The New York State Department of Taxation and Finance today announced the arrest of ten individuals in the Capital District and Hudson Valley regions for illegally possessing untaxed cigarettes and untaxed tobacco.
The ten - all employees or owners of roll-your-own (RYO) cigarette outlets - are alleged to have possessed quantities of pre-rolled, untaxed cigarettes that were to be offered to the general public for sale, in violation of the New York State Tax Law. There were no immediate arrests at two of the twelve locations raided, though evidence was seized at those stores.
Earlier this year, undercover investigators with the Tax Department made purchases of untaxed, pre-rolled cigarettes at each of the twelve locations at issue.
Because cigarette taxes were not prepaid as required, these shops were able to sell cigarettes for as low as $35 a carton. When sold legally, cigarettes can cost as much as $100 a carton for premium brands.
"Avoiding taxes gives unscrupulous merchants an unfair advantage over business owners who comply with their tax responsibilities," said Commissioner of Taxation and Finance Thomas H. Mattox.
The Tax Department excecuted warrants at each of the twelve shops and seized records, equipment, unstamped tobacco products, and cash. The Department was assisted by the New York State Police, the Department of Homeland Security and several local police departments.
The ten individuals arrested were charged with crimes for the illegal possession of untaxed cigarettes for the purpose of sale, and/or possessing untaxed tobacco.
"As alleged, these defendants undercut other merchants, cheated the State out of tax revenue, and put at risk the stream of payments the State receives under the Master Settlement Agreement - payments that are vital toward funding healthcare and smoking prevention programs," Commissioner Mattox added.
The Master Settlement Agreement is an agreement between New York (and 45 other settling states) and the participating tobacco companies requiring the companies to pay roughly $800 million annually to the State to offset the financial costs associated with treating tobacco-related illnesses.
Following are the locations of the stores, items seized and individuals arrested (including charges):
The class E felony charges carry a maximum potential sentence of up to 4 years in state prison. The misdemeanor charges carry a maximum potential sentence of 1 year in jail.
A charge is merely an accusation and a defendant is presumed innocent until and unless proven guilty.