From: Courrier Post Online
CAMDEN — It was bootleg cigarettes, not booze, that resulted in charges being filed last week against eight men in North Jersey as part of a sting operation targeting individuals with mob ties.
About $1million in illegal Pall Mall and Lucky 7 cigarettes were allegedly stolen in illicit operations headed by Augustine “Augie” Guido, 72, of Staten Island, N.Y. He faces five years in prison and fines in excess of $250,000.
“These eight men are the tip of a billion-dollar iceberg,” said state Sen. Donald Norcross, D-Camden, who plans to introduce legislation that would stiffen penalties for similar offenses.
“By helping our law enforcement officers crack down on these and similar criminals, we can recover lost revenue and assist other states who are suffering from the same activity.”
According to law enforcement officials, Guido’s operation was fairly simple and profitable.
Untaxed cigarettes shipped from out of state were stored in a tractor-trailer parked in a locked commercial trucking facility in Edison. An FBI informant tipped Guido off to the presence of the truck in the summer of 2010, officials said.
Following a planning meeting with the informant, Guido’s associates were seen cutting the gate to the facility, driving a truck inside and then leaving with the trailer containing the 270 crates of stolen cigarettes, authorities said. It was taken to another warehouse in Perth Amboy, where it was later recovered by authorities.
Their plan was to sell the untaxed cigarettes for profit, officials said. None of the 52 full boxes of cigarettes had the required tax stamps and each box held 50 cartons.
For every pack of cigarettes a smoker buys in New Jersey, nearly $3 of the purchase price is accounted for by state taxes, the seventh-highest in the country. That’s on top of a flat tax of about a dollar per pack collected by the federal government.
A carton carries an excise tax of $27.
In a 2007 case, New Jersey retailers were charged with selling 30 million counterfeit cigarettes, costing the state $3 million in tax money.
The highest combined cigarette tax rate in the nation is found in New York City, where an additional $5.85 is added to the per-pack purchase price.
Norcross’ legislation also would increase the transparency of sales and strengthen state licensing and reporting requirements to aid New Jersey law enforcement.
“We’re shutting down Tobacco Road,” said Norcross, who is chair of the Senate Law and Public Safety Committee. “The sale of illegal cigarettes costs the government billions of dollars nationally each year and New Jersey is a focal point in the cigarette black market.
“It has to end.”
Only one of the eight men arrested as part of Guido’s criminal operation had a New Jersey address. The rest are from New York and were arrested on charges of conspiracy to commit cargo threat, officials said.
This year, the Virginia Senate directed the Virginia State Crime Commission to take a stronger look at illegal cigarette trafficking. “Cigarette smuggling and “black market cigarettes” have existed for decades, but recent tax increases in a number of states have greatly increased the potential profits to be made,” the report said.
It’s estimated that the profit on a diverted load of 1,500 contraband cartons of cigarettes moved from Virginia to New York City can reach upwards of $100,000 because of differences in tax rates.
In Virginia, buying cigarettes with that state’s tax stamp to sell at a higher price in other states is a misdemeanor.
Individuals buying up to 25 cartons of cigarettes to distribute out of state are permitted to do so, but proposed legislation would make smuggling 500 cartons or more a felony.
