NY AG, NYC PD Take Down Unstamped Cigarette Trafficking Enterprise
Indict 16 members of ring that flooded area with million cartons illegally imported from Virginia
Published in CSP Daily News
NEW YORK -- New York Attorney General Eric Schneiderman and New York City Police Commissioner Ray Kelly on May 16 announced the indictment of 16 members of a criminal ring that flooded the New York City area with more than a million cartons of untaxed cigarettes illegally imported from Virginia. A 244-count indictment charges them with enterprise corruption, money laundering and related tax crimes. Each faces up to 25 years in prison.
The investigation revealed that the head of the enterprise, Basel Ramadan, and his brother, Samir Ramadan, obtained cigarettes from Cooper-Booth Wholesale Inc., a Virginia-based wholesaler, and stored them in a public storage facility in Delaware. Several times a week, co-conspirator Adel Abuzahrieh drove with tens of thousands of dollars in cash from New York to Delaware where he gave the Ramadans the cash in exchange for cigarettes. Beyond the $55 million in sales, the Ramadans have generated more than $10 million in profits from their illegal activities.
As reported in a Raymond James/CSP Daily News Flash on Thursday, Cooper-Booth, Mountville, Va., has declared bankruptcy after the government seized its main bank account as part of the investigation. See the related story for details.
During a 12-month investigation, law enforcement seized more than 65,000 forged city and state cigarette tax stamps not affixed to cigarette packs and nearly 20,000 cartons of untaxed cigarettes. The investigation, which has so far uncovered $55 million in illegal cigarette sales, is continuing. Similar schemes have been used to help fund organizations like Hamas and Hezbollah, the AG said.
"Not only did this organized crime ring hurt law abiding mom-and-pop shops and other businesses in New York by putting those who do pay taxes at a competitive disadvantage, there is a very real concern about the possibility of violence related to this type of enterprise," said Schneiderman.
This joint investigation by the AG's Organized Crime Task Force and the New York City Police Department, and with the assistance of the Department of Homeland Security, uncovered the trafficking ring and its connections to Brooklyn, Queens, Staten Island, the Bronx, Albany, Schenectady and other states, including Maryland, Delaware, Virginia and New Jersey.
In addition to the Ramadans, the criminal enterprise--all of whose members are Palestinian--consisted of several New York-based cigarette distributors, several New York-based cigarette resellers and Abuzahrieh, who transport of cash, sometimes more than $100,000 per trip, and cigarettes between New York and Delaware.
Once the distributors took possession of the merchandise--approximately 20,000 cartons of cigarettes a week--they distributed it to the resellers, who in turn sold the untaxed cigarettes to Arab markets and grocery stores in Brooklyn, Queens, the Bronx and Staten Island. One of the resellers, Mohannad Seif, also resold the untaxed cigarettes to grocery stores in Albany and Schenectady Counties. The AG estimated that the sales tax revenue lost to New York State to be more than $80 million.
The Ramadan brothers furthered the criminal enterprise by depositing more than $55 million from their untaxed cigarette sales into small local financial institutions in and around Ocean City, Md., and used that money to purchase additional cigarettes for illegal sale.
Members of the criminal enterprise were arraigned before Brooklyn Supreme Court Justice William Miller beginning May 16. The defendants are presumed innocent until proven guilty in a court of law.