A group of six local business owners convicted of tax evasion were ordered Wednesday to pay more than $2 million, in total, to the Municipality of Anchorage, according to a statement from the Department of Law.
U.S. District Court Judge Sharon L. Gleason sentenced 44-year-old Michael Butler, 52-year-old Sun Sims, 57-year-old Kyong Hee Kim, 60-year-old Jae Ho Lee, 62-year-old Jae Gak Lee and 60-year-old Jerry Lee for their roles in a conspiracy to defraud the Municipality of Anchorage of payment from the local cigarette excise tax. Gleason also ordered each individual in the group to pay the muni in restitution, which totaled more than $2 million.
Butler and Sims operated and managed three businesses — two outside the municipality and one within. Excise tax exempt cigarettes purchased from tobacco wholesale distributors within the municipality were only allowed to be sold at the two locations outside the municipality. But they were sold at all three locations, the Department of Law says, which increased the profits of Butler and Sims. Additionally, the two sold the cigarettes to other businesses within the municipality — owned and operated by the other conspirators — for a fee, furthering their own profits and assisting others in avoiding the excise tax.
“Tax evasion unfairly shifts the burden to honest American taxpayers,” said Teri Alexander, special agent in charge, in a prepared DOL statement. “IRS Criminal Investigation together with the Department of Justice will continue to work vigorously to protect our national and local tax systems.”
Each of the conspirators was sentenced prior to Wednesday. Butler was sentenced Friday to three years in prison. Sims was sentenced to 34 months in prison and a fine of $18,000. Jae Gak Lee was sentenced to 16 months in prison and a fine of $100,000. Jae Ho Lee was sentenced to 16 months as well. Jerry Lee faces nine months in prison, and Kim received a probation of five years.
Another defendant in the case, Kimberly Crandell, was sentenced to a 3-month-long probation and ordered to pay a fine of $1,500 after pleading guilty to conspiracy to make false statements. Crandell — whose maiden name was Sims — managed Up in Smoke, a business owned and operated by Butler and Sims.