ATF Smuggles 250 Million Cigarettes

ATF Smuggles 250 Million Cigarettes

This is a discussion on ATF Smuggles 250 Million Cigarettes within the Off Topic & Humor Discussion forums, part of the The Back Porch category; Here is a story for you: ATF stings put 250M illegal cigarettes on streets - Yahoo! News FALLS CHURCH, Va. Undercover ATF agents in ...

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Thread: ATF Smuggles 250 Million Cigarettes

  1. #1
    Distinguished Member Array nutz4utwo's Avatar
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    ATF Smuggles 250 Million Cigarettes

    Here is a story for you:

    ATF stings put 250M illegal cigarettes on streets - Yahoo! News

    FALLS CHURCH, Va. 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.

    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.

    The Virginia agents say they focus on cigarette smuggling in large part because the investigations often turn up other crimes. The ATF's Richmond office went so far as to set up its own store in King George, Va., called KG Wholesale, which advertised in Arabic-language newspapers and elsewhere. The store was set up with audio and video surveillance to record the transactions, all of which were illegal undercover sales.

    By the time ATF pulled the plug on KG Wholesale in 2008, 27 people had been arrested and roughly 60 million contraband cigarettes had been sold.

    The planners of the storefront sting were aware that cigarette smuggling has been a source of terrorist funding in the past in 2002 a federal jury in North Carolina convicted two Lebanese citizens of diverting millions of dollars in cigarette smuggling proceeds to the radical Islamic group Hezbollah and were anxious to disrupt other similar money trails.

    Agent Ken Mosley is confident that investigations like the KG case disrupt terror financing, but he acknowledged evidence was insufficient to bring terrorism charges.

    "There is no doubt in my mind that we have arrested people involved in terrorism," Mosley said.

    The focus on Arabic-speaking smugglers in the KG Wholesale investigation the store did not run ads in other foreign-language papers smacks of profiling, said Ibrahim Hooper, a spokesman for the Council on American-Islamic Relations, a Muslim civil rights group.

    "Obviously it would be a concern if they targeted only Muslims and/or Arab-Americans," Hooper said.

    While there have been terrorists who have made money through cigarette smuggling, it's far more common to find smugglers linked to organized crime, said John W. Colledge III, a Nevada-based consultant who once ran large-scale cigarette smuggling investigations for the U.S. Customs Service.

    "Unfortunately, terrorism has become a sort of a buzzword," he said. "That's what gets you funding."

    Smuggled cigarettes end up in legitimate retail establishments as well as on street corners, where they're often sold for $5 a pack several dollars below retail. The cheap cigarettes are especially alluring to minors, experts say, since black market sellers are less likely to card.

    A tractor-trailer filled with untaxed or low-tax cigarettes can hold a potential profit of $1 million if they're trucked to New York City, where each pack faces $2.75 in state taxes plus a $1.50 levy from the city itself. A single vanload can turn a $115,000 profit.

    By their nature, the undercover investigations require agents to act convincingly as criminals. Benedict and Fairfax County Police Lt. David Smith had the Korean smugglers convinced they were Italian mobsters. In the KG case, Mosley said agents would get angry or cagey if their customers asked where all the cigarettes were coming from.

    "We'd tell them, 'It's none of your business,'" Mosley said.

    In fact, the cigarettes come from the same places the legitimate ones do: Big Tobacco. Under an ATF program, tobacco corporations supply cigarettes for stings and are repaid with the proceeds from the sales
    There are some great quotes in there:
    "The profit margin on this is ridiculous," said Ashan Benedict, resident agent in charge of the bureau's office
    Since the profit margin is equal to the amount of tax charged, one can reason the amount of tax is ridiculous.

    The stings by the Bureau of Alcohol, Tobacco, Firearms and Explosives have yielded about five dozen federal arrests, albeit none on terror charges.
    That is only 4,166,6667 cigarettes per arrest!

    Under an ATF program, tobacco corporations supply cigarettes for stings and are repaid with the proceeds from the sales
    My favorite quote. Get the ATF stooges to sell your product for you, at the government's expense, without having to follow the law! Genius!!

    Now, I am no fan of smoking for various reasons. I do however think the .gov system of regulating, taxing, and enforcing them is terrible.
    "a reminder that no law can replace personal responsibility" - Bill Clinton 2010.


  2. #2
    Ex Member Array JOHNSMITH's Avatar
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    Indeed - the REAL reason for this is right here:

    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.
    It has nothing to do with anything else. "But it's for the children!" How many times have we heard that before...

    People constantly wish to increase taxes on tobacco. But what has decreased use the most? Education on the health effects, as well as a large quit-smoking support culture. Not some tax. Taxes just make people poorer, and make it more likely that some guy is going to walk into your store, jack a bunch of cigarettes, and run out, or try to kill you doing so. All so that The Man can get his money.

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    Gee...I remember back when I was a little kid around 5 years old...my Aunt used to send me down to the corner "Drug Store" to buy her a pack of Cigs & they cost .27 Cents for a pack back then.
    Yep, little kids could go and and buy a pack of smokes for Mom or Dad or whoever back then.
    You didn't have to show any ID.

    She used to give me .50 cents and I could "Keep The Change" and that was Windfall Profits for me back then.

    When you unfairly TAX anything you're eventually going to create a Black Market if the profit is there to be made.

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    Quote Originally Posted by QKShooter View Post
    Gee...I remember back when I was a little kid around 5 years old...my Aunt used to send me down to the corner "Drug Store" to buy her a pack of Cigs & they cost .27 Cents for a pack back then.
    Yep, little kids could go and and buy a pack of smokes for Mom or Dad or whoever back then.
    You didn't have to show any ID.

    She used to give me .50 cents and I could "Keep The Change" and that was Windfall Profits for me back then.

    When you unfairly TAX anything you're eventually going to create a Black Market if the profit is there to be made.
    I remember those days. It sure is a different world we live in today.

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    How many younger forum members have never even seen one of these machines and they used to be EVERYWHERE!
    And these machines had absolutely no way of knowing that you were only 13 years old and buying yourself a pack of smokes.
    You only had to be tall enough to reach the coin slot.


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    How many younger forum members have never seen one of these and they used to be EVERYWHERE!
    I bet those cigarettes are stale..........Some Luckies in there too!

    And yes........"It's for the Children"

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    L.S.M.F.T. Lucky Strike Means Fine Tobacco

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    L.S.M.F.T. Lucky Strike Means Fine Tobacco

  9. #9
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    Here's a better one:



    Paul34 had it right:

    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.
    BTW, Obama has also called out the IRS to track down other Tax Cheats too............so watch your P's & Q's on those tax returns!

  10. #10
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    A while back I use to work at Walgreens. Over the course a week or two the same 2 chubby dark haired guys with NY accents would come in and buy every box and carton of cigs. They carried their wads of cash under their shirts in passport-like neck holders. I kinda figured they were pulling something like this, but on a smaller scale. Keep in mind I'm located in FL where the taxes, at the time, were very low on tobacco.
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    Member Array Archie's Avatar
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    Current FEDERAL (Internal Revenue) tax on cigarettes is $10.066 per carton. Title 26 U.S.Code section 5703 lists all this; it's public law and public information.

    State and local taxes are in addition to this. There's a lot of money in cigarette taxes.

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  12. #12
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    Most of the Tobacco companies have at least one, if not two or more attorneys that deal solely with smuggling and counterfeit cigarette matters.

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    This has nothing to do with the post, but they're going for tobacco again. I'm an advice pipe and cigar smoker (no cigarettes, though), and since the SCHIP tax hasn't raised the amount of tax they expected they're wanting to increase the pipe tobacco per pound tax to the equivalent of the roll your own cigarette tobacco. Pipe tobac is currently about $3/lb--the new tax--$27/lb. PS, I buy mine by the pound right now at roughly $45.
    Last edited by HotGuns; January 24th, 2010 at 01:54 PM. Reason: language workaround
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    VIP Member Array zacii's Avatar
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    "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.
    ?? I thought black markets increased prices?
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    Member Array Holger's Avatar
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    Saw a T-shirt today that said:
    Alcohol,
    Tobacco,
    Firearms,
    Who's bringing the chips?

    Thought it was pretty funny. Anyway, they fail to mention there would be no black market for cigarettes if the taxes weren't so outrageously high.

    It gets to be ridiculous. The government raises taxes on cigs with the goal of reducing consumption, yet they plan on funding all sorts of initiatives with the increased tax dollars. Then when it WORKS, and the revenue stream goes down, they can't understand why they can't pay for all the wasteful programs they wanted in the first place.

    So the government takes up sting operations to counter a situation they created, wasting cash and putting LEO lives in danger. Wonder what it's going to be like when marijuana gets legalized.

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