Tobacco tax-evasion cases settled in Oregon

PORTLAND — Two of the largest tobacco tax-evasion cases in Oregon history have been settled, state officials said yesterday.

Willamette Valley Distributing and H&K Distributing had evaded a total of more than $2 million in tobacco taxes, according to the Oregon Department of Justice.

Attorney General Hardy Myers announced the plea agreements after a two-year investigation by the Oregon Tobacco Tax Compliance Task Force, which includes representatives from the state Department of Revenue, the Department of Justice and Oregon State Police.

Willamette Valley Distributing and its owner, Michael Miller, were indicted in Marion County on charges including racketeering, tobacco and cigarette tax evasion, false reporting of tax information, money laundering and unlawful distribution of cigarettes.

Miller will serve one year in jail and pay $1.5 million in restitution after he and his company pleaded guilty Monday to racketeering and unlawful distribution of cigarettes, Myers said.

The state also will revoke the tobacco and cigarette licenses for Willamette Valley Distributing, which will be dissolved by court order after it liquidates all assets, Myers said.

Yesterday, Ronald Kent Hartley, owner of H&K Distributing, pleaded guilty to charges of racketeering, as well as computer crime and filing false tobacco-tax returns.

H&K distributed chewing tobacco and other smokeless-tobacco products taxed at 65 percent of their wholesale value.

Hartley purchased products from a source on the Yakama Indian Reservation in Washington state that does not pay state tobacco tax, requiring Hartley to pay those taxes before reselling the product, Myers said.

An investigation resulted in a 30-count indictment against Hartley. Under the terms of the plea agreement, he was sentenced to 13 months in Clackamas County Jail and ordered to pay nearly $1.7 million in restitution.

Lawyers for Hartley and Miller could not immediately be reached for comment yesterday.

The Oregon Tobacco Tax Compliance Task Force was created by the Legislature in 2001.