Month: June 2016

A Manhattan, Kan., man pleaded guilty today to six counts of exporting and attempting to export firearms illegally from the United States to individuals located in other countries.

The guilty plea was announced by Assistant Attorney General Leslie R. Caldwell of the Justice Department’s Criminal Division and acting U.S. Attorney Tom Beall of the District of Kansas.

Michael Andrew Ryan, 35, of Manhattan, Kan., pleaded guilty before U.S. District Judge Daniel D. Crabtree of the District of Kansas, who set sentencing for Sept. 12, 2016.

“With a computer and an internet connection, Ryan hosted an international arms trafficking business on the dark web, peddling firearms and ammunition throughout the world,” said Assistant Attorney General Caldwell. “Criminals of all stripes take advantage of technological advances to further their crimes and attempt to avoid identification and arrest. In this case, thanks to the hard work of the prosecutors and law enforcement officers involved, we were able to shut down dangerous criminal activity and secure the defendant’s conviction – but we must remain vigilant to ensure that law enforcement retains the necessary capabilities to keep up with criminals.”

“The fact that international firearms trafficking has reached Kansas shows the power of the internet,” said acting U.S. Attorney Beall. “This prosecution shows our law enforcement efforts are working.”

In connection with his plea, Ryan admitted that he used a hidden internet marketplace website that sold illegal drugs and other illegal goods to unlawfully export or attempt to export firearms from the United States to Cork, Ireland; Pinner, England; Edinburgh, Scotland; Victoria, Australia; and Mallow, Ireland.

In his plea, he admitted unlawfully exporting or attempting to export to:

Cork:
• a Beretta 9 mm pistol;
• a Taurus .38 Special revolver;
• a 15-round 9 millimeter magazine;
• 32 rounds of 9 mm ammunition;
• one round of .380 ammunition; and
• 41 rounds of .40 caliber ammunition.

Pinner:
• a .22 caliber UZI;
• a .22 caliber magazine for an UZI;
• 98 rounds of .22 caliber ammunition; and
• 89 rounds of .270 long ammunition.

Edinburgh:
• a Highpoint .45 caliber pistol;
• a .45 caliber magazine; and
• 19 rounds of .45 caliber ammunition.

Victoria:
• a Walther P22, .22 caliber pistol; and
• a .22 caliber magazine.

Mallow:
• a Glock model 27, .40 caliber pistol;
• a Glock model 22, .40 caliber pistol;
• a 9- round magazine for a .40 caliber Glock;
• a 10-round magazine for a .40 caliber Glock; and
• 10 rounds of 9 mm ammunition.

The Bureau of Alcohol, Tobacco, Firearms and Explosives Kansas City Field Division investigated the case with assistance from ATF’s Washington, D.C., Division; U.S. Customs and Border Protection; U.S. Immigration and Customs Enforcement’s Homeland Security Investigations; and the Manhattan and Riley County, Kan., Police Departments. Senior Counsel Marie-Flore Johnson of the Criminal Division’s Computer Crime and Intellectual Property Section and Assistant U.S. Attorney Greg Hough of the District of Kansas are prosecuting the case.

With the receipt in April of the 2016 Master Settlement Agreement annual payment, Kansas has now received more than $1 billion in total tobacco settlement payments, Attorney General Derek Schmidt announced today.

Since the first payment was made in 1999, Kansas has received $1,013,566,691.35 from the participating tobacco manufacturers. The settlement payments are intended to offset the costs of tobacco-related illness and disease that are borne by Kansas taxpayers through government-paid medical benefits. The payments are made each year pursuant to a legal settlement that resolved claims made by 46 states, including Kansas, against the tobacco companies in the late 1990s.

“The Master Settlement Agreement has allowed Kansas to recover a significant portion of the cost Kansas taxpayers bear to deal with the health-related costs of tobacco use in our state,” Schmidt said. “These payments offset what otherwise would be a taxpayer subsidy of the tobacco industry.”

Schmidt noted that in order for payments to continue, Kansas must continually meet the obligations it undertook as part of the Master Settlement Agreement. The principal obligation that has been a point of dispute is for the state to “diligently enforce” its tobacco-related statute, including a requirement the state account for all tobacco sales in the state and require tobacco companies that were not part of the MSA to pay funds into escrow accounts that may later be used to offset tobacco-related health care costs borne by state taxpayers.

When Schmidt assumed office in 2011, the tobacco companies had accused many states, including Kansas, of failing to live up to their end of the MSA bargain since 2003 and were demanding repayment of billions of dollars in past payments to the states. If the companies’ claims had succeeded, Kansas could have been required to repay hundreds of millions of dollars previously received.

In 2012, Schmidt and 18 other state attorneys general reached an agreement with the tobacco companies to eliminate that potential liability for the state. Subsequently, five other states joined this settlement. The provisions of that settlement agreement are reflected in a term sheet that has governed annual payments for the past three-and-a-half years. The final details of that settlement agreement are still being worked out among Kansas, the other settling states and the tobacco companies.

To minimize the risk the companies may again accuse the states of failing to live up to their obligations under the MSA, the attorney general’s office said it has taken several steps:
• Worked closely with the Department of Revenue to strengthen enforcement efforts against illicit cigarette sales.
• Obtained permission from the Legislature to add an investigator at the attorney general’s office who will focus specifically on non-compliant sales.
• Entered into negotiations with the four resident Indian Tribes in Kansas to improve accounting for tobacco sales on tribal lands. Compacts with two of the tribes were approved by the Legislature earlier this year; negotiations with the other two tribes remain ongoing.
• Worked closely with the Legislature to strengthen the state’s escrow statutes to improve MSA compliance.

“Protecting these annual payments to the fullest extent possible is a priority for our office,” Schmidt said. “We are determined to continue making these funds available to ease the burden tobacco use can impose on Kansas taxpayers.”

Schmidt noted that because the MSA, which was reached in 1998, is now almost 20 years old, Kansas tobacco payments are expected to naturally decline starting in April 2018. This is because certain provisions of the original MSA were designed to expire after payment year 2017. With those provisions expiring there will be a change in the amount of money Kansas receives each year. Because the state’s annual payment amount is based on numerous variables, it is difficult at this time to predict how much the annual payment will decline, but the attorney general’s office has informed the state’s revenue estimators it could be significant.

The Legislature in 1999 decided most of Kansas’ receipts from the MSA would be used to finance children’s programs in the state.

The annual amounts received by the state of Kansas each year pursuant to the MSA are as follows:
1999: $38.5 million
2000: $47.9 million
2001: $50.6 million
2002: $57.7 million
2003: $48.3 million
2004: $52.4 million
2005: $53.1 million
2006: $48.6 million
2007: $50.6 million
2008: $66.3 million
2009: $72.0 million
2010: $60.4 million
2011: $56.8 million
2012: $57.9 million
2013: $68.1 million
2014: $62.2 million
2015: $62.4 million
2016: $59.1 million
Total: $1.013 billion