Restaurant Owner Pleads Guilty in Extortion Scheme Involving Prince George’s County Police Officers

First Defendant in the Scheme to Plead Guilty

GREENBELT, MD—Chun Chen, aka Eddy Chen, age 34, of Bowie, Maryland, pleaded guilty today to conspiring with others, including a public official, to commit extortion in connection with a scheme involving the transport and distribution of untaxed cigarettes.

The guilty plea was announced by United States Attorney for the District of Maryland Rod J. Rosenstein; Special Agent in Charge Richard A. McFeely of the Federal Bureau of Investigation; and Special Agent in Charge Rebecca Sparkman of the Internal Revenue Service - Criminal Investigation, Washington, D.C. Field Office.

According to his plea agreement, Chen owned a carry-out restaurant in Maryland. Between July 2009 and January 2010, Chen bought untaxed cigarettes from two conspirators, one of whom was a Prince George’s County police officer. The conspirators, along with another Prince George’s County police officer, had obtained the untaxed cigarettes in Virginia from an undercover agent and transported, or arranged for the transport of the cigarettes into Maryland. Under applicable state law Virginia imposes a $0.30 sales tax on each pack of cigarettes and Maryland imposes a $2 sales tax per pack. Chen in turn sold the contraband cigarettes to persons in New York where local taxes on cigarettes exceed $8 per pack. The conspirators paid Prince George’s County Police officers to use their official authority to ensure the safe transport and distribution of the untaxed cigarettes in Maryland and Virginia.

Chen was involved in all but one of the conspirators’ illicit transactions with the undercover agent involving the sale of contraband cigarette. Altogether, Chen and others paid the undercover agent $1,770,230 for 1,420 master cases of contraband cigarettes, for a total of more than 17 million contraband cigarettes. The lost state tax revenue attributable to Chen is $2,661,240.

Chen faces a maximum sentence of 20 years in prison and a $250,000 fine. As part of his plea agreement, Chen has agreed to the entry of an order of forfeiture of $2,661,240. Chief U.S. District Judge Deborah K. Chasanow scheduled sentencing for July 13, 2011 at 9:30 a.m. before U.S. District Judge Peter J. Messitte.

United States Attorney Rod J. Rosenstein praised the FBI and IRS for their work in the investigation. Mr. Rosenstein thanked Assistant United States Attorneys James A. Crowell IV, A. David Copperthite and Sujit Raman, who are prosecuting the case.

Mr. Rosenstein, Mr. McFeely, and Ms. Sparkman expressed their appreciation to Interim Chief Mark Magaw of the Prince George’s County Police Department for the assistance that he and his department provided.