Bootleg Cigarette Ring Dismantled

Fourteen people have been charged with running a large-scale cigarette trafficking conspiracy in which they evaded millions of dollars in taxes, according to a federal indictment unsealed in St. Louis, MO, today.

Twelve of the defendants were arrested earlier today, and the two remaining defendants are expected to surrender in the near future. The indictment, which was returned on February 18, 2016, alleges that the defendants, primarily from New York and the Atlanta area, purchased large quantities of cigarettes in Missouri and Georgia, where the state tax on cigarettes is substantially lower than in New York.

According to the indictment, the defendants transported the cigarettes to New York, sold them without paying the New York tax, and concealed the transactions, resulting in a substantial profit. The State of Missouri and the State of New York require that a tax stamp be affixed to each package of cigarettes as proof of tax payments.

New York currently imposes a combined state-local tax of $5.85 per package, compared with Missouri, which imposes combined state-local tax of 22 to 24 cents per package in St. Louis County and St. Louis City. It is estimated that the tax loss for New York State is in excess of twenty million dollars.

If convicted, conspiracy to traffic in contraband cigarettes and money laundering carries a maximum penalty of five years in prison, and/or a fine up to $250,000; each count of trafficking in contraband cigarettes carries a maximum of five years in prison and/or fines up to $250,000; each count of money laundering carries a maximum of 20 years in prison and/or fines up to $500,000.

The case was investigated by the Bureau of Alcohol, Tobacco, Firearms and Explosives and IRS Criminal Investigation, with the assistance of multiple federal, state and local law enforcement agencies in Missouri, New York, Georgia, Indiana and Illinois.

As is always the case, charges set forth in an indictment are merely accusations and do not constitute proof of guilt. Every defendant is presumed to be innocent unless and until proven guilty.