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250M Illegal Cigarettes On Streets After ATF Stings

250M Illegal Cigarettes On Streets After ATF Stings

This undated photo released by the Bureau of Alcohol, Tobacco, Firearms and Explosives shows a vehicle agents from the ATF and the Maryland Comptroller\'s office stopped on Interstate 95 in February 2005, recovering 1,600 cartons of cigarettes from the ve

Associated Press

January 22, 2010

FALLS CHURCH, Va. (AP) – 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.

The Department of Justice, the ATF’s parent agency, estimates that federal, state and local governments lose out on $5 billion annually in tax revenue from cigarettes sold through illegitimate channels.

In the biggest and most recent prosecution, federal authorities charged 14 people in November with paying more than $8 million in cash, supplemented by guns and drugs, for 77 million cigarettes over the course of a year. Two are accused of paying an undercover agent posing as a hitman to kill a couple over missing cigarettes.

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,” said Ashan Benedict, resident agent in charge of the bureau’s office in Falls Church, Va. “It’s not that hard to find a customer who wants to save $40 a carton.”

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.

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