Tobacco Documents Online

.`°~.. C aa ~t~.~~ ro1 f NEW NO'RY .CITY OFFICF SUITE 2400 ' 270 BROADWl~1Y 0G4-U530 or 4R8-37701 q AQBANI" OFFICE 3043T0, Nl:OE3. 472-7490, 74lD 1. 7.32 For Information: For Immediate Release: John R'amsey, - 488-37~70' Thursday:,, January 15, 197'6 No. 609 SENATOR GOOD~4'AN' DEMANDS GTG~ARETTE CRIlt^I'E CRACKDOWN ~tatG Ser~di:or Roy ~T, Goodman (,R'-L, M•anhattc.Y), ,, j oiried' by 1topState taxinvestigatorsand fourprotectively'~ masked tobaccodi'~stributing, executives,, persona7llyhijacked16, t~es~~ in 19 mp~r.ch~s,today presented' a get-tough hegis]~ative program'to combat an alarming increase in cigarette h3jacking,and bootlegging conducted by organized' cr ime . hYeetz.n'g atthe~ S'tateGigaretzeCbntraband Vault fivefloo'rsbelow stree~t 1:evel in the World' Trad'e Center, Senatar Gaodman said that theczgarette distributing ind'ustryhasb~ecomea jungle in which organized crime preys upon legitimate dealers,, clears a profit of' $1 mnililio n lion a week, and' robs I~I~:w York State of ~'93' million in tax revenue annually. "The racketeering,tactics of cigarette bootleggers have createda climate of terror in1which hundreds of legitimate dealers' are being confronted' daily with the risks and' dangers of personal violence,,"'Goodman d!eclared. "There must be a maj'or revitalization of law enforcement in this area to protect innccent businessmen from brutalization and the ~lestrt:ctioc~'of an industry which, is a, mainstay in the City's economy, providing inconce' and jobs for many' of' our middle class,"' - more - Sciaatcr ' 03635222

Coodman andlAlfrcd Donati, State Dircctor of Special Investigations for the State Department of Taxation and Finance, outlined the maj',or problems afflicting,the cigarette distributing, ind'ustry in N'ew tork: Tobacco racketeering,has become the largest "iriskless revenueP' source for organized crime. Racketeers have netted $.5 billi'on in the past decade, and now reap the profits, at the rate of $1 million a week„ from one of every two,cigarette sales in New York. Legitimate wholesalers have lost more than $2 billion in sales during the last decade. Bootleg,- ging,operations have slashed' more than 2„200 jobs in the trade in New York, virtually eliminating,the "Mom andlFop"'stores that were once a mainstay of neighborhoods. -- Tt'ie State and'the City now are losing $93 million a year in tax revenues. To~deau with these problems caused' by rampant cigarette bootlegging and! hijacking,, Goodman presented the following, llegis- lative program: 1. A five-fol'd enforcement budget increase to $S million to increase the State field'enforcementt staff from 50 to 2'50' members. 2. The use of State and City police.officers,, either retired or layed off', to upgrade the effective- ness of a force now requiring extensive on-the-job training, an&encumbered~ with civil service restraints which cause peoplie to wa1!k-off the job in the middle of stake-outs. 3. The replacement of archaic equipment which makes a mockery of surveiSlance and' enforcement efforts. 4., A one-year trial suspension of the City's eight-cent per-pack cigarette tax to reduce the incentive for bmying illog,^il cigarettes and' to drastically cut the . - more - 1..... .... .'.a e..~~a.a_... _..-::~:............. _ ....._....._........_.._._.....,. :r.,.. __._._. _...____.__ :L~__...-..~-~._._~...,.._

-3- profits of organized' criminal gangs. The loss of'$40 mi'lllion~ a yesrfrom th~isCitytax woui_ll bemorethan off-set by theincreaseofsaLes through legitimate channels, andiwould' make it possible for the State to , reimburse'the City for revenues lost fromithe repeal 'of taxes. _ S. Au education program for the State judiciary to assure the use of available penalties. Goodtnan- sponsored'legislation made bootlegging of 20,000 cartons a Class E felony p•inishable by up to five years in jail. -. in 1975, however,, only nine people were jailed iniNew York City for bootlegging„seven for three months or less. The most common penalty was a$,10 to $15' fine, really nottiing, more than allicensing fee to a single day. operate. Cigarette smuggling hasgrownrapid'lyim recen~tyears because of the illegal profits made possibl.- by the wide disparity between the tax or, cigarettes inside and outside New York City. A~ carton of cigarettes can be bought legal'ly in North Carolina for $2',40' and peddled in New York City for $3.75 a carton ($1.25 below the legal retail price). The contraband is easy to handle and transport. A 40!-foot trailer stocked with 60',000' cartons yields a profit of $90,000 on an overnight haul fromiNorth Carolina, where the per-pack tax is two cents, 21 cents less than the com- bined New York State-New York City tax. This powerfu7~l economic incentive makes apprehension of smugglers an overwhelming task for the 50-member State Special Investiga'tions Bureau,, the six-member unit within the City Finance Administration and' local police units. Enforcement agents seized 8'6,433'cartons of illegal cigarettes in 1975,,considerahly Less than the total volume of untaxed' cigarettes sold in, the State in - more -

~r:: ..~.,.., . C "The New York City cigarette tax has pllayed' riglit into the hands of organized • crime", Goodman declared,,~ nlTheir brazen terror tactics must be stapped. Tihe program I recommend' will do this while assuring adequate tax revenues and protecting legitimate members of a key industry." - ENDi -