not "contraband," that is, no Kentucky excise taxes were due on the cigarettes when they were possessed or otherwise sold by DS Marketing. Second, some, but not all, of the cigarettes at issue were "Berkley" branded cigarettes. Berkley cigarettes are not listed in Kentucky's Tobacco Directory, and Kentucky law expressly prohibits the payment of excise taxes on non-directory cigarettes. Accordingly, Cooper argues that the Berkley branded cigarettes were not contraband because no excise taxes were due on them. Because the Court finds that at least some of the cigarettes at issue were already contraband when possessed by DS Marketing the Court need not consider Cooper's second argument at this time.

II.

A criminal indictment must contain "a plain, concise, and definite written statement of the essential facts constituting the offense charged[.]" Fed. R. Crim. P. 7(c)(1). A defendant "may raise by pretrial motion any defense, objection, or request that the court can determine without a trial of the general issue." Fed. R. Crim. P. 12(b)(2). "Rule 12(b)(2) motions are typically raised when confronting matters of law, such as 'former jeopardy, former conviction, former acquittal, statute of limitations, immunity and lack of jurisdiction.'" United States v. Alwan, 822 F. Supp. 2d 672, 672 (W.D. Ky. 2011) (quoting United States v. Craft, 105 F.3d 1123, 126 (6th Cir. 1997)). Motions to dismiss can also challenge the sufficiency of the indictment. "In consideration of a motion to dismiss the indictment as being insufficient, the court's 'determination must be based on whether the facts alleged in the indictment, if accepted as entirely true, state the elements of an offense and could result in a guilty verdict. Generally speaking, it is a narrow, limited analysis geared only towards ensuring that legally deficient charges do not go to a jury.'" 1A Charles Alan Wright, et al., Federal Practice & Procedure § 191 n.13 (4th ed. 2013) (quoting United States v. Bergrin, 650 F.3d 257, 268 (3d Cir. 2011)).

III.

Cooper moves to dismiss the indictment on grounds that it does not allege a violation of the CCTA because DS Marketing did not possess "contraband cigarettes." Therefore, resolution of the motion turns on whether the cigarettes at issue were "contraband cigarettes."

1.

As an initial matter, the Court notes that this appears to be a question of fact. Cooper essentially argues that application of the facts to the law demonstrates the cigarettes were not contraband. In a motion to dismiss for insufficiency, a "district court is permitted to make preliminary findings of fact necessary to decide the questions of law presented by pre-trial motion as long as the court's findings on the motion do not invade the province of the jury." Alwan, 822 F. Supp. 2d at 672. Ultimately, the Court concludes that the allegations in the indictment, taken as true, state the elements of a violation of the CCTA and could result in a guilty verdict against Cooper. Nothing in this opinion is to be construed as ...


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