BERLIN — The number of people caught smuggling untaxed cigarettes into Maryland is on the rise, and it’s costing the state hundreds of thousands of dollars in lost tax revenue, authorities say.
“If they can buy them in Virginia or the Carolinas for $5 a pack, they can go up to New York and sell them for $15 a pack, so they triple their money,” said Detective Sgt. Richard Klebon with the Berlin Barrack of the Maryland State Police.
Law enforcement efforts ultimately aim to keep the tax dollars in Maryland; the state levies a $2-per-pack tax. As far as the Comptroller of Maryland is concerned, cigarette smuggling is a big business with little risk.
Comptroller Peter Franchot “has always been a strong proponent for aggressive enforcement of Maryland’s tax laws,” said his spokeswoman, Christine Feldmann. “It’s a matter of fairness. Criminals who knowingly violate Maryland’s tax laws hurt small businesses who follow the rules. It’s about leveling the playing field.”
She said typically when smugglers are caught, they can face criminal charges of transporting and possession of untaxed cigarettes. The transporting charge is a felony, and carries a fine of $50 per carton as well as the threat of up to two years in prison. Possession is a misdemeanor and can bring up to a $1,000 fine and a year in prison.
“It’s happening every day because the penalty if you get caught is not very bad,” she said, and as a result, “we’ve had multiple repeat offenders.”
So far, state police at the Berlin Barrack are on track to seize about four times more cigarettes than last year. They had four arrests that yielded 1,737 cartons in 2011. This year, they’ve already made five arrests and seized about 1,600 cartons.
Troopers out of Berlin made two arrests in 2009 for 88 cartons. No arrests were made in 2008 or 2010, Klebon said.
It’s against the law to enter Maryland with more than two packs of cigarettes purchased out-of-state. If someone has any more untaxed smokes than that, the law says the person is transporting untaxed contraband.
The comptroller is sponsoring legislation to increase the smuggling penalties. Bills pending in Annapolis would increase penalties to a per-carton $150 fine and imprisonment for up to two years — and that’s just for first-time offenders. Repeat offenders could, upon conviction, face a fine of $300 for each carton and up to five years in jail.
The ways in which people transport dozens of cartons may vary, Klebon said. Sometimes, they’ll just have big black trash bags tied up in the back seat. One man was caught having built a secret compartment out of wood paneling in a commercial-type van.
In a recent traffic stop, Klebon said one of his troopers stopped a man who had packed 690 cartons of cigarettes into his minivan.
“The guy could have been an engineer — there wasn’t a cubic inch of space wasted,” he said. “They packed it right level with the windows, then put blankets on top, then would put, like, a bag or two of groceries on top.”
Most people don’t travel like that, so any vehicles obviously filled with boxes — and are spotted crossing the Maryland’s state line from the south — become targets for a trained police eye, Klebon also said.
Klebon said he’s not thrilled by the slap on the wrist some people get when caught smuggling.
“Given the propensity for people to do it, the punishment should fit the crime. If they tighten up the penalties, it might dissuade people from doing it.”
The thousands of cigarettes confiscated by police are not sent back into retail circulation, but instead sit in evidence rooms “for a long time” before the case even makes it to a courtroom, and then they are typically destroyed, Feldmann said.
It’s not just Worcester County that’s a cigarette-smuggling hot spot. Feldmann said “pretty much everywhere that a county borders a low-tax state” is a target, like Cecil County, Prince George’s County and western Maryland.
In Somerset County, authorities are also catching more cigarette smugglers. Lt. Krah Plunkert, State Police barrack commander in Princess Anne, said his troopers are seeing a significant increase in the transport of untaxed cigarettes through the state. On Wednesday alone, while conducting specific enforcement to catch cigarette smugglers, they made two arrests and seized about 700 cartons, bringing the total in 2012 to eight arrests and about 1,700 cartons. Last year, they had just two seizures, for about 900 cartons.
Plunkert said the economy is the culprit, “driving these individuals to make the quick buck,” he said.
Police believe smugglers are taking clear north-south routes to unload their cargo in New York City. There, the combined city and state tax comes to $6.46 a pack, and a carton can cost about $300, Plunkert said. A carton bought in the south can run about $40 and be re-sold for a tidy sum.
“You figure, for a day-long operation, it’s a pretty significant profit,” Plunkert said.
He also said past investigations lead them to believe that cigarette smuggling is funding elements of organized crime, “like your bootlegger with the alcohol, back in the day.”
“There has to be some type of group that puts it together,” he said. “I don’t think they’re just putting the money back in their pocket and purchasing houses and nice vehicles.”