Jump to full article: Associated Press (AP), 2010-01-22
Author: MATTHEW BARAKAT Associated Press Writer
Intro: Undercover ATF agents in Virginia have funneled more than 250 million cigarettes onto the nation's streets in the past three years through black market sales targeting smugglers, an Associated Press review has found.
Authorities say the flood of government-provided smokes - a pack and a half for every man, woman and child in New York City, the smugglers' main destination - leads them to organized crime rings and can even cut off financing for terrorists. The stings by the Bureau of Alcohol, Tobacco, Firearms and Explosives have yielded about five dozen federal arrests, albeit none on terror charges.
Many of those cigarettes undoubtedly wind up in the mouths of minors, since black market vendors have no reason to turn away teenage purchasers.
Despite that, government auditors and anti-tobacco groups want the ATF to do even more.
"Smuggling reduces prices, so it increases use, especially among kids, who are more price-sensitive" in their purchases, said Eric Lindblom, director of policy research for the Campaign for Tobacco-Free Kids. . . .
In September, the Justice Department's inspector general found that tobacco diversion cases account for just 1 percent of ATF's caseload and 2 percent of its budget. In large swaths of the country, ATF has not conducted any investigations of cigarette smuggling for at least five years, the audit determined.
A notable exception, the AP found, was the Eastern District of Virginia, which includes Richmond, northern Virginia and the Interstate 95 corridor. The area is a hotbed for the crime because while 42 states and the District of Columbia have collectively passed more than 80 tax hikes on cigarettes since 2002, Virginia and North Carolina, the heart of tobacco country, still tax tobacco at only pennies per pack.
"The profit margin on this is ridiculous," . . .
All told, the AP found undercover sales of more than 250 million cigarettes in the last few years. The AP review did not include state charges - authorities said that the vast majority of cases brought in state courts involve relatively small quantities of cigarettes.
While 250 million is a large number, it pales to the 469 million cigarettes produced every day by Philip Morris USA at its two plants in Virginia and North Carolina last year. . . .
While there have been terrorists who have made money through cigarette smuggling, it's far more common to find smugglers linked to organized crime
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