Tobacco warehouseman getshouse arrest, fined for fraud

David Stephenson

RALEIGH — A Lumberton tobacco warehouseman who pleaded guilty to tobacco fraud was sentenced today in federal court to a year of house arrest and five years of probation.

David Stephenson, 68, who operated S&P Tobacco on Fayetteville Road and worked as an independent tobacco broker, was also ordered to pay a $10,000 fine and forfeit $233,837.50, according to the office of Thomas Walker, United States attorney for the Eastern District of North Carolina. The sentence was handed down by Chief United States District Judge James C. Dever III in Raleigh.

Stephenson, who served more than a decade on Golden LEAF’s board of directors, had faced up to 10 years in prison, three years of supervised release and a $500,000 fine. He will have to wear a monitoring device, and will only be able to leave the home in certain situations, such as to visit a doctor.

Stephenson in March waived indictment and pleaded guilty to structuring transactions — or intentionally breaking up transactions of more than $10,000 into two or more transactions in order to avoid a federal law that requires banks and other financial institutions to report all cash transactions exceeding $10,000 to the U.S. Treasury Department.

Stephenson from 2009 to 2012 converted tobacco checks made out to him and to others to cash, mainly in amounts less than $10,000, and structured $382,562.37 in financial transactions to evade the reporting requirement, Walker’s office said in a statement at the time of his plea.

Stephenson structured the transactions as “part of a pattern of illegal activity” involving more than $100,000 in a 12-month period, the U.S. Attorney’s Office said. From September 2011 to January 2012, he structured about $150,000 into transactions in amounts such as $9,500, $9,600 and $9,700.

The case is part of an ongoing investigation of crop insurance fraud in the Eastern District of North Carolina. Assistant U.S. Attorney Banumathi Rangarajan prosecuted the case.