State Rep. Joe Armstrong once worked with former state Sen. Bill Owen as a lobbyist in Washington for the tobacco wholesale company that had a problem with pending cigarette tax legislation in Congress, according to the News Sentinel.
That company now figures prominently in federal charges of fraud and tax evasion pending against Armstrong that involve a state cigarette tax increase enacted in 2007, a year before the Washington lobbying.
The problem: Tru Wholesale had a warehouse full of Bronco cigarettes in 2008. Congress was preparing to pass a bill that would raise the taxes owed on those cigarettes to help fund an increase in the availability of health insurance for children.
“They were going to get soaked for that increase,” former state Sen. Bill Owen explained Wednesday in an interview with the News Sentinel.
…In early 2008, federal court records allege, Tru Wholesale was funneling nearly $1 million in tax stamp profits owed Armstrong and Anderson through a firm owned by Armstrong’s accountant, Charles Marshall Stivers of Kentucky.
Stivers had been Armstrong’s accountant for years and served on the boards of Tengasco, an energy firm Armstrong founded, and of Miller Energy, public disclosure records show.
Tru Wholesale owners Boyd Wyatt and Roger Cox already employed Owen as a lobbyist. But Owen said the pair wanted a bit more influence and brought Armstrong, a nationally prominent black Democratic state legislator, on board.
“He knew the Tru Wholesale people, and he knew people in Congress,” Owen said.
…Owen crafted an “out-of-state consulting contract” with Armstrong and filed it with the Ethics Commission, records show. Owen said Armstrong traveled with him and Cox to Washington and lobbied Congressional leaders to drop the so-called floor tax hike.
…After the lobbying efforts of Armstrong and Owen, those records show the floor tax hike was eliminated altogether in the Senate final version.
“We reached a compromise,” Owen said.
…Owen did not say how much Armstrong was paid. Tru Wholesale picked up the tab for the travels and paid a fee to the two men, he said.
Owen is president and founder of Asset and Equity Corporation, a lobbying and consulting firm he has operated since 1987. Armstrong listed the firm as a source of income in his 2009 and 2010 financial disclosure forms.
Owen denied any knowledge of the tax stamp deal Armstrong allegedly brokered with Tru Wholesale but insisted neither that deal nor Armstrong’s paid lobbying of Congress while a sitting member of the Tennessee General Assembly were illegal or improper.
“Joe saw a situation developing and he took advantage of that,” Owen said. “That happens every day in the Legislature. That’s not a crime.”