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NY Sets Its Sights on UPS for Ciggie Deliveries

MANHATTAN (CN) - A joint $180 million federal action Wednesday by the city and state of New York accuses UPS of shipping more than 136 million illegal cigarettes.

From between 2010 and 2014, the shipping giant made more than 78,500 illegal shipments of smokes, costing the state $34 million in tax lost revenue, the complaint alleges.

Such conduct also violated a settlement that the shipping giant had made with the New York State Attorney General's office in 2005 to stop illegal cigarette deliveries.

Almost 36,000 of the shipments went to the city, and at least 70 of the shipments "marked in UPS's own records" were given to a child, according to the complaint.

Records kept by UPS show that the drivers sometimes delivered cigarettes to customers they described as "girl" and "boy," "strongly suggesting that UPS engaged in cigarette deliveries to minors," the 44-page complaint alleges.

New York state wants $78.5 million for penalties for violating the agreement and another $89.1 million for racketeering charges. The city wants $14.1 million.

"UPS blatantly disregarded New York and federal tax and public health laws, by shipping tens of millions of cheap, untaxed cigarettes to New Yorkers," New York Attorney General Eric Schneiderman said in a statement.

"We contend that UPS cost this state millions in revenue and is helping to make illegal, low-cost cigarettes available to our young people, who are disproportionally lured to smoking by lower costs."

Schneiderman filed a similar, $235 million federal lawsuit last year, claiming Fedex shipped 80 million untaxed cigarettes.

UPS denied the allegations and vowed to "vigorously defend our position."

"UPS tobacco policy strictly prohibits the shipment of cigarettes to consumers and unlicensed dealers or distributors, and we terminate service under that contract program if that policy is violated," the company said in a statement.

The lawsuit was filed by New York City attorney Eric Proshansky, and Dana Bilberman, chief of the attorney general's Tobacco Compliance Bureau.

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