IN THE

UNITED STATES DISTRICT COURT

FOR THE
WESTERN DISTRICT OF VIRGINIA
HARRISONBURG DIVISION
AUGUST 2011 SESSION
rCl.!Rl('I OFPIOIi! U,S, Ollli', COURT
AT VA
flJUlO
AUG 032011
" .fULI.Ot _
\ BY: ' VI \
. DEPUTY CLERK
UNITED STATES OF AMERICA Criminal No.: 2> : \ \ C-(ZO 00 ci3
v.


'
CHENGZENG
a/k/ a "Alex'
MOHAMMAD BUTT

MUSHTAQ AHMAD
a/k/a"Tony'
SEALED
Title 18 U.S.C. 371
Title 18 U.S.C. 2342
Title 18 U.S.C. 1956
a/k/a'Mushtaq Ahmad Kharl'
a/k/a"Ahmad Mushtaq'
The Grand Jury charges that:
INDICTMENT
COUNT!
(18 U.S.C. 371)
(Conspiracy-Contraband Cigarettes)
1. From in or about April 2009, and continuing up to and including the date of this
indictment, in the Western District of Virginia and elsewhere, the defendants,
CHENG ZENG, MOHAMMAD BUTT,
and MUSHTAQ AHMAD, knowingly and willfully conspired
and agreed together and with each other (and with other persons known and unknown to
the Grand Jury) to knowingly ship, transport, receive, possess, sell, distribute and
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purchase contraband cigarettes, as that term is defmed in Title 18, United States Code,
Section 2341, to wit: a quantity of more than 10,000 cigarettes which bore no evidence of
the payment of applicable State cigarette taxes, in violation of 18 U.S.C. 2342(a).
INTRODUCTION
2. Title 18, United States Code, Section 2342(1) defines contraband cigarette trafficking and
states, "It shall be unlawful for any person knowingly to ship, transport, receive, possess,
sell, distribute, or purchase contraband cigarettes."
3. Title 18, United States Code, Section 2341(2) defines "contraband cigarettes," as "a
quantity in excess of 10,000 cigarettes, which bear no evidence of the payment of
applicable State or local cigarette taxes in the State or locality where the cigarettes are
found, if the State or local government requires a stamp, impression, or other indication
to be placed on packages or other containers of cigarettes to evidence payment of
cigarette taxes, and which are in the possession of any person other than:"
a. A person holding a permit issued pursuant to chapter 52 of the Internal Revenue
Code of 1986 as a manufacturer of tobacco products or as an export warehouse
proprietor, or a person operating a customs bonded warehouse pursuant to section
311 or 555 of the Tariff Act of 1930 (19 U.S.C. 1311 or 1555) or an agent of such
person;
b. A common or contract carrier transporting the cigarettes involved under a proper
bill of lading or freight bill which states the quantity, source, and destination of
such cigarettes;
c. A person-
. 1. who is licensed or otherwise authorized by the State where the cigarettes
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are found to account for and pay cigarette taxes imposed by such State;
and
11. who has complied with the accounting and payment requirements relating
to such license or authorization with respect to the cigarettes involved; or
d. An officer, employee, or other agent of the United States or a State, or any
department, agency, or instrumentality of the United States or a State (including
any political subdivision of a State) having possession of such cigarettes in
connection with the performance of official duties.
4. Virginia Code 58.1-1001 states that:
A. Except as provided in subsection B, in addition to all other taxes now imposed by
law, every person within this Commonwealth who sells, stores or receives cigarettes
made of tobacco or any substitute thereof, for the purpose of distribution to any person
within this Commonwealth, shall pay to this Commonwealth an excise tax of one and
one-quarter mills on each such cigarette sold, stored or received before August 1, 2004;
an excise tax of one cent on each such cigarette sold, stored or received on and after
August 1, 2004, through midnight on June 30, 2005; and an excise tax of 1.5 cents on
each such cigarette sold, stored or received on and after July 1, 2005.
B. In addition to all other taxes now imposed by law, every person within the
Commonwealth who sells, stores, or receives roll-your-own tobacco, for the purpose of
distribution within the Commonwealth, shall pay to the Commonwealth a cigarette excise
tax at the rate of 10% of the manufacturer's sales price of such roll-your-own tobacco.
5. Virginia Code 58.1-1003 states that:
A. Except as otherwise specifically provided pursuant to 58.1-1003.2, the taxes
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imposed by this chapter shall be paid by affixing stamps equaling the amount of the tax in
the manner set forth. The stamps shall be affixed to each individual package, bag, box or
can in such a manner that their removal will require continued application of water or
steam. Every stamping agent in the Commonwealth shall affix to any unstamped
cigarettes the requisite denominations and amount of stamp or stamps that represent the
proper tax levied by ~ t h i s chapter prior to shipping to other wholesale dealers or retail
outlets.
6. A "master case" of cigarettes, also known as a "case" of cigarettes, contains 60 cartons of
cigarettes.
7. A "half-case" of cigarettes contains 30 cartons of cigarettes.
8. A standard "carton" of cigarettes contains 10 packs of cigarettes.
9. A standard "pack" of cigarettes contains 20 cigarettes.
10. "Taxed" or "stamped" cigarettes means a State or local tax stamp has been affixed to the
cigarettes.
11. "Untaxed" or "unstamped" cigarettes means a State or local tax stamp has not been
affixed to the cigarettes.
12. The Commonwealth of Virginia has experienced an influx of organizations and
individuals who buy large volumes of cigarettes to transport to other states. Virginia is a
source state for low-cost, low-tax cigarettes. States that impose high taxes are often
destination states, such as New York.
13. In 2009 and 2010, the Commonwealth of Virginia levied a cigarette tax of $0.30 per pack
or $3.00 per carton of cigarettes.
14. In 2009 and 2010, the State of New York levied a cigarette tax of$2.75 per pack or
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$27.50 per carton of cigarettes.
15. In 2009 and 2010, New York City levied a cigarette tax of$1.50 per pack or $15.00 per
carton of cigarettes (plus the state tax levy of $2.75 per pack -equaling a combined tax
levy of $4.25 per pack) or $42.50 total per carton of cigarettes. This tax is included in the
retail price indicated below.
16. Effective April 1, 2009, the Children's Health Insurance Program Reauthorization Act of
2009 (CHIPRA) increased the federal cigarette tax to approximately $10.06 per carton.
17. There are many different kinds and quality levels of cigarettes. Marlboro cigarettes, for
example are a Tier One, meaning highest quality level, cigarette that in 2010 retailed in
Virginia for approximately $36.00 per carton. The wholesale price in 2010 in Virginia
for this same carton of cigarettes would be approximately $32.08.
18. In 2009, the retail price for a carton of Marlboro cigarettes in New York was
approximately $71.70. In 2010, the retail price for a carton of Marlboro cigarettes in New
York was approximately $92.00.
19. In 2009, the retail price for a carton of Marlboro cigarettes in New York City was
approximately $88.00. In 2010, the retail price for a carton of Marlboro cigarettes in
New York City was approximately $110.00.
20. The difference in price of a carton of cigarettes in Virginia as compared to New York and
other high cigarette tax states is such that individuals engaged in the illegal trafficking of
cigarettes can make a substantial amount of money by buying cigarettes in Virginia,
paying the Virginia cigarette tax, and selling them in other states that levy a greater tax.
Individuals engaged in the trafficking of contraband cigarettes can make even more
money by buying untaxed cigarettes and selling them in states that levy a greater cigarette
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tax. The procurement of cigarettes from low tax states or untaxed cigarettes for sale in
high tax states without paying the cigarette tax in the high tax state is the essence of
contraband cigarette trafficking.
21. To conceal their contraband cigarette trafficking, participants sometimes file false or
misleading reports with state agencies, and/or place counterfeit state tax stamps on the
cigarette packs they sell.
22. The illegal proceeds generated by the sale of contraband cigarettes in high tax states can
also be used to make additional cigarette purchase from low or no tax sources. In this
way the contraband cigarette trafficking enterprise can continue.
23. The Bureau of Alcohol, Tobacco, and Firearms is the principal federal agency
responsible for investigating the transportation and possession of contraband cigarettes.
MANNER AND MEANS OF THE CONSPIRACY
24. It was part of the conspiracy for the defendants to acquire untaxed cigarettes in the
Western Judicial District of Virginia and to transport them or have them transported for
distribution in New York City and other locations known and unknown to the Grand
Jury.
25. It was further part of the conspiracy that as of March 7, 2011, during the course of the
conspiracy, the defendants have purchased from undercover law enforcement officers
approximately 103,272 cartons of cigarettes, of which approximately 101,569 cartons of
cigarettes were untaxed. The defendants have paid undercover law enforcement officers
approximately $2,625,379, for all the cigarettes, and $2,621,099 for the untaxed
cigarettes. All of the cartons of cigarettes the defendants purchased had a 2010 retail
value of approximately $3,717,792 in Virginia, or $9,501,024 in New York, or
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$11,359,920 in New York City.
26. It was a further part of the conspiracy that in order to facilitate and conceal the illegal
conduct, the defendants used various businesses and business names.
27. It was a further part of the conspiracy that the defendants used various bank accounts to
conceal proceeds from the illegal conduct.
28. It was a further part of the conspiracy that the defendants used proceeds from the illegal
conduct to promote their business in contraband cigarettes.
29. It was a further part of the conspiracy that during the course of the conspiracy, the
defendants deprived the Commonwealth of Virginia of more than $304,707 in cigarette
taxes. Contraband cigarettes that were transported and sold in other states resulted in the
loss of additional tax revenues to those states.
BACKGROUND INFORMATION
30. (hereafter
a. Has listed his address as
b. Has listed his occupation as owner of a tobacco shop.
31. (hereafter
a. Previously used the name
b. Has listed her address as

c. Has listed her occupation as homemaker and unemployed.
32. . CHENG ZENG (hereafter ZENG):
a. Goes by the name "Alex'.
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b. Has listed his address as 247 Gordon Drive, Hedgesville, West Virginia.
33. MOHAMMAD BUTT (hereafter BUTT):
a. Has listed his address as
b. He listed his occupation as self employed.
c. He is listed as the Director of Nail a Inc.
34. MUSHTAQ AHMAD (hereafter AHMAD):
a. Also goes by the name"fony:'
b. Has listed his address as
35. (hereafter
a. Also goes by the name
b. Has listed his address as
36. American Market Inc. (hereafter American Market):
a. Has used the name The Smoke Shop to transact business.
b. Has listed its EINITIN number as xxxxx4198.
c. Has listed its address as 201 Centre Drive, Suite 105, Stephens City, Virginia
22655.
d. Has listed its type of business as a grocery store and as a tobacco retail store.
e. Has listed its owner as
37. Bank account number xxxxxx5806 with First Bank is listed in the name of
and R.S (an individual known to the Grand Jury).
( and R.S. have signing authority regarding this account.
38. Bank account number xxxxxx9601 with First Bank is listed in the name of American
Market Inc., Smoke Shop. has signing authority regarding this account.
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39. Bank account number xxxxxx2601 with First Bank is listed in the name of American
Market Inc. signing authority regarding this account.
40. Bank account number xxxxxx0701 with First Bank is listed in the name of Strasburg
Tobacco, Inc. has signing authority regarding this account.
41. Bank account number xxxxxx3501 with First Bank is listed in the name of A&M
Tobacco T/A The Smoke Shop. has signing authority regarding this account.
42. Bank account number xxxxxx31 06 with First Bank is listed in the name of
MOHAMMAD BUTT. BUTT has signing authority regarding this account.
43. First Bank Safety deposit box was rented by on July 18,2007. This box
is located at First Bank, Sherando Financial Center, 695 Fairfax Pike, Stephens City,
Virginia.
44. First Bank Safety deposit box was rented by on July 18,2007. This box
is located at First Bank, Sherando Financial Center, 695 Fairfax Pike, Stephens City,
Virginia.
OVERT ACTS
In furtherance ofthe conspiracy and to affect the objects of the conspiracy, the following
overt acts, among others, were committed in the Western District of Virginia:
45. On April 3, 2009, an undercover law enforcement officer (hereafter UC) traveled to
Carter's Store in Middletown, Virginia, and spoke with a Middle-Eastern male standing
behind the counter that appeared to be a store clerk. A UC told the clerk that he was a
small wholesale cigarette seller and gave the clerk a fictitious price list and business card.
The clerk told the UC that the owner had a second store in Stephens City, Virginia
(American Market/The Smoke Shop) and that he would have the owner call the UC later.
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Later on the same day, the UC received a telephone call from who identified
himself F said he was the owner of Carter's Store and was interested
in obtaining cigarettes from the UC.
46. On April 6, 2009, a UC traveled to Carter's Store. Upon arriving, identified
himself to the UC as " asked the UC about getting cigarettes.
asked the UC what brands the UC had for sale and what the prices were. pulled out
the fictitious price listthat the UC had dropped off previously and asked the UC if the
prices listed were current and reflected the recent tax increase (Effective Apr 1, 2009,
CHIPRA increased the federal excise tax). The UC told that they did. The UC
explained that he was a wholesaler supplying extra cigarettes to stores in the area.
told the UC that they would need approximately 1000-1500 cartons of cigarettes each
week. Later the same day, telephoned the UC and ordered 220 cartons of taxed
cigarettes.
47. On April 9, 2009, a UC delivered 220 cartons of taxed cigarettes to Carter's Store
(located in Middletown, Virginia). purchased and took delivery of these cigarettes
and told the UC to bring the cigarettes into the store. paid $6,080 ($3,080 in cash,
and $3,000 by check, number 1163, drawn on First.Bank account number xxxxxx2601 in
the name of American Market) for the cigarettes. then placed an order with the UC
for 40 cartons of cigarettes.
48. On April 14, 2009, a UC arrived at Carter's Store and spoke with a Middle-Eastem male
behind the counter, who identified himself as s brother. This individual received 39
cartons of taxed cigarettes. and the UC then spoke via telephone. After concluding
the telephone call, the individual behind the counter paid the UC $682.50 by check
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(check number 1547, drawn on First Bank account number xxx5401 in the name of
Shaimaan Inc. T/A The Smoke Shop).
49. On April 18, 2009, contacted a UC by telephone. told the UC that he wanted
300 cartons of Marlboro Light cigarettes for delivery on April 20. told the UC that
he did not want tax stamps on the cigarettes. The UC asked ifhe said that he did
not want stamps on the cigarettes. responded that he did not want stamped
cigarettes. also stated he would need an additional 400 cartons of untaxed
cigarettes later in the week.
50. On April 19, 2009, a UC and spoke by telephone. The UC told that did not
have complete order and that he only had 180 cartons of untaxed cigarettes.
told the UC that was okay, and asked if the UC could deliver the 180 cartons on
April 20. the UC agreed to make the delivery and told he would have the
remaining 120 cartons by April 22.
51. On April 20, 2009, at approximately 11:40 a.m., contacted the UC by telephone
and told the UC that he was at the store and needed the cigarettes delivered by 2:00 p.m.
52. On April 20, 2009, at approximately 1 :25 p.m. a UC arrived at Carter's Store with 180
cartons of untaxed cigarettes. told the UC that he wanted the cigarettes put into a
car in the parking lot outside the store. and the UC left the store and were
accompanied by R.S. to a car in the parking lot. and the UC then loaded 180
cartons of untaxed cigarettes into the car. R.S. then drove away in the car, heading north
on Route 11. paid the UC $4,860 in cash for the cigarettes. The UC asked if
he still wanted the 400 cartons of untaxed cigarettes as he had previously requested.
said he needed to call his customer, but most likely he would want the cigarettes.
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also said he would have to pay the DC the day after the DC delivered the cigarettes,
explaining that his customer comes at night and would not have the money to pay
for the cigarettes until after his customer picked up the cigarettes.
53. On April 21, 2009, contacted a DC by telephone and requested 60 cartons of
untaxed Marlboro Light cigarettes in addition to the 120 cartons of untaxed Marlboro
Lights he had previously ordered.
54. On April 23, 2009, a DC arrived at Carter's Store with 240 cartons of taxed and 180
cartons of untaxed cigarettes. BDTT was seated at a table at the front of the store.
purchased and took possession of all the cigarettes. told the DC that he wanted all
the cigarettes placed in a white Toyota SDV. paid the DC $12,195 in cash for all
the cigarettes. requested that additional cigarettes be delivered when the DC
delivered the 300 cartons of untaxed Marlboro Light cigarettes.
55. On May 1, 2009, a DC arrived at Carters Store with 250 cartons of taxed and 290 cartons
of untaxed cigarettes. was inside the store, while BDTT was out front of the store.
told the DC that he wanted the cigarettes put into a car outside the store. and
the DC then proceeded to load all the cigarettes into a light colored compact car. When
the DC offered to deliver the cigarettes, explained that he had a driver coming.
paid the DC $3,600 for the taxed cigarettes. reiterated that his customer
would be down later that night and would call the DC the following day when he
had the money for the untaxed cigarettes. also placed an additional order for
cigarettes.
56. On May 3, 2009, a DC traveled to Carters Store where he spoke with R.S., who told the
DC that the DC would have to go to their other store in Stephens City, the American
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Market, to meet up with The UC traveled to the American Market, where he met
with asked the UC who he was. The UC explained that he was
there to meet to pick up money. asked the UC how much money, to
which he replied $11,340. then addressed the UC as"the cigarette guy' and told
him that was on his way. arrived and paid the UC $11,340.
57. On May 5, 2009, a UC arrived at the American Market with 598 cartons of taxed
cigarettes and spoke with who instructed the UC to put some of the cigarettes in
Toyota Land Cruiser and the remainder in the store. the UC and
carried the remainder, approximately one-half of the cigarettes, into the American
Market. paid the UC $6,770 for the cigarettes. Approximately 30 minutes after the
UC left the American Market, called the UC and asked him to return to the store,
which he did. Once the UC was back at the American Market, paid the UC an
additional $5,000 and placed an additional order for 440 cartons of taxed and 230 cartons
of untaxed cigarettes.
58. On May 7, 2009, a UC delivered 285 cartons of taxed and 110 cartons of untaxed
cigarettes to at Carters Store. and the UC loaded the cigarettes into
Toyota SUV. The UC told he did not have 120 cartons of order.
asked the UC ifhe stamped cigarettes for Maryland. The UC explained that he did not,
but that he might be able to supply with counterfeit Maryland tax stamps.
asked the UC to see about getting the counterfeit Maryland tax stamps, saying that if the
UC could put the stamps on Newport cigarettes, he would be able to make large orders.
then asked what the price would be for the counterfeit Maryland tax stamps. The
UC replied that the price would be the cost of the stamps plus $0.10.
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59. On May 11,2009, at Carter's Store purchased and received 150 cartons of untaxed
cigarettes from a UC. paid the UC $5,865 for taxed cigarettes delivered on May 7,
2009. told the UC that he would pay the UC the following day for the cigarettes he
had just received.
60. On May 12, 2009, at the American Market paid a UC $4,280 for cigarettes the
UC had previously delivered to The UC traveled to Carter's Store, where
ordered 60 cartons oftaxed Virginia Slim cigarettes.
61. On November 3, 2009, spoke with via telephone and placed an order for cigarettes.
A DC told that he only had untaxed cigarettes. told the UC that was fine.
62. On November 4,2009, at Carter's Store purchased and received 600 cartons of
untaxed cigarettes from a UC that had previously ordered. paid the UC
$18,480 in cash.
63. . On November 9, 2009, at Carter's Store purchased and received 540 cartons of
untaxed cigarettes from the UC that had previously ordered. agreed to pay
the UC the following day.
64. On November 10, 2009, near a restaurant on Route 11 in Strasburg, Virginia paid
the UC $16,440 for untaxed cigarettes.
65. On November 24, 2009, at Carter's Store purchased and received 720 cartons of
untaxed cigarettes from a UC.
66. On November 25,2009, at Carter's Store purchased and received 240 cartons of
untaxed cigarettes from a UC. paid the DC $17,195 in cash for untaxed cigarettes
he purchased on November 24.
67. On December 1,2009, at Carter's Store purchased and received 300 cartons of
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untaxed cigarettes from a UC. paid the UC $6,240 for cigarettes he received on
November 25. The UC asked when he was going to pay his debt of $2,005 from
the delivery of untaxed cigarettes on November 25. said it was his fault because
the money had come from his customer and he did not count the money before giving it
to the UC. also said he was going to bring a new customer with him to the
warehouse (where the UC stored cigarettes) to introduce the customer to the UC.
68. On December 3, 2009, arrived at the warehouse in a green Toyota4Runner being
driven by AHMAD, who introduced as"Tony:' purchased and received 600
cartons of untaxed cigarettes. paid the UC $8,800 in cash. stated that"rony'
was interested in purchasing untaxed Newport cigarettes from the UC and would need to
buy the cigarettes on consignment, meaning he would pay the UC after he sold the
cigarettes.
69. On December 17,2009, at the warehouse BUTT received 1320 cartons of untaxed
cigarettes. During the delivery, BUTT and a UC discussed whether BUTT was
transporting the cigarettes to New York because a snow shower was predicted. BUTT
told the UC that he would be back by the time the snow started falling because he was
going to New York that evening and would be returning the following morning. BUTT
told the UC that he did not have the money for the cigarettes, but that the UC should
come to the American Market the next afternoon to get paid.
70. On December 21,2009, outside of Carte is Store BUTT paid a UC $37,160 for untaxed
cigarettes that BUTT had purchased on December 17, 2009. During the transaction,
BUTT told the UC that his customers were in New York City and that BUTT would need
first to obtain the cigarettes from the UC, transport the cigarettes to New York, get paid
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and then return immediately and pay the UC for the cigarettes.
71. On December 22,2009, at the warehouse BUTT and another individual purchased and
received 6750 cartons of untaxed cigarettes from a UC. BUTT agreed to pay for the
cigarettes the following Thursday.
72. On December 28,2009, BUTT and another individual met a UC at a gas station near
Middletown, Virginia. BUTT paid the UC $180,300. During the transaction, BUTT told
the UC that he, BUTT, had previously driven the cigarettes to New York for another
individuaL BUTT said he was paid $200 per trip and when he asked for a raise he was let
go. That was when he started working for
73. On December 29,2009, at the warehouse BUTT and another individual purchased and
received 3600 cartons of untaxed cigarettes from a UC. They paid the UC $101,741 in
cash.
74. On December 30,2009, at the warehouse BUTT and another individual purchased and
received 2880 cartons of untaxed cigarettes from a UC. They paid the UC $32,418 in
cash. During the transaction, BUTT told the UC that they house the cigarettes until it is
time to take them to New York and that they only take about 46 cases of untaxed
cigarettes at a time in order to reduce the risk of getting caught. BUTT also stated that he
had purchased a conversion van and that they would no longer be using a rental van.
75. On January 5, 2010, at the warehouse BUTT and another individual purchased and
received 2280 cartons for untaxed cigarettes from a UC. They paid the UC $82,481 in
cash. BUTT and the other individual transported the untaxed cigarettes in a Chevrolet
conversion van. During the transaction BUTT stated that he andthe other individual
would be able to meet again on January 6, 2010 at 10:30 a.m. because they were traveling
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up to New York and heading straight back.
76. On March 2,2010, at the warehouse and who was introduced as
purchased and received 840 cartons for untaxed cigarettes. paid a UC
$21,840 in cash.
77. On March 4,2010, at the warehouse and purchased and received
1800 cartons for untaxed cigarettes. paid a UC $48,360 in cash for untaxed
cigarettes.
78. On March 9, 2010, at the warehouse and purchased and received
780 cartons of untaxed cigarettes. paid a UC $10,000 in cash for untaxed
cigarettes. A few hours later, met the UC in Stephens City, Virginia and paid the
balance owed for the untaxed cigarettes, $10,280 in cash.
79. On March 23,2010, at the warehouse and purchased and received
5100 cartons of untaxed cigarettes. paid a UC $144,020 in cash for untaxed
cigarettes. During the transaction, told the UC that he had a new customer that was
picking up cigarettes and that did not have to deliver them. and the UC also
discussed a $19,000 debt owed by BUTT. told the UC that BUTT would be
coming to the warehouse soon and that BUTT would not be working with but
would be working by himself.
80. On March 26, 2010, and met a UC at a restaurant in Stephens City,
Virginia. told the UC that he and had some bad luck, explaining that
he and had been robbed of their cigarettes in New York. also told the
UC that he lost $150,000 because he had not received any money in advance for the
cigarettes that were seized. then paid the UC $9,650 towards the debt he owed the
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UC for untaxed cigarettes.
81. On April 13, 2010, at the warehouse purchased and received 1380 cartons of
untaxed cigarettes from a UC. paid the UC $3,000 in cash for untaxed cigarettes.
82. On April 14, 2010, at the warehouse purchased and received 660 cartons of
untaxed cigarettes from a UC. paid UC1 $33,320 for the untaxed cigarettes and
towards his debt.
83. On the same day, a few hours later at a grocery store parking lot in Stephens City,
purchased and received 180 cartons of untaxed cigarettes from a UC. also paid the
UC $20,000 in cash towards his untaxed cigarette debt.
84. On April 21, 2010, at the warehouse purchased and received 2100 cartons of
untaxed cigarettes from a UC. paid the UC $23,000 in cash for untaxed cigarettes.
85. On the same day, a few hours later, returned to the warehouse and paid a UC
$35,000 in cash and purchased an additional 480 cartons of untaxed cigarettes.
86. On April 27, 2010, at the warehouse purchased and received 960 cartons of
untaxed cigarettes from a UC. paid the UC $17,140 in cash for the untaxed
cigarettes. also asked the UC if he could receive a $1 commission per carton for
cigarettes sold to a new customer, described by as a Chinese man that would
introduce to the UC. told the UC that this person was willing to pay $1 per
carton in exchange for introducing him to the UC.
87. On May 11, 2010, at the warehouse and ZENG, identified by as"Alex;'
purchased and received 1200 cartons of untaxed cigarettes from a UC (1140 by 60
by ZENG). The cigarettes were loaded into a red minivan and a blue Honda Accord.
paid the UC $28,000.
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88. On May 12,2010, at the warehouse purchased and received 1920 cartons of
untaxed cigarettes from a DC (1320 for 600 for"fony,). paid the DC $51,560
in cash ($35,960 for purchase; $15,600 for"fony'purchase) for untaxed cigarettes.
told the DC that he wanted to bring a new customer,"fony;'(introduced by to
the DC on December 3, 2009 and identified as ) to the warehouse but"fony'had
fallen asleep, and so was buying untaxed cigarettes on behalf of'fony:'
89. On May 18, 2010, at the warehouse purchased and received 2400 cartons of
untaxed cigarettes from the DC (1320 for 1080 for''fonY,). indicated that
some of the cigarettes were being purchased on behalf of'fony;'( paid a
DC $64,320 ($34,320 for purchase; $30,000 for''fong'purchase) in cash for
untaxed cigarettes.
90. On May 18, 2010, at the warehouse ZENG purchased and received 720 cartons of
untaxed cigarettes from a DC. He paid the DC $15,000. During the transaction, ZENG
stated he was not storing his cigarettes at store in Stephens City, but was going to
rent a house and store the cigarettes there. When the DC offered to deliver a large
quantity of cigarettes to ZENG in New York, which would be cheaper than ZENG
renting a house for storage, ZENG stated that that was not the way they do it in New
York. ZEN G said they are very careful and use small cars to transport cigarettes and that
was the way he was going to do it at first and be safe.
91. On May 25, 2010, at the warehouse and ZENG purchased and received 2460
cartons (1380 to 1080 to ZENG) of untaxed cigarettes from a DC. and
ZENG paid the DC $90,870 ($60,430 from $30,440 from ZENG) in cash for all
the untaxed cigarettes. During the transaction, ZENG asked if the DC would deliver a
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load of untaxed cigarettes to the New York City area.
92. Later that day at approximately approx 3:17 p.m., returned to the warehouse and
purchased 1020 cartons of untaxed cigarettes from a UC.
93. On June 1,2010, at the warehouse and ZENG purchased and received 2520 cartons
(1080 to 1440 to ZENG) of untaxed cigarettes from a UC. and ZENG paid
the UC $56,640 ($26,640 from $30,000 from ZENG) in cash for the untaxed
cigarettes.
94. On June 7, 2010, at approximately 8:30 a.m. at the warehouse ZENG purchased and
received 420 cartons of untaxed cigarettes from a Uc. ZENG paid the UC $19,880 in
cash.
95. On June 7, 2010, at approximately 1:00 p.m, at the warehouse purchased and
received 1680 cartons of untaxed cigarettes from a UC. paid the UC $34,960 in
cash for untaxed cigarettes.
96. On the same date, at approximately 2:00 p.m., and ZENG purchased and received
1920 cartons (840 to 1080 to ZENG) of untaxed cigarettes from a Uc. and
ZENGpaid the UC $51,400 ($29,060 from $22,340 from ZENG) in cash for
untaxed cigarettes.
97. On June 16,2010, at the warehouse and ZENG purchased and received 4140
cartons (2400 to 1740 to ZENG) of untaxed cigarettes from a UC. and
ZENG paid the UC $96,140 ($48,980 from $47,160 from ZENG) in cash for
untaxed cigarettes.
98. On the same date, a few hours later at approximately approximately 1 :56 p.m.,
returned to the warehouse and purchased and received 2400 cartons of untaxed cigarettes
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from a Uc. paid the UC $71,140 in cash for untaxed cigarettes.
99. On June 22, 2010, at the warehouse and ZENG purchased and received 6900
cartons (5460 to 1440 to ZENG) of untaxed cigarettes from a UC. and
ZENG paid the UC $161,000 ($116,760 from $44,240 from ZENG) in cash for
untaxed cigarettes. During the transaction, told the UC that the cigarettes he was
purchasing were going to be divided among three of his customers.
100. On July 9, 2010, at a storage facility located near Woodstock, Virginia ZENG purchased
and received 720 cartons of untaxed cigarettes from a UC. ZENG paid the UC $19,440
in cash. During the transaction ZENG stated he was getting his orders for untaxed
cigarettes from customers in New York. ZENG said he had rented an apartment in
Stephens City, where his customers came to pick up cigarettes.
101. On July 13,2010, at a storage facility in Woodstock, Virginia purchased and
received 1500 cartons of untaxed cigarettes from a UC. the paid UC $39,000.00 in
cash for untaxed cigarettes.
102. On July 14, 2010, at a residence located on Lynn Drive, Stephens City, Virginia ZENG
purchased and received 960 cartons of untaxed cigarettes from a UC. ZENG paid the UC
$20,000 in cash. The residence was sparsely furnished, including an air-mattress and a
money-counting machine. ZENG stated he had rented the property because it was safer.
103. On Augnst 10,2010, at the warehouse purchased and received 1560 cartons of
untaxed cigarettes from a UC. paid the UC $38,700 in cash for untaxed cigarettes.
104. On Augnst 17,2010, at a storage facility near Woodstock, VirginiaATIF and ZENG
purchased and received 2640 cartons (1200 to 1440 to ZENG) of untaxed
cigarettes from a UC. and ZENG paid the UC $69,380 ($30,000 from
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$39,380 from ZENG) in cash for untaxed cigarettes.
105. On August 26, 2010, at a storage facility located near Woodstock, Virginia and
ZENG purchased and received 2640 cartons (1200 to 1440 to ZENG) of untaxed
cigarettes from a UC. and ZENG paid the UC $63,690 ($29,810 from
$33,880 from ZENG) in cash for untaxed cigarettes.
106. On August 31, 2010, at the warehouse ZENG purchased and received 2460 cartons of
untaxed cigarettes from a UC. ZENG paid a UC $68,900 in cash for untaxed cigarettes.
ZENG told a UC that he was purchasing cigarettes for specifically, that 1020
cartons of untaxed cigarettes were for and $25,020 of the money given to a UC was
from
107. On September 27,2010, at the warehouse and ZENG purchased and received 3540
cartons (2100 to 1440 to ZENG) of untaxed cigarettes from a UC. and
ZENG paid the UC $97,410 ($62,410 from $35,000 from ZENG) in cash for
untaxed cigarettes.
108. On October 13, 2010, at the warehouse ZENG purchased and received 1980 cartons of"
untaxed cigarettes from a UC. ZENG paid a UC $54,360 in cash for untaxed cigarettes.
109. On November 3, 2010, at the warehouse ZENG purchased and received 2160 cartons of
untaxed cigarettes from a UC. ZENG paid a UC $58,300 in cash for untaxed cigarettes.
110. On November 16,2010, at the warehouse ZENG purchased and received 1200 cartons of
untaxed cigarettes from a UC. ZENG paid the UC $38,000 in cash for untaxed cigarettes.
During the transaction ZENG said that his customers had provided the money to ZENG
so that he could purchase the cigarettes.
111. On December 7, 2010, at the warehouse ZENG purchased and received 1200 cartons of
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untaxed cigarettes from a UC. ZENG paid the UC $33,300 in cash for untaxed cigarettes.
112. On December 17,2010, at the warehouse ZENG purchased and received 1200 cartons of
untaxed cigarettes from a UC. ZENG paid the UC $33,000 in cash for untaxed cigarettes.
During the transaction, ZENG said his customer was on his way to pick up the cigarettes
ZENG had just purchased.
113. On January 19,2011, at the warehouse and ZENG purchased and received 3750
cartons (1950 to 1800 to ZENG) of untaxed cigarettes from a UC. and
ZENG paid $102,500 ($53,300 from $49,200 from ZENG) in cash for untaxed
cigarettes. During the transaction ZENG indicated he did not have any employment other
than trafficking untaxed cigarettes.
114. From January 2009 through July 2009, American Market reported $195,967 in gross
Virginia sales.
115. From August 2009 until January 2011, American Market reported $0 in gross Virginia
sales.
116. During 2009, and deposited or caused to be deposited $294,720 into one
or more of the banks accounts listed above.
117. For tax year 2009, and filed a joint federal tax return and reported gross
receipts income of $32,482 and a net profit of $16,576.
118. From January 2010 through January 2011, American Market, Inc. reported $0 in gross
Virginia sales.
119. From January 2010 through January 2011, and deposited or caused to be
deposited $26,283 into one of the bank accounts listed above.
120. All in violation of Title 18, United States Code, Section371.
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COUNTS 2
(18 U.S.C. 1956(h))
(Conspiracy to Commit Money Laundering)
1. The allegations contained in Count Iare hereby realleged and incorporated by reference
as though set forth in full.
2. From in or about April 2009 , and continuing up to and including the date of this
indictment, in the Western District of Virginia and elsewhere, the defendants,
CHENG ZENG, MOHAMMAD BUTT,
and MUSHTAQ AHMAD, did knowingly combine, conspire,
and agree with each other and with other persons known and unknown to the Grand Jury
to commit offenses against the United States in violation of Title 18, United States Code,
Section 1956, to wit:
a. to knowingly conduct and attempt to conduct a financial transaction affecting
interstate and foreign commerce, which involved the proceeds of a specified
unlawful activity, that is trafficking in contraband cigarettes, with the intent to
promote the carrying on of specified unlawful activity, that is trafficking in
contraband cigarettes, and that while conducting and attempting to conduct such
financial transaction knew that the property involved in the financial transaction
represented the proceeds of some form of unlawful activity in violation of Title
18, United States Code, Section 1956(a)(I)(A)(i);
b. to knowingly conduct and attempt to conduct financial transactions affecting
interstate commerce and foreign commerce, which transactions involved the
proceeds of specified unlawful activity, that is, trafficking in contraband
cigarettes, knowing that the transactions were designed in whole or in part to
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conceal and disguise the nature, location, source, ownership, and control ofthe
proceeds of specified unlawful activity, and that while conducting and attempting
to conduct such fmancial transactions, knew that the property involved in the
financial transactions represented the proceeds of some form of unlawful activity,
in violation of Title 18, United States Code, Section 1956(a)(I)(B)(i); and
c. to knowingly conduct and attempt to conduct financial transactions affecting
interstate commerce and foreign commerce, which transactions involved the
proceeds of specified unlawful activity, that is, trafficking in contraband
cigarettes, knowing that the transaction was designed in whole and in part to
avoid a transaction reporting requirement under F ederallaw, and that while
conducting and attempting to conduct such financial transaction knew that the
property involved in the financial transaction, represented the proceeds of some
form of unlawful activity, in violation of Title 18, United States Code, Section
I 956(a)(1 )(B)(ii).
MANNER AND MEANS
3. The marmer and means used to accomplish the objectives of the conspiracy included,
among others, the following:
a. Members of the conspiracy were engaged in the possession, transportation, and
sale of contraband cigarettes.
b. Members of the conspiracy obtained proceeds from the sale of contraband
cigarettes.
c. Members of the conspiracy used the proceeds from the sale of contraband
cigarettes to purchase additional contraband cigarettes.
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d. Members of the conspiracy used financial institutions to exchange small-
denomination bills for 100-dollar-bills.
e. Members ofthe conspiracy used safety deposit boxes to conceal assets.
f. Members ofthe conspiracy created and operated business entities to conceal their
activities.
g. Members of the conspiracy opened bank accounts in their own names and in the
names of various businesses.
h. Members of the conspiracy used a variety of personal and business bank accounts
in an attempt to conceal the nature, source, and ownership of funds.
1. Members ofthe conspiracy leased vehicles to facilitate the transportation of
contraband cigarettes.
J. Members of the conspiracy leased and maintained various business locations to
promote their sale of contraband cigarettes.
k. Members of the conspiracy engaged in financial transactions exceeding $10,000.
1. Members of the conspiracy engaged in the conduct contained in the allegations
alleged in Counts 5S through 65 which are hereby incorporated by reference as
though set forth in full.
4. All in violation of Title IS, United States Code, Section 1956(h).
COUNTS 3 THROUGH 57
(IS U.S.C. 2342(a
(Trafficking in Contraband Cigarettes)
1. On or about the dates set forth below, in the Western District of Virginia, the
defendant(s) listed below, as principles and as aiders and abettors, did knowingly and
unlawfully purchase, receive and possess contraband cigarettes, as that term is defined in
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Title 18, United States Code, Section 2341, to wit: a quantity of more than 10,000
cigarettes which bore no evidence of the payment of applicable State cigarette taxes in
the Commonwealth of Virginia, in the amounts set forth below.
Count Date DefendantC s) Number of Cartons of
Contraband Cigarettes
(one carton contains 200
cigarettes)
3 April 20, 2009 180
4 April 23, 2009 180
5 May 1,2009 290
6 May 7, 2009 110
7 May II, 2009 150
8 November 4, 2009 600
9 November 9, 2009 540
10 November 24, 2009 720
II November 25, 2009 240
12 December 1,2009 300
13 December 3, 2009 and 600
MUSHTAQ AHMAD
14 December 17,2009 MOHAMMAD BUTT 1320
15 December 22, 2009 MOHAMMAD BUTT 6750
16 December 29, 2009 MOHAMMAD BUTT 3600
17 December 30, 2009 MOHAMMAD BUTT 2880
18 January 5, 2010 MOHAMMAD BUTT 2280
19 March 2, 2010 and 840

20 March 4,2010 and 1800

21 March 9, 2010 and 780

22 March 23, 2010 and 5100
.

23 April 13, 2010 1380
24 April 14, 2010 660
25 April 14, 2010 180
26 April 21, 2010 2100
27 April 21, 2010 480
28 April 27, 2010 960
29 May ll, 2010 and 1200
CHENGZENG
30 May 12, 2010 and 1920
MUSHTAQ AHMAD
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31 May 18,2010 and 2400
MUSHTAQ AHMAD
32 May 18,2010 CHENGZENG 720
33 May 25, 2010 and 2460
CHENGZENG
34 May 25, 2010 1020
35 June 1,2010 and 2520
CHENGZENG
36 June 7, 2010, CHENGZENG 420
at approximately
8:30 a.m.
37 June 7, 2010, 1680
at approximately
1:00 p.m.
38 June 7, 2010, and 1920
at approximately CHENGZENG
2:00p.m.
39 June 16,2010 and 4140
CHENGZENG
40 June 16,2010 2400 '
41 June 22,2010 D and 6900
CHENGZENG
42 July 9,2010 CHENGZENG 720
43 July 13, 2010 1500
44 July 14, 2010 CHENGZENG 960
45 August 10,2010 1560
46 August 17,2010 and 2640
CHENGZENG
47 August 26, 2010 and 2640
CHENGZENG
48 August 31, 2010 CHENGZENG 2460
49 September 27, 2010 and 3540
CHENGZENG
50 October 13,2010 CHENGZENG 1980
51 November 3, 2010 CHENGZENG 2160
52 November 16, 2010 CHENGZENG 1200
.
53 December 7, 2010 CHENGZENG 1200
54 December 17,2010 CHENGZENG 1200
55 January 19,2011 and 3750
CHENGZENG
56 February 11,2011 CHENGZENG 1500
57 March 7, 2011 CHENGZENG 1800
2. All in violation of Title 18, United States Code, Sections 2342(a) and 2.
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COUNTS 58 THROUGH 65
(18 U.S.C. 1956(a)(1)(A)(i) and 1956(a)(1)(B)(i))
(Money Laundering-Promotion and Concealment)
1. On or about dates listed below, in the Western District of Virginia, the defendant(s) listed
below, as principals and as aider and abettors, did knowingly conduct and attempt to
conduct the following financial transactions affecting interstate and foreign commerce,
which involved the proceeds of specified unlawful activity, that is trafficking in
contraband cigarettes, with the intent to promote the carrying on of said specified
nnlawful activity, knowing that the transaction was designed in whole and in part to
conceal and disgnise the nature, location, source, ownership, and control ofthe proceeds
of said specified unlawful activity and that while conducting and attempting to conduct
such financial transactions the defendant knew that the property involved in the fmancial
transactions, represented the proceeds of some form of unlawful activity.
Count Date Defendant(s} Transaction
58 November 27,2009 exchanged
$2,000.00 in twenty dollar bills
for $2,000.00 in hnndred dollar
bills.
59 November 30, 2009 exchanged
$4,000.00 in twenty dollar bills
for $4,000.00 in hnndred dollar
bills.
60 December 3, 2009 exchanged
i
$500.00 in fifty, twenty and ten
dollar bills for $500.00 in
hnndred dollar bills.
61 April 9, 2010 exchanged
$5,000 in twenty, ten, and five
dollar bills for $5,000 in hnndred
dollar bills.
62 April 12, 2010
dollar bills for
$6,000 in hnndred dollar bills.
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63 April 13, 2010 exchanged
$6,000 in twenty dollar bills for
$6,000 in hundred dollar bills.
64 May 24, 2010 exchanged
$4,000.00 in twenty dollar bills
for $4,000.00 in hundred dollar
bills.
65 June 29, 2010 exchanged
$1,200.00 in twenty and one
dollar bills for $1,200.00 in
hundred dollar bills.
2. All in violation ofTitle 18, United States Code, Sections 1956(a)(1)(A)(i) and
1956(a)(I)(B)(i) and 2.
NOTICE OF FORFEITURE
1. Upon conviction of one or more of the felony offenses alleged in this Indictment, the
Defendants shall forfeit to the United States:
A. Any property, real or personal, which constitutes or is derived from proceeds
traceable to a violation of 18 U.S.C. 371 and/or 2342, pursuant to 18 U.S.C.
981 (a)(I)(C) and 28 U.S.C. 2461.
B. Any property, real or personal, involved in a violation of 18 U.S.C. 1956, or any
property traceable to such property, pursuant to 18 U.S.C. 982(a)(I).
C. Any conveyances involved in a violation of 18 U.S.C. 2342, pursuant to 49
U.S.C. 80303 and 28 U.S.C. 2461.
2. The property to be forfeited to the United States includes but is not limited to the
following property:
A. Money Judgment
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1. A sum of United States currency to be determined, and all interest and
proceeds traceable thereto, in that such sum in aggregate was obtained
directly or indirectly as a result of said offenses or is traceable to such
property.
B. United States Currency and/or financial account(s)
1. First Bank, business checking accoimt # , held in the name of
American Market, Inc., (Signature Card:
11. First Bank, joint checking account held in the names of
Mohammad and (Signature Card:
and
iii. First Bank, business checking account , held in the name of
A&M Tobacco, Inc., T/A The Smoke Shop, (Signature Card:

IV. First Bank, checking account held in the name of
Mohammad Butt.
v. First Bank, checking account held in the name of

vi. First Bank, Safe Deposit Box held in the mime of
V11. First Bank, Safe Deposit Box held in the name of
C. Vehicles and/or conveyances
I. 2006 Toyota Carmy, VIN 4T1BE32KX6U686930.
11. 2001 Toyota Land Cruiser, VIN JTEHT05J012000657.
111. 1999 Toyota4Runner, VIN JT3HN87R8X9025357.
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3. If any of the above-described forfeitable property, as a result of any act or omission of the
defendant:
A. cannot be located upon the exercise of due diligence;
B. has been transferred or sold to, or deposited with a third person;
C. has been placed beyond the jurisdiction of the Court;
D. has been substantially diminished in value; or
E. has been commingled with other property which cannot be subdivided without
difficulty;
it is the intent of the United States to seek forfeiture of any other property of the defendant up to
the value of the above-described forfeitable property, pursuant to 21 U.S.C. 853(P), including
the assets described above.
A. 2005 Honda Accord LX, VIN lHGCM56425A162823.
B. Tax Map No. 75M-4-1-70
i.
ii. BEING the same property conveyed to by Deed dated
October 31, 2005, from The Ryland Group, Inc. Said Deed is recorded
among the land records of Frederick County, Virginia, as Instrument
#050026079.
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J.HEAPHY
UNITED STATES ATTORNEY
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