Feds Charge Kansas Tobacco Firm in Fraud Scheme

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Federal prosecutors charge the owner of a Kansas tobacco wholesaler and his business associates with a scheme to avoid paying taxes on cigarettes. The government alleges in a 43-count indictment unsealed Friday that the scam cost the state of Oklahoma and Indian tribes $25 million in tax revenue.

Charged in the indictment is Gary Hall, the president and owner of Sunflower Supply Co. in Galena, Kan. In all the indictment names eight people from Kansas, Missouri and Oklahoma. Sunflower Discount Tobacco Warehouse Inc. of Joplin, Mo., and Rebel Industries Inc. of Galena are also named.

Prosecutors say the investigation started in 2006 after the Kansas Highway Patrol stopped a vehicle in Coffeyville that was carrying cigarettes worth over $200,000 without appropriate tax stamps.