Counterfeit Cigarette Ring Smashed

Source from:  BY MICHAEL FRAZIER | michael.frazier@newsday.com August 13, 2007  08/15/2007

A tip on illegal cigarettes being sold out of the trunk of cars in Nassau County triggered a monthslong investigation leading to the arrests of three Chinese nationals in Queens and the seizure of nearly 60,000 untaxed cartons, authorities said Monday. The tax revenue loss to Nassau residents was estimated at more than $1 million, authorities said. More than half a million packs of untaxed cigarettes -- half were counterfeit -- and about $350,000 in cash were seized last week in a raid of a Queens warehouse, home base to a black-market tobacco ring of "unbelievable proportions," Nassau District Attorney Kathleen Rice said Monday in a news conference in Mineola. The illegal smokes originated in China and were distributed across the metropolitan area, often sold at reduced prices at mom-and-pop stores and other small retailers, police said. A carton of cigarettes in New York City -- with its $3 a pack sales tax -- can cost $75, but the illegal cartons fetch between $20 and $25 apiece, said Det. Sgt. Pat Ryder of Nassau's Asset Forfeiture Bureau. Cheaper prices make it difficult to break up such rings, Ryder added. "No one is really calling the police if they are getting a $5 pack of cigarettes for $3," he said. Half of the seized cigarettes bearing brand names like Newport were convincing fakes. Counterfeiters went as far as placing a rebate offer on some cartons. The counterfeit cigarettes were exceptionally more harmful than U.S.-made ones, because the fakes don't adhere to New York state law requiring "firesafe" cigarettes that automatically burn out if not puffed after a brief period of time, Rice said. Queens District Attorney Richard Brown, who joined Rice in the announcement, added that the fakes also contained higher levels of tar and nicotine. The investigation, which began in February, entailed undercover purchases and video surveillance that led police to the warehouse at 102-19 44th Ave. in Corona, where the three men were arrested Thursday. A fourth man, who police believe to be the ringleader, is being sought. At the warehouse, Min Liang Yu, 21, Ru Dong Chen, 46, and Yulin Zhuang, 43, were each arrested on charges of criminal possession of a forged instrument, violations of state tax laws and trademark counterfeiting. They were arraigned over the weekend and are being held on bail ranging from $250,000 to $500,000. Cigarette smuggling is a global problem, supporting a multimillion-dollar criminal enterprise, authorities said. In recent years, U.S. authorities have said such operations also help fund terrorist groups. Monday, authorities said they have contacted U.S. Immigration and Customs Enforcement officials, and as part of the ongoing probe, investigators are exploring whether any links exist between any terror organizations and the Queens warehouse bust. For higher profits, U.S. traffickers will purchase large volumes of cigarettes in states with low taxes, such as Virginia and Kentucky, and transport them for sale to states like New York. "If cartons of cigarettes are $24 each in Kentucky, but they can sell them for $50 elsewhere, that's 100 percent of their money back," Ryder said. Richmond, Va.-based Philip Morris USA, America's leading cigarette maker, actively works with regulatory agencies to help ensure consumers receive legitimate products, a spokesman said. "This is a problem with the potential to seriously disrupt legitimate cigarette trade in the U.S.," said David Sutton, the spokesman. Enditem