NYC Hands Big Tax Bill to Cigarette Traffickers

BROOKLYN (CN) - New York City lost $10 million in cigarette taxes to traffickers who acquired tens of thousands of cartons of smokes in Virginia, officials told a federal judge.

Sixteen people bought 155,000 cartons of smokes from undercover officers in Virginia at least a dozen times between 2011 and 2013, the city says in a 53-page lawsuit filed Tuesday.

Though the bootleggers usually loaded up their rented vehicles with the smokes they then resold in the city, they sometimes asked agents to deliver them to storage sites in the Bronx, according to the complaint.

"We will continue to vigorously pursue damages from traffickers who cost the city millions in lost tax revenue and circumvent laws designed to protect the public health," the city's attorney Zachary Carter said in a statement.

Traffickers earn illegal profits by buying cigarettes in states like Virginia, where taxes are low, and selling them in New York, where cigarette taxes are high.

The lawsuit is part of an ongoing effort by authorities to snuff cigarette trafficking.

In February, the city and New York state filed a joint $180 million lawsuit in Manhattan accusing UPS of carting in more than 136 million cigarettes between 2010 and 2014.

New York Attorney General Eric Schneiderman filed a similar, $235 million lawsuit months earlier, claiming Fedex shipped in 80 million untaxed smokes.

A year before that, the city filed a $53 million federal lawsuit accusing LaserShip of bringing in 75,000 cartons purchased from the Seneca Nation and resold in the city.

After U.S. District Judge George Daniels advanced the case against the last-mile delivery service in July 2014, the city negotiated a $5 million settlement.

The individuals named as defendants in the latest lawsuit are also facing criminal charges in Shenandoah County, Va., officials said.

Named as defendants in that case are: John Charles Tavares; Thaer Nimer Khashman; Ronald Vasconcelas; Abelis Vasconcelas; Tito Llanes; and Juan Encarnacion.

Ten other defendants have not yet been identiefied.

Subscribe to Closing Arguments

Sign up for new weekly newsletter Closing Arguments to get the latest about ongoing trials, major litigation and hot cases and rulings in courthouses around the U.S. and the world.

Email *

Submit