Cigarette Smuggling a Common Scheme

Editor’s Note:  One of the key points in the article below is that cigarette trafficking is more lucrative than gun running.

From: Wall Street Journal


Within months of being approached by a confidential informant about making a traffic ticket disappear, William Masso, a veteran NYPD officer, was suggesting a more lucrative scheme: smuggling cigarettes into New York City, federal authorities said.

“Do you know how much you’ll make with that?” Mr. Masso allegedly told the Federal Bureau of Investigation informant in April 2010.

With that conversation began a nearly two-year smuggling operation involving 10 current and former New York area law-enforcement officers and two civilians, federal prosecutors said. While their alleged sale of firearms—including machine guns—captured much attention after their arrest Tuesday, most of the allegations revolve around selling hundreds of thousands of cigarettes on the black market.

The demand for cheap cigarettes in New York—which has the nation’s highest tax levy, $6.46 a pack in the city—has fueled a burgeoning underground market that costs the city about $200 million a year and the state $525 million, city, state and federal officials said.

“Over the past decade we have seen a marked increase in contraband cigarettes coming into the greater New York area,” Joseph Green, a spokesman for the ATF’s New York office, said Wednesday.

Mr. Masso and the other defendants were charged with conspiracy and smuggling counts and have been released on $100,000 bond. Mr. Masso, who was also ordered confined to his home, didn’t answer the door Wednesday. His attorney said he denied the charges.

The cigarette-smuggling operation actually made the defendants more money: Undercover investigators paid the defendants about three times as much money—about $92,000—for moving cigarettes than for the guns, the complaint said.

And unlike the guns the defendants sold in the federal sting operation, some of the 2.4 million cigarettes they allegedly smuggled appear to have made their way into the New York market, the complaint suggests.

Law-enforcement officials say that black-market cigarettes generally are sold to bodegas and other small shops, or end up being sold in single packs on the street, undercutting the shops. Others go to bars and nightclubs.

According to recorded conversations cited by federal prosecutors, Mr. Masso was long familiar with cigarette smuggling. He told undercover investigators that he used to acquire cigarettes from a woman who bought them from Native American reservations and put bogus tax stamps on the cigarette boxes, a criminal complaint said.

He allegedly told the informant that he made $5,000 a week on the scheme and ruminated about again finding the woman and getting a tax stamp.

By May of this year, Mr. Masso and the group of officers and civilians he recruited allegedly had participated in the smuggling and sale of more than $600,000 worth of cigarettes, moving them from Virginia and New Jersey into the New York City area, authorities said. In one case, a group broke into box trucks in Virginia and stole the cigarettes, authorities said.

Nationally, the number of cigarette-smuggling cases has declined in the past eight years, according to records at the Bureau of Alcohol, Tobacco, Firearms and Explosives. But regionally it is a different story.

The Government Accountability Office has found that state-to-state disparities in taxes on cigarettes create an opportunity for criminal elements, especially in New York and Michigan. Often the smugglers are gangs who unload the cigarettes in immigrant neighborhoods.

The arrests in New York come as authorities at nearly every level of government have stepped up efforts to curb illegal cigarette sales.

NYPD teams often go from store to store looking for evidence of the selling of “loosies,” which are cigarettes sold individually from an untaxed pack, typically for 50 cents.

The New York State Department of Taxation and Finance conducts undercover investigations to catch store owners purchasing untaxed cigarettes. Queens District Attorney Richard Brown in April created a tax unit that has targeted cigarette smugglers.

And Mayor Michael Bloomberg, who has made anti-smoking efforts a signature issue, has twice sued stores and suppliers in New York and out of state in federal court for selling bulk quantity cigarettes to alleged bootleggers. Asked about the cigarette-smuggling allegations against the officers, a spokesman for Mr. Bloomberg, Stu Loeser, said Wednesday: “If true, these actions are disgraceful and deplorable.”


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