Federal Law Enforcement Agencies are Aggressively Enforcing State Tobacco Laws
In recent months, federal authorities have initiated significant enforcement actions involving trafficking in contraband cigarettes:
- In May, federal prosecutors filed a forfeiture action in Tennessee in an effort to seize over $1.3 million, which the government claims are the gross receipts obtained by cigarette distribution company as a result of fraud and violations
of the Contraband Cigarette Trafficking Act. (There are some key aspects of this forfeiture action which will be discussed in further detail in an upcoming advisory.)
- In June, federal authorities have raided four cigarette distribution and manufacturing companies in the last two months as a part of a two-year investigation into an alleged tobacco black market. According to an FBI statement released on June 5, 2009, the black market network is believed to have ties to South Carolina, Kentucky, Mississippi and other states.
A number of these enforcement actions are conducted by a federal task force comprised of federal, state and local law enforcement agencies, including the Federal Bureau of Investigation (FBI), the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), and various state agencies and local authorities. ATF officials report that their task force was formed specifically to prevent criminal networks from profiting and flourishing from tax evasion through the interstate transportation and sales of contraband cigarettes and that the best way to address this problem is by attacking the entire network.
Cigarette trafficking investigations are long-term, cover large geographical areas, cross a multitude of jurisdictional boundaries and are resource intensive. Even manufacturers or distributors who are not the target or subject of the investigation may receive subpoenas for documents or testimony related to these investigations. It appears that many tobacco issues that have been traditionally treated as state civil matters are becoming “federalized” as potential criminal violations.
If you are contacted by a representative of a law enforcement agency, whether it is for the purpose of serving a search warrant, serving a subpoena for documents, or requesting an interview, it is important that you contact legal counsel immediately for advice on how to respond.