FAIRFIELD — A Fairfield man who operated a nationwide chain of cigarette stores in the 1990s until he was caught defrauding a bank for millions of dollars was sentenced Wednesday in San Jose to five years in federal prison.
Ned Roscoe, 51, owned Cigarettes Cheaper!, which at its height had nearly 800 retail stores and $1 billion in annual revenue. Last year, a federal jury found him guilty of 28 criminal charges related to bank fraud.
John Roscoe, 81, of Green Valley, Ned Roscoe’s father and the company’s president, was sentenced to a year of home confinement. During their jury trial, he took a plea deal, pleading guilty to conspiracy to make false statements to Comerica Bank.
The relationship of the Roscoes and Cigarettes Cheaper! with Comerica Bank started going bad in 2001, when lines of credit were increased to $50 million and were secured with store inventory. In November 2003, Ned Roscoe admitted to Comerica Bank that the company’s inventory was about $16 million less than he was reporting in weekly and monthly reports to the bank, according to court records.
The Roscoes were indicted in 2007.
Federal prosecutors have said the fraud ended up costing Comerica more than $10 million and that the fraud Ned Roscoe perpetuated became so brazen that he eventually ordered employees to make up truckload after truckload of imaginary cigarettes and asked the cigarette provider to give Cigarettes Cheaper! inflated false invoices to add to the illusion of the company’s inventory.
Federal prosecutors asked for Ned Roscoe to receive a 14-year prison sentence. Ned Roscoe, who remains free on $150,000 bail, will appeal his conviction and was ordered to turn himself in March 21 to federal prison authorities. Both Roscoes were also ordered to spend five years on probation after they complete the terms of their confinement.
Reach Jess Sullivan at 427-6919 or at firstname.lastname@example.org.