Dueling Filings in Tobacco Fraud Case

Published in CSP Daily News

DOJ moves to wrap up case; industry: not even close

WASHINGTON -- The U.S. Department of Justice moved to wrap up its fraud case against the tobacco industry, alleging in a 2,400-page legal filing a massive 50-year scheme to defraud the American public, said Dow Jones.

Evidence before the court demonstrates that defendants' public statements denying that smoking causes adverse health effects were knowingly false, deceptive, misleading, or otherwise fraudulent when made, the Justice Department document said. The department Monday released a detailed proposed findings of fact to guide U.S. District Judge [image-nocss] Gladys Kessler through the more than 160 witnesses and 10,000 documents in the tobacco racketeering trial. The trial began in September 2004 and concluded in June.

Judge Kessler could rule on the case this autumn. The government wants cigarette makers to fund a $10 billion smoking-cessation program and give $4 billion more to the American Legacy Foundation for antismoking advertising.

The tobacco-industry defendants also issued their own set of findings, telling Judge Kessler that the government failed to cross even the basic legal threshold in the wide-ranging civil racketeering trial. In the end, the government has been left with the tired repetition of innuendos drawn from the same company documents that have been featured in the press and the courts for the better part of a decade, the companies said in a court filing.

The Justice Department filed suit against major cigarette makers in 1999 alleging a five-decade scheme to defraud the U.S. public on the dangers of smoking.

Defendants include Altria Group Inc.'s Philip Morris USA; R.J. Reynolds Tobacco Holdings Inc. and Brown & Williamson, which have merged to form Reynolds American Inc.; British American Tobacco PLC; Vector Group Ltd.'s Liggett Group Inc.; and Loews Corp.'s Lorillard Inc.

The tobacco industry said the Justice Department failed to prove the basic elements of its case under the Racketeer Influenced & Corrupt Organizations Act (RICO). It is not even close, the industry filing said.

The government initially sought a $280 billion claim for disgorgement of industry profits. It scaled back the claim to $14 billion after an adverse ruling in February by the U.S. Circuit Court of Appeals for the District of Columbia. The latest Justice Department filing does not change its requested remedies in the case, a department spokesperson said.

Tobacco companies criticized the proposed remedies. Far from prosecuting a reasoned and measured case, the government thus has been at pains always to push and exceed the most extreme frontiers, the industry filing said.