Tobacco.org

• NEWS: CIGARETTE TAXES UP, SMUGGLING UP 

"Higher cigarette taxes will help curb smoking and its deadly consequences. But little revenue is expected to be seen at the City or State level. Instead they will create a greater incentive for smugglers to use black market sales to fund terrorism. As we create disincentives for New Yorkers to start and continue smoking, we also need a renewed crackdown on smuggled cigarettes. We cannot ease a major health crisis by helping fund terrorism." . . .

Rep. Weiner is the author of the Prevent All Cigarette Trafficking (PACT) legislation, which increases penalties for individuals smuggling cigarettes and provides law enforcement with new tools to go after black market sales.

Rep. Weiner’s new tobacco bill comes just weeks after law enforcement seized six million dollars worth of counterfeit tax stamps and arrested a Jordanian man as part of a major sting. According to a recent Government Office of Accountability (GAO) report, Hezbollah profited $1.5 million from the sale of illegal tobacco from 1996-2000.

Jump to full article »

Report: Cigarette smuggling costs state millions  

A congressional report being released today charges that New York State loses millions of dollars a year in unpaid sales taxes on smuggled cigarettes.

Rep. Peter King (R-Seaford) called for an investigation and hearings into the lost revenue - money that King says in past cases has been funneled by smugglers to terror groups overseas.

King, who requested the report by the Republican staff of the House Homeland Security Committee, faults New York State government for not enforcing its own cigarette tax laws, particularly on Indian reservations - reporting that the state lost as much as $576 million in 2004 alone including from purchases on reservations.

"We've been talking to state investigators and law enforcement ... and there's definitely a nexus between the cigarette sales and the terrorist organizations,"

Jump to full article »

• Tobacco and Terror (PDF) 

Prepared by the Republican Staff of the U.S. House Committee on Homeland Security U.S. Rep. Peter T. King (R-NY), Ranking Member
. . .

Recent law enforcement investigations, however, have directly linked those involved in illicit tobacco trade to infamous terrorist organizations such as Hezbollah, Hamas, and al Qaeda.1

These startling discoveries led U.S. House Committee on Homeland Security Ranking Member Peter T. King (R-NY) to launch an investigation of the issue. The following staff report--which will focus on the estimated millions of dollars in illicit tobacco profits being funneled to terrorist groups overseas as well as New York State's refusal to enforce tobacco laws--is the result of numerous interviews with law enforcement officials at the local, State, and Federal level, as well as open-source research. . . .

Conclusion

Experts have long acknowledged that terrorist organizations such as Hezbollah "depend on a wide variety of criminal enterprises, ranging from smuggling to fraud to drug trade to diamond trade in regions across the world,"" including the United States. Terrorist organizations rely heavily on their global web of illicit enterprises to financially support their recruiting, training, arming, and operational objectives. As law enforcement agencies continue to combat terrorist and criminal fundraising schemes, these criminal groups will continue to adapt and exploit emerging vulnerabilities. The ability of these groups to engage in low-risk, cash-based schemes such as cigarette smuggling are critical to the continuation of their operations. The more than $50,000 in profits that smuggling rings can generate from one contraband load (1,500 cartons) is enough to fund as many as 10 USS Cole bombing operations. In just two months of illicit cigarette trade operations, a motivated terrorist cell could generate sufficient funds to carry out another September 11th style attack, in which operational costs were estimated to be $500,000.38

Law enforcement agencies face a daunting task of keeping up with these ever-changing criminal schemes. Simply put, they need more help from State and Federal governments. The last few years have seen a boom in cigarette smuggling around the world and here in the United States; and, thanks to its policy of forbearance, New York State is doing more to facilitate this trade than any other State in the union. On June 3, 2008, New York State taxes on cigarettes are set to increase by another $12.50 per carton. This will only serve to increase the demand for illicitly smuggled cigarettes and inflate the profit margin of these smuggling networks.

This must be brought to an end. It is more than just a matter of hundreds of millions in lost tax revenue-it is a matter of national security.

Jump to full article »

• NEW COURT DECISION ON ILLEGAL CIGARETTES SHOWS NEED FOR STRONGER FEDERAL LAWS 

Today, Rep. Anthony Weiner (D-Brooklyn & Queens) a member of the House Judiciary Committee renewed his call for stronger federal laws to curb the widespread illegal sale of tobacco after a federal judge dismissed all but one count in a lawsuit filed against Indian reservations who sell tax-free cigarettes. The court decision in Brooklyn dismissed the claim that the illegal cigarettes "created, fostered, and nourished a thriving black market," even though the selling of illegal cigarettes is a technique used by terror groups such as Hamas and Hezbollah to finance their activities. According to a recent Government Office of Accountability (GAO) report, Hezbollah profited $1.5 million from the sale of illegal tobacco from 1996-2000. Weiner has requested Congressional hearings to examine this national security issue. . . .

Reports of tobacco smuggling by individuals with ties to terrorist organizations include:

· June 21, 2002: A federal jury in North Carolina finds Mohamad Hammoud guilty of cigarette smuggling, racketeering, and money laundering. Hammoud and his brother smuggled $7.9 million worth of cigarettes from North Carolina to Michigan. Together they steered profits from their multimillion dollar cigarette smuggling operation to Hezbollah.

--May 1, 2003: 10 men of Middle Eastern descent are arrested in New York and Virginia for possession of 71, 467 cartons valued over $2.2 million, wire fraud and money laundering. Federal government opens investigation into suspected ties with Hezbollah . . .

"We must crack down on the illegal sale of tobacco which gives terrorists and criminals the ability to raise more money," said Rep. Weiner.

Jump to full article »

• Bill would stamp out Internet cigarette sales, sez Weiner 

Rep. Anthony Weiner wants to snuff out illegal on-line cigarette sales by making them a felony and by banning the delivery of cigarettes through the mail.

Weiner (D-Brooklyn/Queens) said his goal is to cut down on tax-free Internet sales - which cost the city some $40 million a year in lost revenue and have been linked to terrorist groups such as Hezbollah and Hamas.

A recent federal study found that Hezbollah raised $1.5 million from illegal cigarette sales from 1996 to 2000.

Weiner's bill, which will be introduced tomorrow, comes on the heels of a similar U.S. Senate bill, introduced in March.

Jump to full article »

• GOLDEN: INDIAN BUTTS: TERROR'S TAKE 

A senior intelligence analyst with ATF, William Billingslea, wrote in Police Chief Magazine that "Because of the immense profit in the . . . trade, illicit cigarette trafficking now rivals drug trafficking as the method of choice to fill the bank accounts of terrorists and terrorist groups."

In New York, state tax agents have joined with the state Tax Department to establish the "First Alert Program," which has produced many of the leads resulting in arrests - including a Brooklyn husband and wife who smuggled cigarettes to fund the anti-American activities of a group of 200 terrorists.

Another part of the problem is Native American reservations across the state that insist their sovereignty gives them the right to sell tax-free cigarettes even to non-tribal members.

The U.S. Supreme Court ruled in 1994 that New York was within its constitutional right to tax those sales (tribe members can still escape the tax). But the state has refused to enforce the law. . . .

Both federal and state laws are already in place, and the courts have reaffirmed their constitutionality. What we need now is a governor with the guts to enforce them. The result of not enforcing the law has transcended the issue of Native American sovereignty into an issue of national security.

Jump to full article »

• Cigarette smuggling costs state $20M  

Sales of illegal cigarettes cost the state an estimated $20 million a year in lost tax revenue, and the problem has been linked in other parts of the country to such organizations as al-Qaida and Hezbollah, experts say.

The lucrative business can bring smugglers $60,000 profit per truckload, with criminals in some cases using fake tax stamps to avoid having to pay taxes on their loot, the experts told a Georgia Senate panel Thursday.

Although Georgia isn't considered one of the top states for cigarette smuggling, "It would be ridiculous to say you don't have a problem," said Robert Shepherd, an ex-policeman and prosecutor who fought smuggling in New York.

The Senate committee is studying the problem and considering ways to fight it . . .

last year, when 18 people were charged in a smuggling conspiracy that prosecutors said raised money for Hezbollah.

"The enterprise operated from Lebanon, Canada, Brazil, Paraguay, China, North Carolina, Florida and the Dearborn, Mich., area, perpetrating crimes in the states of Michigan, California, Florida, Georgia, Illinois, North Carolina, West Virginia and points in between," the indictment alleged.

Jump to full article »

• for hezbollah: cheap smokes, fake viagra 

They are accused of trying to fund terror through the sale of cheap cigarettes and fake Viagra pills.

U.S. law enforcement agencies in Michigan allege five Canadian men -- three from Windsor, Ont., and two from Montreal -- were clandestinely shipping tax-free cigarettes, rolling papers and fake Viagra across borders to sell and raise millions for Hezbollah, the Lebanese extremist group with terrorist ties.

Windsor cabbie Karim Hassan Nasser has pleaded guilty to playing a role in the scheme between 1998 and 2001 and is awaiting sentencing. . . .

According to U.S. court documents obtained by The Vancouver Sun, portions of the $500,000-a-month operation were given to Hezbollah. Some members of the enterprise charged a "resistance tax," a set amount over black-market price per carton of contraband cigarettes, which their customers were told would be going to militant organizations.

Some members of the enterprise also solicited money from cigarette customers for the "orphans of martyrs" program run by Hezbollah in Southern Lebanon to support the families of so-called suicide martyrs.

The Hezbollah supporters are not the only Canadians on the run from U.S. authorities in a terrorist financing case.

Jump to full article »

LOVELACE: Raising cigarette tax is common-sense public policy 

While being a step in the right direction, Gov. Mark Sanford's proposal for a token increase in South Carolina's cigarette tax is a dollar short and a day late. In the halls of government there is a sore lack of understanding of health care in general and a gross underestimation of the impact of our state having the lowest cigarette tax in the nation.

The governor's proposal to raise the cigarette tax to 37 cents is more than a dollar short of the $1.41 state tax per pack recently passed by President Bush's home state of Texas. The national average state cigarette tax is now a dollar.

In our state, the smoking-caused health-care costs for Medicaid and Medicare are about $7 per pack of cigarettes sold. . . .

Why would our governor propose a 30-cent remedy to a $6.50 problem? . . .

In 2002, a terrorist cell in North Carolina was convicted of selling $7.9 million of cheap N.C. cigarettes in Michigan by the tractor-trailer load -- raising millions of dollars for the Hezbollah militia. . . .

Increasing our cigarette tax, at least to the national average, is common-sense public policy. It is the most effective deterrent to youth smoking, it reduces health-care costs and it saves lives here and abroad while generating revenue for our failing health-care delivery system. A 2006 voter survey showed that over 70 percent of S.C. voters are in favor of a dollar tax on each pack of cigarettes. As our legislative year begins, let your voice be heard.

Jump to full article »

• LOVELACE: Too-low cigarette tax has wide-ranging effects 

In our state, the smoking-caused health care costs for Medicaid and Medicare are about $7 per pack of cigarettes sold. The federal tax on a pack of cigarettes is 39 cents, and our current state tax is just 7 cents. So for each pack sold we are presently getting 46 cents to fund the $7 of taxpayer expense for smoking-caused Medicaid and Medicare costs. Why would our governor propose a 30-cent remedy to a $6.50 problem? To say he is a dollar short is an understatement. Remember the figure above does not include the smoking-related health care costs of the uninsured. The best way to get out of a hole is to stop digging.

South Carolina has not raised the tax on a pack of cigarettes since 1977. The governor's idea is not a day late - it is actually three decades late. We are paying dearly for our lack of action, abroad and at home.

In 2002, a terrorist cell in North Carolina was convicted of selling $7.9 million of cheap N.C. cigarettes in Michigan by the tractor-trailer load, raising millions of dollars for the Hezbollah militia. . . .

Increasing our cigarette tax, at least to the national average, is common sense public policy. It is the most effective deterrent to youth smoking, it reduces health care costs, and saves lives here and abroad while generating revenue for our failing health care delivery system. A 2006 voter survey showed that more than

70 percent of S.C. voters are in favor of a dollar tax on each pack of cigarettes. As our legislative year begins, let your voice be heard.

Jump to full article »

• Paraguayan Smuggling Crossroads Scrutinized 

CIUDAD DEL ESTE, Paraguay -- For years, this region -- where the boundaries of Paraguay, Brazil and Argentina converge -- has been considered a teeming stew of globalization's more unseemly byproducts. Much of the trade that crosses the borders, officials say, is illegitimate. The region is full of smuggled goods and laundered money.

Now U.S. officials are launching a broad series of new measures aimed at uncovering money-laundering rings that they believe are funding Hezbollah and other radical groups. . . .

Meanwhile, the State Department this year helped draft stricter anti-money-laundering legislation that was passed by Argentina's congress. The U.S. Embassy's legal adviser in Asuncion, Paraguay has held training courses during the past year for investigators and prosecutors in charge of combating possible terror links, according to the Justice Department.

Glaser said it is the links to Hezbollah and other radical groups that "concern us most."

U.S. officials cite a smuggling case in March in which 19 people were charged in Detroit for allegedly operating an international ring that illegally moved cigarettes through Paraguay and Brazil. The indictment alleged that profits were funneled to Hezbollah. . . .

A trip to one of two warehouses where agents collect three to four tons of confiscated goods from the markets each week offers an instant corrective to that notion. The cardboard boxes are bursting open with pirated CDs and DVDs, PlayStation games, shoes, Hello Kitty dolls and watches. The air smells like tobacco, from thousands of cartons of phony Marlboros.

Jump to full article »

• 18 charged in smuggling case 

The U.S. Attorney's Office on Wednesday indicted 18 people it alleged took part in a multimillion-dollar international conspiracy to smuggle cigarettes, counterfeit Viagra and other goods to raise money for the Mideast terrorist group Hezbollah.

The tobacco-smuggling operation was based in Dearborn and shipped up to $500,000 a week worth of untaxed and low-tax cigarettes, according to a grand jury indictment unsealed Wednesday in federal court in Detroit. Part of the fundraising effort also involved the sale of counterfeit Viagra shipped from China and Eastern Europe, the indictment alleges.

"The enterprise operated from Lebanon, Canada, Brazil, Paraguay, China, North Carolina, Florida and the Dearborn, Mich., area, perpetrating crimes in the states of Michigan, California, Florida, Georgia, Illinois, North Carolina and West Virginia (and points in between)," the indictment alleges.

The federal government estimates the state of Michigan lost $20 million in taxes as a result of the smuggling. There is no estimate of how much money went to Hezbollah, officials said.

Some smuggled cigarettes were supplied by Cattaraugus Indian Reservation residents near Irving, N.Y., the indictment alleges. Also, thousands of cartons were bought after they were stolen from the R.J. Reynolds tobacco company in Kentucky, the indictment alleges. . . .

The smuggled cigarettes were sometimes subject to a "resistance tax," which customers said would be sent to Hezbollah, the indictment alleges. . . .

Imad Hamad, Michigan regional director of the American Anti-Discrimination Committee, said he objects to the stamp of terrorism being routinely placed on criminal cases involving Arab-Americans or people of Muslim faith.

"An indictment does not mean a conviction," Hamad said. . . .

Nine men were arraigned in U.S. District Court in Detroit on racketeering charges Wednesday.

Jump to full article »

The enterprise operated from Lebanon, Canada, Brazil, Paraguay, China, North Carolina, Florida and the Dearborn, Mich., area, perpetrating crimes in the states of Michigan, California, Florida, Georgia, Illinois, North Carolina and West Virginia (and points in between).
Federal indictment alleging a Dearborn, MI, group took part in a multimillion-dollar international conspiracy to smuggle cigarettes and other goods to raise money for the Mideast terrorist group Hezbollah.

• Witness in N.C. cigarette smuggling case indicted in firebombing 

A Lebanese native who was a witness in the 2002 trial of two men convicted of smuggling cigarettes to benefit a militant group has been accused of firebombing a competing Charlotte convenience store.

Haissam Nashar, 39, was arrested Tuesday after the FBI searched his office. He has been ordered held without bond pending a hearing Thursday in U.S. District Court. . . .

The indictment makes no connection between the current case and the cigarette-smuggling case.

In that case, Nashar was sentenced to probation after pleading guilty to a single charge of transporting counterfeit cigarette stamps. He then testified at the trial of two brothers charged with operating a smuggling ring that sold cheap North Carolina cigarettes in Michigan without paying state taxes there, then funneled the proceeds to Hezbollah, the Lebanese militia group the U.S. government considers a terrorist organization.

Jump to full article »

• Illegal sales worry cigarette tax foes 

Two dueling groups combined their proposed ballot measures Tuesday into one that would slap a $2.60 tax on a $4 pack of cigarettes to aid health care -- but officials said the 300 percent tax hike also would turn California into a gold mine for terrorists.

The California Hospital Association and anti-smoking groups, eyeing the November ballot, said the good far outweighs cigarette-smuggling concerns. It would provide nearly $2.3 billion annually for emergency rooms, children's health insurance and nursing education.

But in an acknowledgment of the cigarette-smuggling problem, the measure would also set aside $20 million a year for law enforcement efforts.

Federal and state officials already are waging an uphill battle against cigarette smuggling fromlow-tax states to high-tax states, where the cigarettes are sold at a discount.

Many of the illegal operations are now tied to terrorism. . . .

Radley Balko of the Cato Institute in the nation's capital said New York's black market "has aided a bevy of international terrorist organizations and nefarious elements, including the Russian mafia, Chinatown gangs, the Irish Republican Army, Hezbollah and al-Qaida."

In 2002, Hezbollah ringleader Mohammad Youssef Hammoud was arrested in Charlotte, N.C., for operating a cigarette-smuggling ring that bought low-tax cigarettes in North Carolina and sold them on the black market in high-tax Michigan, Balko said.

Jump to full article »

Appeals court to rehear cigarette-smuggling case 

Confusion over a U.S. Supreme Court decision striking down Washington state's sentencing guidelines prompted the Richmond-based federal appeals court to schedule a rare August hearing on the ruling's impact in the five states it covers.

The hearing involves the case of a man convicted of helping terrorists via a North Carolina cigarette-smuggling ring.

The Supreme Court ruled in June that juries, not judges, must consider aggravating factors that can lengthen a defendant's sentence. Those factors must be proven beyond a reasonable doubt -- the same high standard used to determine guilt or innocence.

Jump to full article »