New Jersey Nightly News; A Closer Look: Buttlegging Cigarette Smuggling; 255

New Jersey is the East Coast's prime location for what is known in the trade as but like the smuggling of cigarettes up tobacco road to better known as Interstate 95 from low tax states like North Carolina to high tax states like our own. State. There are. Like 200. Million Dollars A. Year in cigarette tax. But the State Division of taxation estimates that New Jersey loses between 10 and 16 million dollars more to cigarette smugglers and that is revenue from the con's million dollars assessed revenue. The average time spent in Matthew Diamond runs one of the state's 109 cigarette distribution centers which affixed the state's tax stamp to every pack of cigarettes legally sold in the state. Smuggling is bad for his business. Another source has to have an effect a citizen brought into matter state. North

Carolina. Has an effect. People with my life. Smash stores retailers if they get about it with less from US taxes and I think paid on these smugglers status as well as the smuggling also hurts the butt likers themselves. Violence and hijacking among competing smugglers is fairly common pre-vote says. And cigarettes are such a liquid commodity that they are ripe for organized crime but rather. A Lack. Perhaps the country.

But occasionally it gets messy after a 1976 tax divison bust of a 26000 carton smuggling ring. This man was tortured and then murdered because others in the ring mistakenly suspected he was an informant. That was the taxation division's largest case but since 1981 there have been 800 smuggling cases investigated and 40 percent of them have resulted in arrests. This division of taxation involved is a good illustration of the problem. Thousands of cartons of contraband cigarettes are held here as evidence awaiting trial. Thousands more are kept until they are either auctioned or returned to the manufacturer. Two packs of cigarettes may look alike but if you look closely you'll notice a difference. The tax stamps this pack was bought legally in North Carolina stamped there and then smuggled

into New Jersey. North Carolina charges a state tax of two cents per pack while New Jersey charges twenty four cents. That's a 20 percent incentive for smuggling. Twenty two cents may not sound like much but it amounts to $2 and 20 cents per carton. And with vans and car trunks filled with cartons that adds up. Well that's how much money that's next. Just because. I was assuming roughly a dollar more per car in the street in June New Jersey raised its cigarette tax a nickel a pack. That gives the state the second highest cigarette tax in the nation topped only by Wisconsin's 25 cents a pack. New Jersey also has what's called the unfair cigarette sales Act

which says cigarettes can't be underselling right now the minimum price to 74 cents a pack a carton sells for seven dollars and 40 cents here retail and four dollars and 50 cents in North Carolina. New Jersey's recent tax increase was designed to bring into the state coffers an additional 36 million dollars in its first year. But state taxation officials are now questioning whether the tax increase could ultimately mean a net loss to the state due to smuggling initial projections show a possible 25 to 35 percent increase in smuggling they say in large part due to the higher cigarette tax. Well statistically the states that have this problem. I will contact States whether they're in eastern corridor or in the Midwest where they have some high connections in the relatively close availability of cigarettes and the tax rate with those drives away.

The rest of you have to take another factor which may contribute to increased cigarette smuggling is the budgetary problems of the Federal Bureau of Alcohol Tobacco and Firearms or ATF a 978 law made smuggling more than three hundred cartons of cigarettes over state lines a federal offense punishable by five years in jail and or a $100000 fine. This death penalty and the bureau's subsequent cooperation with taxation departments throughout the country resulted in a decrease in cigarette smuggling. Prior to the 978 laws state taxation agents like these were unable to make an arrest out of state. They would have to follow vehicles with Jersey plates all the way from North Carolina or call ahead with a description of the car. In the process they often lost the vehicle and the contraband. Federal ATF agents like Joe Bratton often have jurisdiction regardless of the state. So smuggling decreased in New Jersey in 1979 in 1980. But since the 1900 one because of budget cuts ATF has had to eliminate

almost its entire tobacco enforcement. It recently received a supplemental budget of twenty four million dollars until September. But none of that money is earmarked for tobacco. Better have questions how much they will be able to accomplish between now and September. We've mostly grants the past 11 months as an intelligence gathering and then we further estimations the appropriate state agencies. They've taken no active part in investigations and we have encountered some incident any investigations that we had for 3 prior years. Not that one under. This ATF surveillance film shows one of the largest smuggling rings the bureau has been able to crack. A New York City based ring took orders directly from consumers for bootleg cigarettes used a Virginia distributor and dropped points in storage garages in New York and Englishtown New Jersey. By selling the cigarettes directly. The bootleggers made the ATF investigation more difficult. It was very hard to first get into the operation and then offer the services to join their operation.

As an employee to find out actually who was funding the operation the indictments that came from this were wire fraud conspiracy conspiracy to violate the federal tobacco laws and this was our first RICO indictment which is the racketeering influence and corrupt organization statute. This is where the use in an enterprise and this was a separate operation for illegal means and we're talking about a large conspiracy in a multi-million-dollar nature. But it remains questionable whether ATF will be able to continue similar ambitious investigations although it is funded until September its future and some officials say ultimately the battle against cigarette smuggling looks them.