31 people made $12M off multi-state cigarette trafficking, money laundering, Cumberland County officials say
FAYETTEVILLE, N.C. (WTVD) — On Monday, the United States Attorney’s Office announced the arrest of 31 people and one business entity involved in a cigarette trafficking and money laundering operation which made more than $12 million.
Officials said the group was involved in a scheme to defraud the federal government, the states of North Carolina and New York, and the commonwealth of Virginia of millions of dollars in tax revenue from cigarettes.
New York state requires cigarettes sold at the retail level to have a tax stamp on the pack showing it was charged by the proper authorities, which is regulated by federal law. However, North Carolina does not follow that law.
Therefore, authorities said the suspects would buy the cigarettes in North Carolina, drive them to New York and sell them without paying the tax.
State taxes in North Carolina from 2018-2019 were $4.50 per carton. In New York, the price was $43.50; however, if it was bought in New York City, addition city taxes raised the price to $58.50.
Meaning, there was a cost difference in taxes alone of $54 per carton.
The gross profit from the scheme was said to be more than $12 million.
So far, 25 were arrested: three in Virginia, three in Florida and 19 in North Carolina.