Editor’s Note: For more information about the Virginia State Crime Commission’s work in investigating and countering tobacco trafficking, please see the Counterfeit Cigarette IPD here.
From: The News & Advance
ABC could lead effort against threat linked to organized crime, terror
BY FRANK GREEN | Richmond Times-Dispatch
The Virginia State Crime Commission is drafting legislation aimed at illegal cigarette trafficking following a closed briefing from law enforcement agencies this month.
The commission chairman, state Sen. Thomas K. Norment Jr., R-James City, said he was alarmed by the pervasiveness and sophistication of the trafficking. He said the legislature and the public need to be educated about of the threat.
Norment and state Sen. Janet D. Howell, D-Fairfax, did not comment on the specifics of the 2½-hour, closed-door meeting. But Howell said, “We’re finding that the ties to organized crime and terrorism are real and the trafficking is increasing.
“For Virginia, it’s not just the revenue loss, but we’re bringing bad players into our commonwealth,” Howell said. “They’re setting up shop here and particularly down the (Interstates) 95 and 81 corridors.”
One commission proposal calls for studying the feasibility of the Virginia Department of Alcoholic Beverage Control serving as the lead agency coordinating law enforcement efforts against trafficking as well as licensing businesses that sell cigarettes.
Last year Howell prompted a crime commission study, which continued this year, of the illicit trafficking. “What little did I know,” she said. “I thought it was a minor problem. I had no idea it was going to be this serious.”
In May, for example, New York authorities announced the arrests of 16 Palestinians, some with connections to terrorist organizations, who allegedly shipped 1 million cartons of cigarettes from Virginia to New York, making an estimated $65 million profit.
Last month, two of the defendants were also charged with conspiracy to commit murder after allegedly plotting via telephone from the Rikers Island jail to kill witnesses.
The trafficking is bringing the state the same kind of unwanted attention it once drew as a major source of firearms for illegal gun traffickers.
A story last November in the magazine The Economist began: “The busy interstate highway that zips through Richmond, Va., and up to the crowded cities of the Northeast has long been a conduit for handguns bought wholesale in Virginia and sold to drug dealers in New York. Now I-95 is siphoning northwards another form of contraband: black-market cigarettes.”
Cigarette-trafficking schemes depend on tax avoidance and have been around for decades. However, recent major tax increases in other states have boosted the potential profit.
Virginia’s excise tax for a carton of cigarettes is $3. In New York City it is $58.50.
Virginia, with the second-lowest cigarette tax in the country, is near states with some of the highest taxes. A carton of cigarettes that sells in Virginia for $40 to $45 costs $120 to $150 in New York City.
A carload of 750 cartons driven from Virginia and sold in New York without paying New York taxes can mean a profit of nearly $42,000.
Virginia is unlikely to increase its excise tax, and states such as New York are unlikely to decrease theirs. “The solution is obvious, but there’s not the political will to do it,” Howell said.
As a result, Virginia is a top source state for trafficked cigarettes. The General Assembly stiffened some laws during the past two sessions in response to the dubious distinction, but the problem appears to be worsening.
The illicit trafficking is so lucrative it has corrupted some investigators and been linked to terrorist organizations. It also has led to murder and assaults, as well as ancillary crime such as fraud and money laundering.
A detailed public presentation to the commission Nov. 14 by Stewart Petoe, the commission’s director of legal affairs, concluded that the trafficking is not a “cigarette issue” but “an organized crime issue.”
