A federal judge in Anchorage has ordered six defendants convicted of a large-scale cigarette tax evasion scheme to pay more than $2 million in restitution to the city.
U.S. District Court Judge Sharon Gleason decided the defendants -- of whom prosecutors said Michael Butler, 44, and Sun Sims, 52, were the main players -- should pay $2,007,250 plus interest to the Municipality of Anchorage, according to the U.S. Attorney's Office.
According to court records, Butler and Sims owned and managed Up In Smoke in Anchorage, as well as Golden Eagle Tobacco and Longmere Lake Grocery and Liquor on the Kenai Peninsula.
Owning two businesses on the Peninsula allowed Butler and Sims to buy tax-exempt cigarettes from tobacco wholesale distributors in Anchorage. They could only sell the cigarettes outside the city. However, the cigarettes were illegally resold in the city at a price that appeared to include an excise tax but didn't, the records say.
Prosecutors said that taxes of at least $1.3 million were evaded.
Butler and Sims were formally charged on July 18, 2013, along with six other defendants: Kyong Hee Kim, Kimberly Sims, Jae Ho Lee, Jae Gak Lee, Jerry Lee and Insook Baik. All the defendants pleaded guilty prior to Butler's conviction except Baik, who was acquitted at trial.
Butler was sentenced to three years in prison on Friday.
Assistant U.S. Attorney Stephan Collins said the court made Butler and Sims jointly and severally liable for the entire amount of restitution. They're responsible for these approximate amounts with the defendants:
• $700,000 owed by Gak Lee and Ho Lee;
• $140,000 owed by Kim;
• $100,000 owed by Jerry Lee.
Butler and Sims are also liable for $470,000 for the cigarettes delivered to the acquitted defendant, Collins said.
Municipal treasurer Dan Moore previously told Alaska Dispatch News that the city made a claim for restitution and other penalties totaling $3.95 million. Moore said Wednesday in a phone interview that city officials are satisfied with Gleason's order.
"We have more than one person to go after," Moore said. "We're going to explore every avenue to collect the restitution, and our collection efforts are well-supported by the way the judge ruled."
The case was investigated by the Internal Revenue Service Criminal Investigation; the Bureau of Alcohol, Tobacco and Firearms; and the Anchorage Police Department.
Court records show Butler filed a notice of appeal on Monday.