Congressional hearing on cigarette smuggling:
Your Help Needed: See Sample Wording below
Of What to Send to Your Congressional Representative

Thursday (May 1) at 10 AM, the Subcommittee on Crime, Terrorism, and
Homeland Security of the House Judiciary Committee will hold a hearing on
legislation (HR 4081 & HR 5689 at ) to reduce
cigarette counterfeiting and smuggling.  The hearing will be webcast live

Reducing cigarette counterfeiting and smuggling benefits public health and
safety, cigarette companies and retailers, state and federal governments
(and provincial governments in Canada).

Below is a press release from Rep. Lloyd Doggett (sponsor of HR 5689) and
recent news articles on cigarette counterfeiting/smuggling.

- - -

FOR IMMEDIATE RELEASE: Tuesday, April 29, 2008
CONTACT: Wyeth Ruthven, 202-225-4865 

Rep. Doggett Tobacco Smuggling
Gets Subcommittee Hearing

Washington, DC - Congressman Lloyd Doggett's Smuggled Tobacco Prevention
(STOP) Act of 2008 will be the subject of a hearing before the Subcommittee
on Crime, Terrorism, and Homeland Security of the House Judiciary
Committee.  The hearing will be held Thursday, May 1, 2008 at 10:00 am in
Room 2237 of the Rayburn House Office Building.  The hearing will be
webcast live at

"Tobacco smuggling is both an issue of public safety and public health,"
said Congressman Doggett (D-TX), a senior member of the House Ways and
Means Committee to which the STOP Act has also been referred. "Ending this
illegal trafficking will curb a source of funding for organized crime and
terrorists." A recent accidental injury in his district will prevent Rep.
Doggett from attending Thursday's hearing.

Testifying on behalf of the STOP Act will be John Colledge, a former agent
with the U.S. Customs Service Office of Investigations and the Department
of Homeland Security.  Colledge created and managed the Tobacco Smuggling
Task Force at the U.S. Customs Service, and served as a delegate to the G-8
Organized Crime Subgroup and the World Customs Organization as an expert on
cigarette smuggling. Since retiring from the Department of Homeland
Security in 2007, Colledge has served as technical advisor to
Non-Government Organizations (NGOs) on international cigarette smuggling
and developed NGO client policy for the Framework Convention for Tobacco
Control (FCTC) protocol.

Congressman Lloyd Doggett has introduced the STOP Act (H.R. 5689) to
enhance the ability of law enforcement to prevent illegal diversions of
tobacco products and to identify and punish smugglers. The bill requires
that packages of tobacco products manufactured here or imported to the U.S.
also be uniquely marked with a federal high-tech stamp, applied during the
manufacturing process, similar to that which the State of California is
already using and which Canada will soon implement.  

The STOP Act also amends the Internal Revenue Code to require all packages
of tobacco products for export be clearly labeled for export to prevent
illegal reentry into the U.S.   The bill also bans the sale of
manufacturing equipment to unlicensed persons to prevent the illegal use of
tobacco product manufacturing machinery and to address the serious and
growing problem of illegal manufacturing.  Congressman Doggett's bill would
also increase penalties for smuggling for all types of tobacco products.   

Congressman Doggett's legislation is cosponsored by 105 Members of the
House of Representatives and endorsed by the Campaign for Tobacco Free
Kids, the American Lung Association, the American Medical Association,
American Cancer Society, American Heart Association, Corporate
Accountability International, Essential Action, and the Federation of Tax

#  #  #
- - - 

Underground sales rise as plastic bags with illicit tobacco trucked across

The Canadian Press 
April 26, 2008 

The diminutive shopkeeper glances up nervously at a new customer who has
just asked to purchase two cigarettes. 

She eyes the man up and down for a moment, then reaches into a container,
hidden from view underneath her cash register, and pulls out two smokes. 

They sell for 50 cents each. 

They have no corporate markings on them. 

They are, quite clearly, contraband. 

The tiny convenience store, set amidst the dive bars and seedy hotels in
Winnipeg's tough north end, is just one of thousands of final destinations
on Canada's burgeoning underground railroad for illicit tobacco. 

An RCMP website says that officers seized 618,077 cartons of cigarettes
across the country last year - an all-time record, and five times the
amount seized in 2004. 

Police say most of the contraband comes through the Akwesasne reserve that
straddles the borders between the United States, Ontario and Quebec. It
then streams up and down the Trans-Canada Highway in a steady, relentless
flow of trucks, vans and cars. 

"When I arrived here in 2001, there was just one manufacturer set up on the
American portion of the Akwesasne Mohawk territory, and now there are over
a dozen of these tobacco factories, and they are run by organized crime
groups," said Sgt. Michael Harvey of the Central St. Lawrence Valley RCMP
detachment based in Cornwall, Ont. 

Using cheap loose tobacco from states such as North Carolina, the factories
manufacture plain, unmarked cigarettes and divide them into plastic bags of
200, police say. 

The "baggies," as they are often called in the underground trade, have
sold like hotcakes for years in Ontario and Quebec, where the $20 street price
is about one-third of the retail price of a carton of legal smokes. 

What is now becoming more apparent is just how quickly the underground
industry has spread across the country. 

Last October, RCMP in Newfoundland and Labrador announced their largest
seizure of contraband tobacco - 500,000 cigarettes from a home in St.

Earlier this year, Manitoba RCMP seized 1.5 million contraband cigarettes
that police allege had been trucked in from Central Canada. 

In March, Quebec Provincial Police reported breaking an organized crime
ring that allegedly brought contraband tobacco to Nova Scotia from
Akwesasne and Kahnawake, south of Montreal. 

Smuggling has become so big that RCMP detachments along the Trans-Canada
Highway in eastern Ontario pull over transport trucks filled with
contraband tobacco on an almost daily basis. 

"There were a couple of years ago where a minivan was a typical seizure,
but ... we are increasingly seeing larger loads," said Cpl. Nancy Mason
with the Kingston RCMP. 

"We're as busy as we can handle." 

As the cigarettes are transported further afield, the price increases.
Baggies sell for about $35 in Manitoba - still a bargain compared with the
$86 retail price for a legal carton. 

The smokes are sold almost in the open. 

"Have I seen them? Absolutely," said a provincial liquor inspector who
did not want to be identified. 

The inspector, who goes from bar to bar in Winnipeg to enforce compliance
with provincial liquor laws, said he has visited a handful of drinking
holes where contraband tobacco is sold at the beer vendor, known as the
offsale vendor in some other provinces. 

"(Customers) just come up and say, 'I'll have a smoke' (and) put
their 50 cents on the counter. Done, gone, they walk away." 

The Mounties see it, too. 

"We're seeing it sold out of the trunks of vehicles. It then makes its 
way to areas such as community clubs or just about anywhere...beverage rooms,
legions, that type of thing," said Staff Sgt. Ron Obodzinski, head of the
anti-contraband division with the Manitoba RCMP. 

"People will just approach you and say, 'Are you interested in some cheap

Contraband smokes aren't the only form of illegal tobacco. There are also
smuggled foreign cigarettes on which taxes haven't been paid, as well as
cigarettes sold tax-free on reserves that make their way into
non-aboriginal hands. 

But law enforcement officials say those problems pale in comparison to the
cheaply manufactured baggie cigarettes that are now found everywhere. 

The tobacco industry says the problem is so widespread, one in five
cigarettes sold across the country is illicit. It's become almost
acceptable to buy contraband. 

"The cost difference, that's the biggest reason for me," said Amanda,
an office worker in downtown Winnipeg, who did not want her last name

Amanda buys a baggie almost once a week through a friend who gets it from
another friend. 

"Sometimes you have to wait a few days, but it's pretty regular." 

Government coffers are feeling the pinch of the underground trade. Police
estimate illegal smokes cost Canadians $1.6 billion in lost taxes every
year. The Manitoba government expects its tobacco tax revenues to drop $34
million from last year to $170 million. 

In the early 1990s, federal and provincial governments cut tobacco taxes to
take away profit margins in the contraband trade. But the idea doesn't seem
to be on the table now. 

"Taxes have been a major factor in reducing consumption of tobacco,
especially among young people," said Manitoba Finance Minister Greg

"I think there are some enforcement issues that have to be followed up on
by both federal and provincial governments." 

Following some big busts in the last six months, police are optimistic
enforcement will pay off. 

"We know who the players are and we certainly are feeding (different) law
enforcement agencies to work these joint operations I think
it will prove successful," said Harvey. 

Cornwall RCMP have been working co-operatively with police and band
officials on Akwesasne, he said, but shutting down factories on the
American side of the border is a challenge. 

The Mounties and the U.S. Coast Guard have sworn in some of each other's
officers, allowing them to chase smugglers across the border. 

Akwesasne officials did not return repeated phone calls requesting an
interview. In previous media interviews, band police chief Lewis Mitchell
has said the community should not be blamed. 

"We have to remember it's organized crime from Montreal, the big cities,
coming into our community and exploiting our borders, exploiting our
community," he told the CBC last month. 

- - - 

NY Bust Nets $6M in Fake Tax Stamps
By David B. Caruso
Associated Press

Millions of dollars worth of counterfeit tax stamps were seized and a
Jordanian man arrested as part of a major undercover investigation into
tobacco smuggling in New York, authorities announced Wednesday.

The fake stamps would have allowed unscrupulous cigarette dealers to evade
nearly $6.1 million in state and city taxes, authorities said.

Investigators who searched a pair of Queens storage facilities said they
also seized more than 100 cartons of counterfeit Marlboro cigarettes made
in China.

"This type of fraud could cost taxpayers in New York up to hundreds of
millions of dollars each year in lost revenue, and we will not tolerate
it," Brooklyn District Attorney Charles Hynes said.

Tax stamps, which must be affixed by distributors to packs of legal
cigarettes, cost $3 each in New York City, $1.50 in the rest of the state
and $2.57 in New Jersey.

Prosecutors said Rafea Al-Nablisi offered them for 4.5 cents apiece to
state tax investigators who had been posing as dirty tobacco distributors.

Al-Nablisi, 40, who had been living in Queens, was arrested in the sting on
Feb. 29 and has pleaded not guilty. Prosecutors said they waited to
announce the case because the investigation was ongoing.

Al-Nablisi's attorney, Howard Greenberg, said his client is no smuggling

"Even in the light most favorable to the DA's office, my guy is a nobody,"
Greenberg said.

Investigators who searched the Queens storage rooms said they also found
stamps from Pennsylvania, Virginia and Kentucky.

State excise tax investigator Marybeth Cherubino, who was the lead agent on
the case, said that, besides dealing in counterfeit tax stamps, Al-Nablisi
bought 375,000 packs of untaxed cigarettes in February from undercover

"He wanted as much as we could supply," she said.

Prosecutors said that Chinese-made knockoff cigarettes pose a special
hazard, because there is no way for smokers to know whether they are laced
with toxins even more dangerous than those ordinarily found in cigarettes.

"There may be pollutants in there, like heavy metals or lead," said Michael
Vecchione, chief of the Brooklyn district attorney's rackets division.

The arrest comes as some authorities voice concern about whether New York
state's planned $1.25-per-pack hike in tobacco taxes, taking the price of a
pack in the city to about $9, will fuel demand for contraband cigarettes.

Health surveys have found that more than a third of New York state smokers
already regularly buy cigarettes from untaxed sources.

State Department of Taxation and Finance Commissioner Robert L. Megna said
his agency has stepped up its campaign against contraband cigarette
trafficking over the past year.

Please send to your Congressman the following wording:

Please consider co-sponsoring HR 4081 and HR 5689 to reduce cigarette counterfeiting and 
smuggling. Please also work to improve these bills, and/or introduce your own, so that
anti-smuggling law wording in essence 'federalize' already existing state laws on cigarettes
and tobacco. The goal is, on this nation-wide problem, is to aid the states so any violation 
of state law is deemed a federal violation as well.

This would make federal anti-cigarette smuggling law analogous to RICO, 18 USC  1961 et seq.,
which makes a federal matter, a number of violations which are on matters historically
under  state criminal law, e.g., extortion, gambling, robbery, fraud, murder, embezzlement, etc.

18 USC  1961 does list sections 2341-2346 relating to trafficking in contraband cigarettes.
But those clauses don't seem enforced much. The current 18 USC 1961 seems overly
restrictive, limiting its scope to offense "which is chargeable under State law and
punishable by imprisonment for more than one year."

Suggestion: to simply say "which is chargeable under State law" regardless of the specific
penalty any particular State may provide.  No need to weaken the federalization of the new
anti-cigarette smuggling law, is the goal.

If you do not know your federal Representative's name, you can find a list at the House of Representatives' Website.