Tobacco shop owners ordered to pay $9 million in cigarette-tax scheme

A former Puyallup Tribal Council member and her husband have both been sentenced to five years probation and ordered to pay more than $9 million in restitution for conspiring to traffic in contraband cigarettes.

Allison Gottfriedson and her husband Henry operated Frank's Landing Indian Discount Tobacco, where state and federal agents said they schemed to sell tobacco to the public without paying state sales tax. They admitted that they had avoided paying more than $9 million in taxes over the years, and U.S. District Judge Benjamin Settle on Monday ordered that they had to pay it back.

The Gottfriedsons also forfeited $1.5 million in cash, nearly 54,000 cartons of cigarettes and a 2007 Cadillac.

According to court documents, couple sold more than 700,000 cartons of cigarettes between 2001 and 2007 without paying state taxes, at a cost of nearly $21 million. Some of the money was spent to "benefit the Frank's Landing Indian community."

Settle noted that the couple had been active and respected members of the Puyallup tribe, and that Henry Gottfriedson was a former tribal council member who had helped negotiate how cigarette taxes would be allocated to the tribe.

Prosecutors also said that the couple had structured payments of more than $2 million from the sale of cigarettes to their personal bank accounts in such a way as to avoid detection by banking authorities.

Mike Carter: 206-464-3706 or mcarter@seattletimes.com