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Jiddou v. Commonwealth

Court of Appeals of Virginia

December 27, 2019

SIDI O. JIDDOU
v.
COMMONWEALTH OF VIRGINIA

          FROM THE CIRCUIT COURT OF CHESTERFIELD COUNTY David E. Johnson, Judge

          David G. Boyce (Cullen D. Seltzer; Sean M. Hutson; Sands Anderson PC, on briefs), for appellant.

          Rosemary V. Bourne, Senior Assistant Attorney General (Mark R. Herring, Attorney General, on brief), for appellee.

          Present: Judges O'Brien, Russell and Senior Judge Clements Argued at Richmond, Virginia

          OPINION

          JEAN HARRISON CLEMENTS, JUDGE

         In a jury trial, Sidi O. Jiddou (appellant) was convicted for two counts of fraudulently purchasing cigarettes in violation of Code § 58.1-1017.3, three counts of possessing with the intent to distribute tax-paid, contraband cigarettes in violation of Code § 58.1-1017.1, and two counts of money laundering in violation of Code § 18.2-246.3. On appeal, appellant argues that 1) the trial court erred in refusing to find, as a matter of law, that appellant's conduct on February 13, 16, and 22, 2017, did not violate either Code § 58.1-1017.3 or Code § 58.1-1017.1; 2) the evidence was insufficient to sustain his convictions; 3) the trial court improperly permitted the Commonwealth to elect a jury trial; and 4) the trial court erred in admitting prejudicial evidence. Finding no error, we affirm appellant's convictions.

         FACTS

         "In general, when reviewing a challenge to the sufficiency of the evidence to support a conviction, an appellate court considers the evidence in the light most favorable to the Commonwealth, the prevailing party below, and reverses the judgment of the trial court only when its decision is plainly wrong or without evidence to support it." Marshall v. Commonwealth, 69 Va.App. 648, 652-53 (2019). "If there is evidentiary support for the conviction, 'the reviewing court is not permitted to substitute its own judgment, even if its opinion might differ from the conclusions reached by the finder of fact at the trial.'" Chavez v. Commonwealth, 69 Va.App. 149, 161 (2018) (quoting Banks v. Commonwealth, 67 Va.App. 273, 288 (2017)). "In accordance with familiar principles of appellate review, the facts will be stated in the light most favorable to the Commonwealth, the prevailing party at trial." Gerald v. Commonwealth, 295 Va. 469, 472 (2018) (quoting Scott v. Commonwealth, 292 Va. 380, 381 (2016)). Moreover, "[o]n appellate review of issues involving the admissibility of evidence, the Court views the evidence in the light most favorable to the Commonwealth as the party who prevailed below." Haas v. Commonwealth, 71 Va.App. 1, 5 n.1 (2019).

         Individuals engaged in illegal cigarette trafficking in Virginia are known to take advantage of the available sales tax exemption for retail businesses, and to purchase large quantities of cigarettes from wholesale outlets and "big-box" stores, such as Sam's Club or Costco. Even though they do not actually represent operating retail businesses, cigarette traffickers nonetheless present apparently legitimate documentation of entitlement to the sales tax exemption when they purchase cigarettes at wholesale, then resell those cigarettes for profit in states where the price of cigarettes and the sales tax are much higher than in Virginia.[1]

         Background Relating to Cigarette Express

         On June 16, 2015, appellant applied for a business membership at a Sam's Club for the business "Cigarette Express Number 1." In connection with the application, appellant completed and signed a standardized ST-10 form from the Virginia Department of Taxation (the Department) stating that Cigarette Express was exempt from paying sales tax for the purchase of items resold through that retail business. The ST-10, signed by appellant as the owner of Cigarette Express, stated that the certificate of exemption "shall remain in effect until revoked in writing by the Department of Taxation." To obtain the Sam's Club business membership, appellant also was required to provide proof of the business' existence with a "Certificate of Registration for the Collection of Virginia Sales and Use Tax," the standardized ST-4 form issued by the Department. Accordingly, with the Sam's Club membership application, appellant submitted a ST-4 form issued to Cigarette Express at 9905 Hull Street Road. As directed to the holder of the certificate, the ST-4 advised, "If you cease to conduct business at this place of business, the certificate immediately expires. You must notify the Department of Taxation . . . in writing within 30 days and return this Certificate of Registration." On the ST-10 that appellant submitted to Sam's Club, he was required to provide the registration number for Cigarette Express issued by the Department on the ST-4. Upon this documentation, Sam's Club issued a business membership to Cigarette Express, with appellant listed as the contact. The business membership thus permitted appellant to purchase qualifying products at Sam's Club without paying sales tax.

         The commissioner of revenue for Chesterfield County issued a business license to Cigarette Express at the location of 9905 Hull Street Road in 2015. The license was valid until the end of 2015, but was not renewed in 2016. In fact, appellant sold Cigarette Express to another person, Shao Wu, before the end of 2015.[2] A second entity, Good Time LLC, was issued a business license at 9905 Hull Street Road in 2015, and that license expired at the end of 2016.

         Investigation of Appellant's Cigarette Purchases at Sam's Club in February 2017

         Beginning in 2012, Detective Rich Regan of the Chesterfield County police investigated illegal cigarette trafficking in Virginia, and he has made more than 200 arrests for that enterprise. In Regan's experience, cigarette trafficking in Virginia results in the loss of sales tax revenue to the state, as well as an increased rate in many types of crime. During his investigations, Regan often conducts undercover surveillance outside stores like Sam's Club or Costco to watch for potential traffickers buying large quantities of cigarettes, but purchasing nothing else that typically would be sold in a legitimate retail business.

         On February 13, 2017, while stationed in the parking lot of a Chesterfield County Sam's Club, Regan saw appellant exit the store with a man named Abaydee, who had a prior conviction for cigarette trafficking. Appellant was pushing a cart with what Regan later determined to be 240 cartons of cigarettes.[3] Appellant and Abaydee noticed Regan sitting in his vehicle, pointed at him, and walked to appellant's car. Regan saw appellant and Abaydee load the cigarettes into the back of the car, and appellant drove away. Abaydee returned to the store. He later exited the store with Hassan Akim, who had purchased about 200 cartons of cigarettes.

         Regan entered the store and obtained a sales receipt indicating that appellant's business membership to Sam's Club had been used that day to purchase 240 cartons of Newport cigarettes.[4] Videotape from the store's surveillance camera showed appellant making the purchase.

         The Sam's Club purchase history for the Cigarette Express business membership reflected a cash purchase, using appellant's membership card, of 220 cartons of two types of Newport cigarettes on February 16, 2017. Appellant was the holder of the only active membership card for the account. In addition, the purchase history for the Cigarette Express account showed a cash purchase, using appellant's Sam's Club membership card, of 220 cartons of various brands of cigarettes on February 22, 2017.

         Luis Basco, a compliance manager at the Sam's Club store, testified that, to obtain a business membership to purchase items without sales tax, as appellant did in 2015, an applicant must complete a ST-10 form and provide proof of the business' existence. With a business membership in hand, the member may then purchase certain products without paying state sales tax. At the time of a purchase, a Sam's Club member is required to produce a membership card bearing his or her photograph. The cashier verifies that the photograph on the card matches the purchaser before completing the transaction. Basco stated that Sam's Club keeps its cigarette inventory in a "tobacco cage," which has a separate point of sale from the other cash registers. At the tobacco cage, a cashier fills a customer's request for cigarettes, follows the normal procedure to verify the customer's identity with his membership card, and processes the sale.

         Sam's Club sells cigarettes only by whole sealed cartons, not individual packs. As a general practice, cigarettes are sold by the manufacturer to a stamping agent, which applies the required Virginia tax stamp to cigarette packs before they are sold to wholesale outlets in Virginia. Basco testified that, within the sealed cartons, all cigarette packs bear the Virginia tax stamp, which is applied before the product reaches Sam's Club.

         Candace Banks, a senior tobacco analyst with the Department of Taxation, testified that Virginia law requires a retail business to register with the Department and obtain a ST-4 registration to post at its location. Only after obtaining a ST-4 certificate of registration may a business lawfully complete a ST-10 form, the certificate of exemption from sales tax. Banks testified that a ST-4 certificate becomes invalid immediately, just as it states, if the business closes. Banks further testified that for a business' ST-10 form to remain valid, the business must have a valid ST-4 certificate as a prerequisite. Banks also stated that a ST-10 form may be rendered invalid, other than by the business closing, through revocation by the Department.

         Cigarette Express never filed any of the required documents with the Department regarding the collection of sales taxes from retail sales. Following an audit that was prompted by appellant's arrest, the Department notified appellant in writing on or about March 2, 2017, that the ST-10 for Cigarette Express was invalid. Banks testified that, notwithstanding the written notice in March of 2017, the ST-10 for Cigarette Express became invalid with the lapse of the business' ST-4 registration.

         Testifying as an expert in the field of cigarette trafficking, Detective Michael Wyatt stated that proceeds from cigarette trafficking were used to support terrorist organizations and drug cartels in foreign countries. He opined that appellant's use of cash to purchase the amount of cigarettes he bought in February 2017 was inconsistent with possession of cigarettes for personal use or in connection with a legitimate retail business. Consistent with Banks's testimony, Wyatt stated that a ST-10 form expires immediately when the business closes and that any tax-free purchase upon the expired ST-10 form would be invalid. Wyatt also testified that, because ...


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