Last week’s indictment by Attorney General Eric Schneiderman of 16 members of a multimillion-dollar cigarette-smuggling ring underscores the serious nature of cigarette trafficking in New York City. Recent arrests linking the ring members to organized crime and terrorist organizations make it clear that New York needs stronger enforcement of tobacco laws.
While it hasn’t been established yet where the illicit proceeds in last week’s case ended up, we are concerned because similar schemes have been used in the past to help fund terrorist organizations like Hamas and Hezbollah. While our federal partners continue to investigate the money trail, the NYPD has arrested the principals in this massive scheme.
Make no mistake: We have a responsibility both to protect the taxpayer and to make certain we are neither targeted nor exploited by terrorists.
The indicted ring members bought cigarettes wholesale in Virginia and resold them to bodegas in New York City, avoiding the state tax. The Virginia-New York tobacco corridor is well known to law-enforcement agencies. Last week’s arrest represented just the tip of the iceberg. Currently, 46 percent of cigarette retailers in New York City inspected by the Department of Finance have untaxed cigarettes.
The lost tax revenue and possible links to organized crimes are not the only concerns. Smuggled cigarettes often are sold at a discount, making these deadly products more accessible to young people and smokers who are trying to quit. Contraband cigarettes also place law-abiding retailers at a competitive disadvantage to retailers selling illegal, untaxed cigarettes at artificially low prices.
Even as the smoking rate has decreased in New York City over the past decade, it remains the leading cause of preventable death, killing thousands of New Yorkers each year. Many New Yorkers are aware of the city’s public-education efforts to help smokers quit and discourage young people from taking up the habit. However, most do not realize that it’s not just the habit that is dangerous — the cigarette trade itself can be treacherous.
New York City and state are therefore cracking down on the proliferation of illegal cigarettes. Two bills — one introduced in the City Council and the other in the Legislature — directly address the problem of smuggled tobacco products.
The Sensible Tobacco Enforcement bill in the council will curtail the sale of illegal and discounted tobacco goods. Under this bill, the sale, possession or concealment of untaxed cigarettes or counterfeit stamps will result in a fine of up to $2,000 for a first violation, $5,000 for a second violation and the revocation of one’s license to sell cigarettes and the sealing of one’s premises for multiple violations.
The second bill, under consideration by the Legislature, will increase civil and criminal penalties for the possession of counterfeit and untaxed cigarettes and make it easier for officials to seize contraband. If a store can’t sell cigarettes without New York City stamps, it makes smuggling far less profitable.
In a related move, the city also filed a Citizen’s Petition with the US Food and Drug Administration to implement a track-and-trace system that would monitor the manufacturing and flow of tobacco products from production through distribution to retail outlets.
Such a system can help law-enforcement officers identify the last point in the chain of distribution where the cigarettes were possessed legally when they turn up without the required city tax stamps, as they did last week.That, in turn, would enable law enforcement to investigate how they were diverted to the illegal market and who was responsible.
Cigarette smuggling might appear to be a victimless crime, but last week’s arrests illustrate how it is not.Cracking down on cigarette-tax evasion is vital not only for public health but also for businesses and public safety as well.
Raymond W. Kelly is New York City police commissioner. Thomas Farley is health commissioner.