Tobacco companies are manufacturing "weapons of mass destruction," and marketing them all over the world. The tobacco industry's response in each case is to blame the victim, not to take responsibility, and to hand out more money to governments. Any "war on drugs" is hypocritical until the tobacco industry, its executives, and its attorneys, are treated like any other greedy drug pusher.
Smuggling cigarettes is often linked together with terrorism, as the several articles below illustrate, and the articles indicate tobacco companies may be involved in smuggling.
The Canadian government filed criminal charges Friday against affiliates of tobacco giant R.J. Reynolds, accusing them of helping to flood that country with cheap contraband cigarettes during the 1990s.
Also charged with fraud and conspiracy were eight current or former senior executives who allegedly took part in a scheme that authorities said robbed the federal government and the provinces of Ontario and Quebec of more than $800 million in cigarette taxes.
Several observers called it the biggest corporate fraud case ever filed in Canada.
The charges stemmed from a 4 1/2-year investigation by the Royal Canadian Mounted Police of the smuggling boom that prompted Canada to rescind a steep cigarette tax meant to curb smoking. Investigators said the probe was continuing and could result in charges against more tobacco companies or executives.
Among the companies charged were R.J. Reynolds Tobacco International Inc. and JTI-Macdonald Corp., a leading Canadian cigarette maker formerly known as RJR-Macdonald.
The companies and two others named in the complaint were subsidiaries of RJR Nabisco Corp. in the early to mid-1990s, when the alleged offenses took place. RJR Nabisco since has passed out of existence through corporate restructuring, and RJR Tobacco International and RJR-Macdonald were acquired by Japan Tobacco International Inc. in 1999.
"Large multinational corporations will be held accountable for their criminal activity," said Robert Davis, the RCMP inspector in charge of the case. "Senior executives of those companies will not be allowed to hide behind a 'corporate veil' to protect themselves from criminal prosecution."
Les Thompson, a former RJR-Macdonald sales manager and liaison with U.S.-based black marketeers, welcomed the charges.
Thompson served a U.S. prison term after pleading guilty to smuggling-related charges. Thompson, the subject of a November profile in The Times, described himself as a loyal soldier who carried out orders in helping the firm reap millions of dollars in illicit profit. An RJR subsidiary, Northern Brands Inc., also pleaded guilty to U.S. charges and paid a $15-million fine. But top executives blamed the scandal on Thompson, portraying him as a rogue employee who dragged them through the mud.
Garfield Mahood, head of Canada's Non-Smokers' Rights Assn., a leading anti-smoking group, called the black-market trade in tobacco "the largest corporate fraud and conspiracy in the history of Canadian business." Davis of the RCMP said this would not "be an overstatement ... if you measure by the volume of dollars defrauded."
The executives named
have not been arrested but are to appear in court March 26 in Toronto.
All have been charged with at least one count of fraud and one count of
conspiracy, each of which carries a maximum prison sentence of 10 years.
October 31, 2002 -- The European Union (EU) lawsuit was filed in U.S. District Court for the Eastern District of New York against RJReynolds (RJR) for "allegedly corrupt business dealings in Europe and Latin America."
Excerpts from the Press Release of The EU:
The European Commission has filed a civil action on behalf of the European Community (EC) and ten Member States against the U.S. cigarette manufacturer R. J. Reynolds, following the dismissal of its cigarette smuggling action last February. The following Member States participate in the civil action: Italy, Germany, France, Spain, Portugal, Greece, Belgium, The Netherlands, Finland and Luxembourg. The purpose of this new claim is to obtain injunctive relief to stop the laundering of the proceeds of illegal activities and to seek compensation for losses sustained.A copy of the the EU lawsuit, a 149 page document, European Community v. RJReynolds Companies - U.S. District Court-Eastern District of New York, is available at the web sites of ASH United Kingdom and at Tobacco Free Kids. The ASH UK site also has further information on smuggling.
"Throughout the European community, cigarettes and narcotics are routinely part of the same criminal transactions, and the incidence of such violence associated with such trade is rising rapidly around the world... Throughout the 1990s and continuing to the present day, a primary means by which ... cocaine proceeds are laundered is through the purchase and sale of cigarettes, including those manufactured by the RJR defendants. Cocaine sales in the European community are facilitated through money-laundering operations in Colombia, Panama, Switzerland and elsewhere, which utilize RJR cigarettes as the money-laundering vehicle."Some articles:
The Wall Street Journal
The San Francisco Chronicle
Further resources listed above, and also:
Tobacco Products Liability Project
Other articles follow as well
The fight against cigarette smuggling took a new twist yesterday after the European commission accused RJ Reynolds, the world's second largest tobacco company, of selling black-market cigarettes to drug barons and mafiosi and of knowingly accepting the proceeds of crime.
In a civil lawsuit, filed in New York, the commission, together with ten EU member states (although not Britain) [Italy, Germany, France, Spain, Portugal, Greece, Belgium, the Netherlands, Finland and Luxembourg], claimed Reynolds was guilty of money laundering "at the highest corporate level" and said it had lost "hundreds of millions of euros" due to the practice which dates back a decade.
Reynolds, now owned by Japan Tobacco, said: "We operate our business in a legal and responsible manner. Any allegations that we were involved in, or aware of, money laundering, conspiracy or any other illegal activities are completely absurd. ..."
However, detailed commission claims allege that Reynolds worked hand in glove with the criminal underworld in central and eastern Europe, accepting "dirty money" knowing full well that many of the cigarettes it sold would be smuggled into the EU. Some of the cigarettes also allegedly ended up in Iraq, through intermediaries in Panama, Switzerland, Cyprus, Turkey, Montenegro and other countries, it added.
The suit, details of which are available on the internet, alleges that Reynolds made it "part of their operating business to sell cigarettes to and through criminal organisations and accept criminal proceeds in payment for cigarettes by secret and surreptitious means".
The complaint goes on to detail Reynold's allegedly corrupt business practices in Europe and Latin America, including with members of the Italian and Russian mafias, Columbian drug cartels and senior govern ment figures in the Balkans.
It says its proof comes from "shipping papers, witness statements and customs documents", and argues that Reynolds officials knew exactly what they were doing.
In Brussels the commission said it had little choice but to bring the lawsuit."Protecting the financial interests of the European community and fighting money laundering and fraud remain a top priority for the European commission," said Michaele Schreyer, the EU budget commissioner.
He also hinted that similar action against Philip Morris and Japan Tobacco was in the pipeline.
Immediately after the Persian Gulf War ended in 1991, billions of Winstons
and other American-brand cigarettes began turning up inside Iraq. Even now,
the flow continues.
Under U.S. trade sanctions, companies that make cigarettes in the U.S. can't
knowingly sell them in the Iraqi market -- either directly or through
intermediaries -- unless they obtain a license from the U.S. government. The
company that produced many of those cigarettes for most of the past decade,
RJR Nabisco Corp.'s international tobacco unit, which was incorporated in
the U.S., never got a license. Neither did Japan Tobacco Inc., which
acquired the former RJR unit in 1999 and whose U.S. unit continued to
manufacture cigarettes in the U.S. until recently.
Now questions are mounting about whether RJR Nabisco's R.J. Reynolds Tobacco
International unit and Japan Tobacco, which is majority-owned by the
Japanese government, knew that their distributors were shipping cigarettes
to Iraq. One Middle East distributor claims he built a thriving market in
Iraq with the blessing of the former RJR unit. And European regulators claim
that employees connected to the tobacco companies visited Turkey as recently
as August 2001 to monitor the shipment of cigarettes from there into Iraq.
Lawyers for both companies deny any violation of U.S. law or of United
Nations economic sanctions against Iraq.
The European Union is considering filing a civil lawsuit in federal court in
Brooklyn, N.Y., that would accuse the former RJR unit and related companies,
among other things, of sanctions-busting by shipping huge quantities of
American cigarettes to Iraq via Cyprus and Turkey from 1990 through this
year. Separately, federal prosecutors in the U.S. Attorney's office in
Manhattan recently opened an investigation into possible cigarette smuggling
into Iraq by American companies in violation of federal laws, according to a
person familiar with the matter.
One reason that trade of cigarettes into Iraq raises special concerns: Some
exporters say that the sales to Iraq of cigarettes indirectly enrich the
Saddam Hussein regime. Since 1995, Mr. Hussein's eldest son, Uday, has
collected on average $10 million a year in "taxes" from legal and illegal
sales of imported cigarettes, according to Abbas Al-Janabi, who served as
Uday Hussein's private secretary from 1984 to 1998.
Lawyers for the former RJR international tobacco unit and Japan Tobacco's
international unit vigorously deny any suggestion that either company
violated U.S. law or U.N. sanctions. ... The companies also deny enriching the Iraqi regime.
Over the years, cigarettes from other multinational tobacco companies also
have been available inside Iraq. But until the activities of the RJR unit
and Japan Tobacco started coming to light, little has been known about this
Middle East tobacco exporters say it's not possible to export cigarettes
into the parts of Iraq controlled by Saddam Hussein without paying off
members of his family.
In an interview, Abbas Al-Janabi, who served as a private secretary to Uday
Hussein, Saddam's eldest son, from 1984 to 1998, describes the scheme. Mr.
Al-Janabi says that until 1995, Hussein Kamel, Saddam's son-in-law and a
government minister, collected taxes on every imported "master case" of
After Mr. Kamel was murdered in Baghdad in 1995, Mr. Al-Janabi says, the
profits from this trade went to Uday Hussein, who dramatically increased the
flow of imports. A key way Uday did this was by reselling Iraq's imported
cigarettes to smugglers who took them to Iran. "He enlarged the quantities
[of cigarettes], he enlarged the business," Mr. Al-Janabi says. He adds that
many of the cigarettes flowed from Cyprus into Iraq via Jordan, the United
Arab Emirates and Turkey.
In the late 1990s, Uday Hussein's annual take from imported cigarettes
averaged about $10 million a year from legal and illegal sales, says Mr.
Al-Janabi, who was involved in collecting these revenues until 1998 when he
defected from Iraq. "The truth is, he keeps all of it for himself. He never
In Jordan, the fees are sometimes paid through an informal "tax collection
office" run in Amman by a representative of Uday, exporters say. At other
times, the fees are paid by cigarette importers inside Iraq. The payments
are sometimes described by those who levy them as a mandatory contribution
to youth sports organizations or to the Iraqi Olympic Committee. Uday
Hussein serves as president of the committee.
Les Thompson ... pleaded guilty to money laundering and spent two years in a U.S. prison. He became the most notorious figure in the smuggling boom that prompted Canada to rescind a steep tax increase meant to curb smoking.
Interviewed at his home in Canada, Thompson portrayed himself not as a renegade but as an obliging cog in a wheel of corruption. There was no way a mid-level executive could fill multimillion-dollar orders for cigarettes without the approval of superiors, he said. Prosecutors on both sides of the border have said the same thing.
At the peak, Thompson said, RJR-MacDonald made a weekly profit of $1.2 million to $1.3 million from the contraband trade and saw an increase in its market share.
... company executives feared embarrassment or worse if the footprints led to RJR-MacDonald's door. So, Thompson said, they created a separate company to feed the contraband market. They called it Northern Brands International ... and headquartered in Winston-Salem, N.C. It operated out of 401 N. Main St., the Art Deco office tower that also served as headquarters for R.J. Reynolds Tobacco Co. and R.J. Reynolds International.
Early in 1993, Thompson and a colleague, Peter MacGregor, were sent to Winston-Salem to run NBI -- Thompson as head of sales and MacGregor as finance director. MacGregor and his lawyer declined to be interviewed. Along with a third employee, they constituted the entire work force.
The tobacco companies blamed the rampant smuggling on the Canadian government, saying excessive taxation had created irresistible incentives for crooks. But a 1993 letter that surfaced years later in U.S. tobacco litigation suggested that the companies knowingly exploited the black market.
The letter was from R. Don Brown, chairman of Imperial Tobacco, Canada's largest cigarette maker, to his superior in London, Ulrich Herter, managing director for tobacco at Imperial's parent, British-American Tobacco.
"As you are aware, smuggled cigarettes due to exorbitant tax levels represent nearly 30 percent of total sales in Canada, and the level is growing," Brown wrote. "Although we agreed to support the Federal government's effort to reduce smuggling by limiting our exports to the U.S.A., our competitors did not.
"Subsequently, we have decided to remove the limits on our exports to regain our share of Canadian smokers.... Until the smuggling issue is resolved, an increasing volume of our domestic sales in Canada will be exported, then smuggled back for sale here."
With the market drowning in contraband cigarettes, the Canadian government in 1994 adopted the tax-cutting fix that cigarette makers had relentlessly promoted.
For tobacco companies, whose products were suddenly legally available at a deep discount, it was a tremendous victory. Public health groups cried foul, arguing that the tax cuts over time would result in thousands of additional smoking-related deaths. Canadian Prime Minister Jean Chretien voiced bitterness too.
"The Canadian manufacturers have benefited directly from this illegal trade," he said. "They have known perfectly well that their tobacco exports to the United States have been reentering Canada illegally."
Soon after the Canadian rollback, a group with a public-interest veneer -- the National Coalition Against Crime and Tobacco Contraband -- set up shop in Washington, D.C. It was underwritten by R.J. Reynolds.
The coalition commissioned studies to draw press attention to the link between cigarette taxes and smuggling. Its top consultant and spokesman was Rod Stamler, a former officer of the Royal Canadian Mounted Police, who had previously done a report for Canadian cigarette makers attacking the Canadian taxes.
In August 1994, with a tax hike proposal pending in Congress, Stamler issued a new report, saying the measure could "provide organized criminals with one of their most attractive profit-making opportunities since Prohibition."
In April 1998, Steven F. Goldstone, chairman and chief executive of RJR Nabisco, led Big Tobacco's campaign against a sweeping tobacco control bill that included a record increase of $1.10 in the federal cigarette tax.
In speeches to such groups as Wall Street analysts and the National Press Club, Goldstone warned that the tax, if approved, would unleash a wave of smuggling like that seen across the border.
"If Washington creates a raging black market for cheap cigarettes on street corners and in schoolyards, the people will be furious," Goldstone said in one speech. "And they will ask, just as they did in Canada: 'How did we get ourselves into this terrible mess?' "
The tobacco bill was defeated.
A spokesman for Goldstone, who is no longer with the company, said the executive had no idea when he gave those speeches that an RJR subsidiary "would wind up ... involved in a plea related to that type of activity. He was outraged."
Undercover agents on both sides of the border had infiltrated some of the contraband rings. In June 1997, Larry Miller, the Tavanos and 18 employees and associates were arrested and charged in Syracuse, N.Y., with numerous smuggling-related crimes. All 21 defendants would eventually plead guilty to reduced charges.
On Dec. 22, 1998, in federal court in Syracuse, Northern Brands left the boat -- pleading guilty to a single smuggling-related tax offense. It was the first time a major tobacco company or affiliate had been convicted of a federal crime. In exchange for the plea and $15 million in penalties, federal authorities agreed not to bring charges against the big names of the corporate family: RJR Nabisco, R.J. Reynolds Tobacco Co., R.J. Reynolds International.
But prosecutors said there was no question NBI had done their dirty work. NBI was established "with the understanding that there was money to be made by smuggling cigarettes back into Canada," U.S. Atty. Thomas J. Maroney said.
For Thompson, who was portrayed in the NBI indictment as a key figure in the scheme, it was the beginning of the end.
He faced two counts of laundering profits from the smuggling scheme. Facing a possible term of 20 years and a $500,000 fine, Thompson struck a deal. He pleaded guilty to one count, was sentenced to nearly six years in prison, fined $20,000 and ordered to forfeit more than $85,000 in gifts ...
RJR fired Thompson, taking away his pension and stock options that he says would have been worth several hundred thousand dollars. He had to tap his retirement account to pay legal costs and fines.
In a proxy statement filed with the Securities and Exchange Commission, the company sought to distance itself from him: "Employees are prohibited from engaging in smuggling or other violations of the law. No corporate policy can eliminate the risk that dishonest individuals, including company employees, will find ways to circumvent controls for their own personal benefit."
At a court hearing in Canada in February 2000, Thompson pleaded guilty to Canadian charges and was sentenced to probation as part of an agreement to cooperate with authorities.
Canadian prosecutor Michael Bernstein told the court: "Mr. Thompson was not on a lark of his own here. He did not commit this crime by himself. His acts were part and parcel of a corporate strategy developed largely by senior executives who closely monitored and supervised his work. It was the companies who made the huge profits here."
Thompson got out of
in January ... No matter what he might do in the future, Thompson said,
"I'm going to feel better about it than what I did for Reynolds."
EXCERPTS from The Southam News (Canada), March 9, 2002, headlined, Ottawa resumes fight against tobacco giant -- Asks court to review $1-billion civil case, writer Christin Schmitz
Citing the need to combat “transnational organized crime and international terrorism,” Canada has petitioned the U.S. Supreme Court to revive the federal government's moribund $1-billion civil action against the U.S.-based R.J. Reynolds tobacco empire for alleged cigarette smuggling.
Canada's U.S. attorneys filed a petition in Washington this week asking the high court to hear an appeal of a U.S. federal appeals court decision last October that quashed the unprecedented Canadian suit for violating a centuries-old "revenue rule" that bars U.S. courts from interpreting or enforcing the tax laws of foreign nations.
The petition is a last-ditch bid to resuscitate what has now become the most expensive lawsuit ever launched by the federal government.
Gordon Bourgard, a lawyer for the Department of Justice, said that by the end of March, the government is projected to have spent $17-million on its U.S. attorneys and related legal costs since three Liberal cabinet ministers launched the test case in a blaze of publicity in December, 1999.
"We had what we believe to be a correct view of the law and that's why we are taking it to the United States Supreme Court," he said. "We are no less resolved and we are no less committed to our belief in how the revenue rule does not apply to our lawsuit in the United States."
The government claims it was defrauded of hundreds of millions of dollars by R.J. Reynolds Tobacco Co., five related companies and the Canadian Tobacco Manufacturers Council, who allegedly conspired to violate U.S. anti-racketeering laws by funneling billions of duty-free cigarettes from the United States into Canada in the early 1990s, without paying taxes.
Last October, the U.S. Second Circuit Court of Appeals in Manhattan voted 2-1 to uphold a U.S. District Court judge's ruling that accepted Reynolds' central argument that Canada's case doesn't belong in a U.S. courtroom on the grounds it violates the 18th-century "revenue rule" that bars U.S courts from interpreting foreign tax laws.
In its petition to appeal further to the U.S. Supreme Court, Canada argues "cigarette smuggling is a massive industry that has been used to finance terrorism and other forms of organized crime.... The Second Circuit's decision, if left standing, will permit smuggling operations from bases in New York into Canada and other nations without fear of civil liability in the U.S. for the foreign taxes that the smugglers evade."
Stephen Heard Jr., attorney for several Reynolds companies, called it "opportunistic" and "irresponsible in the extreme" for the federal government to link cigarette smuggling to terrorism in its petition to the Supreme Court. "I think its extremely cynical of Canada to [allege] American companies' link to terrorism through cigarette smuggling when the Canadian border has been porous to terrorists and when the Canadians have more RCMP officers dedicated to investigating the tobacco industry than they have to guarding the border."
Mr. Heard reiterated his clients' position that Canadian courts are equipped to handle any claims the federal government might wish to bring against the U.S. tobacco industry.
The federal government is appealing its $1-billion-U.S. cigarette-smuggling lawsuit against RJ Reynolds Tobacco Co. to the U.S. Supreme Court.
The government claims RJ Reynolds and five affiliates "conducted one of the largest smuggling operations in U.S. history, funneling billions of cigarettes from the United States into Canada without paying applicable Canadian taxes."
Canada claims the court wrongly broadened the revenue rule by concluding it bars a foreign government from filing civil lawsuits under U.S. laws against American citizens who have defrauded a foreign government.
Canada claims if the U.S. Supreme Court allows the Court of Appeals ruling to stand, it will "cripple efforts" on the part of any country seek restitution from smugglers operating in the United States.
Canada's appeal contains a cautionary note stating if the appeals-court ruling is "adopted by other countries, the decision will similarly thwart U.S. efforts to pursue smugglers and other criminals operating abroad."
Canada filed its lawsuit under the U.S. Racketeering Influenced and Corrupt Organizations (RICO) law.
Similar lawsuits were subsequently filed by the European Union and state governors in Colombia against Philip Morris and British American Tobacco in the U.S. These lawsuits are also hitting roadblocks in U.S. courts.
Other companies named in the Canadian lawsuit include the RJ Reynolds Tobacco Holdings Inc., RJ Reynolds Tobacco International Inc., RJR-Macdonald, Inc. and Northern Brands International Inc.
The government is also suing the Canadian Tobacco Manufacturers Council.
The European Commission is likely to file an appeal against Philip Morris Cos and Japan Tobacco in the smuggling case against the two companies that was dismissed by a federal judge last month, an EU official said.
"The case in our view is still very much alive," the official said, acknowledging that no final decision had been made to file an appeal, which must be filed by March 25.
US District Judge Nicholas Garaufis Feb 19 rejected the smuggling aspect of the lawsuit brought by the European Commission, which was acting on behalf of the European Community and 10 of the EU member states.
The EU charges that its budget loses "hundreds of millions of euro each year" through contraband tobacco smuggling. An appeal would be filed with the US Court of Appeals for the Second Circuit.
In the same Feb 19 order, Garaufis rejected the separate moneylaundering aspect of the same lawsuit "without prejudice," leaving the door open for the EU to refile a new moneylaundering case in the lower court, the New York Eastern District Court.
An EU spokesman said Feb 20 that it would refile the moneylaundering aspect of the case, but did not give a timeframe for such action. As the refiling of the moneylaundering aspect of the case is not an appeal, there is no deadline for the EU to refile a claim against the tobacco firms.
Japan Tobacco is named in the lawsuit because it purchased the overseas operations of RJ Reynolds Tobacco Holdings.
It began six years ago as a routine undercover investigation into suspiciously large cash purchases of cigarettes at a Statesville store.
But from those unremarkable beginnings, federal investigators and prosecutors in Charlotte are fashioning a legal case that could provide the nation's law enforcement officials with the blueprint for smashing cells of suspected terrorist supporters operating on American soil.
Federal prosecutors are targeting what they believe to be a Charlotte-based group of extremists who may have used connections from Canada to the Middle East to funnel money and military-style equipment to Hezbollah, the Lebanese organization labeled a terrorist group by the U.S. government.
In the wake of the Sept. 11 terrorist attacks in Washington and New York, the hunt for such groups has taken on added urgency. . .
The case sparked headlines across the country last year when federal authorities charged 18 people, mostly from Lebanon, in a wide-ranging investigation into cigarette smuggling, money laundering and immigration violations.
The suspects were accused of fraudulently obtaining visas to get into the United States and of setting up sham marriages to skirt immigration laws. They were also accused of buying cigarettes in bulk from outlets in North Carolina such as JR Tobacco in Statesville and smuggling them to Michigan.
Authorities said then that they also were investigating possible ties between the suspects and Hezbollah.
Eight months later, prosecutors raised the stakes. They obtained indictments accusing eight men and one woman of being members and associates of what they called the Charlotte Hezbollah cell. Four men, including Charlotte entrepreneur Said Mohamad Harb, were charged with conspiring to provide material support to the Lebanese terrorist organization.
EXCERPTS from The Washington Post, May 15, 2003, headlined, Feds Begin Crackdown On Cigarette Smuggling, writer, Jerry Markon
Now, the government is cracking down on the growing problem of smugglers who take advantage of Virginia's lowest-in-the-nation cigarette taxes. As an example of the tough new approach, the U.S. Attorney's Office in Alexandria recently charged 10 people in a large smuggling operation cracked by an innovative sting usually associated with drugs and firearms cases.
The problem has gained attention since the Sept. 11, 2001, attacks because federal officials say terrorists use cigarette smuggling as one way to fund their activities. In fact, a man is in federal custody after his name came up as part of the smuggling investigation and he was found in Detroit with several hundred thousand dollars in wire transfer receipts showing payments to people and groups associated with the Hezbollah terrorist group based in Lebanon, law enforcement sources said.
Those payments, along with his possible ties to the 10 people charged, are under investigation by the FBI and other federal agencies.
The development bears similarities to a case in Charlotte last year in which 10 members of a Hezbollah cell involved in cigarette smuggling were found to have conspired to aid the organization. Eight people pleaded guilty, and a jury convicted two others. One of the men was caught on wiretaps speaking on the phone with Hezbollah's military commander in Lebanon.
Paul J. McNulty, the U.S. attorney in Alexandria, would not comment on the man sources say was arrested in Detroit. But he said the Charlotte case made "all of us in law enforcement more attentive to this source of financial support for terrorism activity. There are other sources, but this is one that has gotten the attention of law enforcement."
McNulty, whose office has prosecuted most major terrorism cases since Sept. 11, said he was especially interested in pursuing the current case because "we have an approach of being very proactive in areas that could have the potential to be associated with terrorist activity."
The current investigation began with a phone call last year to the federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) from investigators with the New York State Department of Taxation and Finance. New York officials were concerned that a rise in that state's cigarette taxes would trigger a surge in smuggling.
State and local taxes on cigarettes sold in New York City are $3 per pack. The New York City portion of that tax shot up from 8 cents to $1.50 last July because of budget problems. In contrast, Virginia's cigarette tax is 2.5 cents per pack.
Smugglers have long taken advantage of the discrepancy by buying truckloads of cigarettes in Virginia, paying the nominal tax and then reselling them in New York and other states at a discount, costing those states revenue.
The defendants were arrested and charged last month in U.S. District Court in Richmond with possession and distribution of contraband cigarettes, wire fraud and money laundering. If convicted, they could face maximum sentences of 20 years' imprisonment and fines of as much as $1 million.
"There will be future
McNulty said. "We don't like the idea that Virginia would play a role
the violation of laws in other places. We want to make it an
place for criminals, period."
EXCERPTS from Reuters, October 25, 2001, headlined, Philip Morris shuts head office in anthrax scare, no writer identified.
Philip Morris on Thursday
closed its corporate headquarters at least through Friday after it
received an envelope containing white powder, the company said.
The substance was delivered to the New York Department of Health for
anthrax tests, the building's ventilation system was shut down and
the police department's hazardous materials unit was sent to the
building on Park Avenue in Manhattan, according to a recorded
message on the telephone line of a Philip Morris spokeswoman.
All employees on the 25th floor of the building, where the media
affairs office received the envelope, and in the mailroom, were
tested for anthrax exposure and as a precaution were given
prescriptions for the antibiotic Cipro, the recording said.
A message on another company line said that as of 6 p.m. (2200 GMT)
``the Philip Morris Company's headquarters building at 120 Park
Avenue is closed'' and that ``employees seeking information about
the building's status should call the security 800 number.''
A security officer reached at the building confirmed that it had
been closed and that no test results were available yet. Calls to
several of the company's corporate representatives were not
The building, headquarters to the world's top tobacco company, could
remain closed at least through Friday, and results of tests on
employees were expected no later than Sunday.