Key figures in a $20 million cigarette-smuggling ring across the Carolinas, which involved the undercover sale of almost a half million cartons of smokes, received federal prison sentences of up to 18 years this week in Charlotte.
In all, “Operation Burn Notice” led to the arrests of 12 people on cigarette-trafficking and money-laundering charges – all connected to the flow of illegal merchandise between Charlotte, Greensboro and Columbia.
The original break in the case took place in Charlotte in 2009. According to court records, federal and state investigators learned that Khaled Ibrahim, who owned mobile telephone stores in the city, was interested in buying cigarettes at far below market prices for resell in the Carolinas.
Cigarette traffickers typically purchase large amounts of products in North Carolina and other low-tax states, then resell them elsewhere without paying the higher taxes, thus clearing big profits.
Undercover agents from the Charlotte-Mecklenburg police and other law enforcement groups eventually focused on the uncle-nephew team of Nasser Kamal Alquza of Mount Pleasant, S.C., and Kama Zaki Qazah of Columbia.
Together, the men owned businesses ranging from convenience stores to used-car lots to Subway franchises. They also maintained extensive business ties throughout South Carolina and their native Jordan.
Those ties allowed them to buy and sell illegal cigarettes and other stolen merchandise, then launder substantial amounts of money here and abroad, investigators say.
According to the U.S. Attorney’s Office in Charlotte, the pair offered to pay undercover agents more than $9.3 million in cash for almost 500,000 cartons, which Qazah and Alquza believed had been stolen in Virginia and Tennessee.
Both were convicted of multiple counts of conspiracy after a seven-day federal trial in Charlotte last year.
Qazah testified in his defense that he did not know the cigarettes were stolen.
But according to testimony presented during his sentencing hearing, Qazah bragged to undercover agents that he could “sell anything.” That ranged from stolen electronics to Christmas decorations pilfered from a hijacked Wal-Mart truck.
His uncle told agents of a similarly diversified portfolio of stolen merchandise – from baby formula to Advil to condoms. He also confided that he could launder hundreds of thousands of dollars overseas each month through various accounts. The secret to his success: Keep changing your operation, he told agents, and you’ll never get caught.
The ring operated on unusually large amounts of cash. According to the federal indictment, Qazah paid more than $825,000 for 38,000 cartons of cigarettes in June 2011, clearing $360,000 in profit when he resold them.
Two months later, Qazah bought almost 50,000 cartons from undercover agents, paying $1.1 million in cash. He was arranging to spend $1.9 million more for almost 83,000 cartons at the time of his arrest, his indictment said.
Wednesday, U.S. District Judge Frank Whitney sentenced the 35-year-old Qazah to 18 years in prison followed by two years of supervised release. Whitney also ordered him to forfeit any property associated with his crimes.
That last hit could be substantial. When authorities searched Qazah’s house after his arrest, they came across a cardboard box in his garage. It held $1,299,990 in cash.
The judge will sentence Alquza next week.
Four other participants in the ring – all from the Carolinas – were also sentenced Wednesday. They included Ahmed Samy Hosney Kareem, 35 of Matthews, who will serve 14 months in prison and two years of supervised release.
Four Charlotte men have already been sentenced to prison terms and supervised release:
• Ibrahim, 50, five years.
• Zafer Ramadan Kafozi, 48, 18 months.
• Hesham Rahman, 46, 21 months.
• Murad Ayyad, 33, one year of probation.