Tennessee representative pleads not guilty to fraud, tax evasion

Tennessee representative pleads not guilty to fraud, tax evasion

June 19th, 2015 by Associated Press in Politics State

NASHVILLE, Tenn. - State Rep. Joe Armstrong of Knoxville has pleaded not guilty to federal fraud and tax evasion charges connected to an increase in the state's cigarette tax.

WBIR-TV reports that the Knoxville Democrat was restrained by handcuffs and leg shackles when he appeared before U.S. Magistrate C. Clifford Shirley Jr. on Friday.

FILE - In this April 14, 2015, file photo, state Rep. Joe Armstrong, D-Knoxville, attends a House floor session at the state Capitol in Nashville, Tenn. Armstrong was indicted on Tuesday, June 16, 2015, on federal fraud and tax evasion charges. Armstrong's attorney said the lawmaker plans to plead not guilty. (AP Photo/Erik Schelzig, file)

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Photo by The Associated Press/Times Free Press.

Trial was set for Aug. 25, but the date will likely change.

The indictment filed Tuesday alleges that Armstrong devised a scheme beginning in 2006 to profit from the cigarette tax hike planned by then-Gov. Phil Bredesen.

According to the charges, Armstrong borrowed $250,000 to buy tax stamps at the old 20-cent rate, and then sold them at a profit after lawmakers approved a 42-cent increase.

The lawsuit says Armstrong failed to report more than $318,000 in income.