The two paid $6.5 million in a plea deal to settle a cigarette tax evasion case that started in 2006. Wake's cut is $3 million.
"I think the six-and-a-half million dollars we helped get back into the state and local governments will be put to good use. This is justice in my opinion," offered Wake County District Attorney Colon Willoughby.
John June, 38, and Larry Phillips, 63, entered an Alford guilty plea to two counts of obtaining property by false pretense to avoid jail time. In an Alford plea, a defendant does not admit the act, but admits that sufficient evidence exists with which the prosecution could likely convince a judge or jury to find the defendant guilty beyond a reasonable doubt.
"It was a business decision they made. They contend, as their plea indicates, they did not violate the law," explained defense attorney Joe Cheshire.
Authorities say June and Phillips operated Tobaccoville, USA Inc and J&E Distributors Inc when they falsified documents showing they bought and sold more than 950,000 cartons of cigarettes in August 2005 - just before the new law took effect that increased the tax from 50 cents a carton to $3 - ultimately cheating the state out of millions.
"The state would contend this whole thing was a scheme and these folks sought to take advantage of North Carolina laws and all these transactions were not real and they were designed to fool and defraud the state," said Willoughby.
The NC Department of Revenue will receive $2.5 million in the settlement. One million goes to the state medical trust for smoking related health claims, and the $3 million fine goes to the clerk of court - which by law goes to the Wake County school board.
"I'm sure the school system will have good use for the money," said Willoughby.
Superior Court Judge Donald Stephens said the case was always about money, so he decided to settle it with money. He also said he hopes the Wake County School Board is able to save some jobs with the cash.
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