High court to hear Md. bootlegging case

Appeal filed by 3 men convicted in scheme to sneak liquor into Canada

April 06, 2004|By Gail Gibson | Gail Gibson,SUN STAFF

The Supreme Court agreed yesterday to hear a modern bootlegging case from Maryland that raises the question of what role U.S. courts should play in helping to enforce the tax laws of other countries.

The case involves three New York men convicted in U.S. District Court in Baltimore on wire fraud charges in a liquor smuggling operation that stretched from Maryland to Canada and cost the Canadian authorities millions in lost excise duties.

At issue in the men's appeal of their 2001 convictions is a centuries-old common law, known as the revenue rule, which prohibits one country from enforcing in its courts the tax laws of another country.

The defendants contend that that rule should have blocked U.S. prosecution in their case, in which they bought thousands of cases of low-end liquor in Maryland and brought them across the New York-Canadian border without paying import fees.

They won a brief victory with the argument. A three-judge panel of the 4th U.S. Circuit Court of Appeals threw out their convictions in a 2002 ruling that asked: "Where do we draw the line as to which countries' laws we will help enforce? ... Imagine [the defendants] had engaged in a similar scheme to travel overseas and defraud Afghanistan or Iraq of tax revenues."

But government lawyers appealed to the full 4th Circuit, which reinstated the convictions in a ruling in July. The full court said that the common law revenue rule does not preclude such cases, and the court rejected the defendants' claim that their prosecution was the equivalent of enforcing Canadian law.

"Such prosecution seeks only to enforce the federal wire fraud statute for the singular goal of vindicating our government's substantial interest in preventing our nation's interstate wire communications system from being used in furtherance of criminal fraudulent enterprises," the court said.

The defendants then appealed to the Supreme Court. Their case is not expected to be heard before fall.

Brothers David and Carl Pasquantino of Niagara Falls, N.Y., and another man, Arthur "Butch" Hilts of Sanborn, N.Y., were convicted on wire fraud charges after a weeklong trial in February 2001 before U.S. District Judge J. Frederick Motz in Baltimore.

Investigators with the Bureau of Alcohol, Tobacco, Fireams and Explosives said the Pasquantinos would place large-scale liquor orders by phone with distributors in Maryland. The orders were picked up in Maryland by Hilts and others and driven across the Canadian border in New York in the trunks of roomy luxury cars.

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