Federal agents in Northern Virginia broke up a major cigarette-smuggling ring whose criminal activities extended into money laundering and identity theft, according to charging documents filed in federal courts.
During the course of the nearly two-year investigation, authorities said, conspirators in New York paid smugglers in Fairfax County more than $4 million for about 200,000 cartons of contraband cigarettes. During the nighttime raid, ATF agents served 15 arrest warrants in three states.
The black market deals often went down in an Annandale restaurant or parking lot where the New York crew pulled out hundreds of thousands of dollars in cash from a compartment concealed inside their black Mercedes Benz, authorities said. Boxes of cigarettes were delivered on wooden pallets from public storage units in Northern Virginia to warehouses in Queens, the Bronx and Flushing.
Trafficking in black market cigarettes is lucrative as the criminals avoid paying taxes and pocket the portion of the sale that otherwise would have gone to the state, authorities said. Such trafficking is most lucrative in places where taxes are highest, such as New York City. A person who deals in contraband cigarettes earns the dealer approximately an extra $4.25 per pack in New York City.
Virginia has a tax of 30 cents per pack, ranking 47th in the nation, according to the Federation of Tax Administrators.
Authorities believe the enterprise was also involved in identification fraud and identity theft. The fraud appears to be motivated in some instances by immigration issues and in other instances by the desire to engage in financial frauds, authorities said. Most of the conspirators were of Korean descent.
These arrests come three months after 27 people were charged with possessing and distributing contraband cigarettes, wire fraud, and money laundering in what appears to be an unrelated federal case. During the course of the 17-month sting, authorities said, undercover federal agents out of Richmond set up a phony storefront in Fredericksburg and sold 295,000 cartons of untaxed cigarettes for which the suspects paid $6.1 million in cash. Most of that contraband was shipped to New York with some going to Michigan.
