Tobacco Documents Online

WHOLESALE T&ACCO DISTPIFUTOPS' ~F h'E~`'~' VOPK, !nc ORiGANI'LED~. IIV~ 103~~3~ 2111 EAST 413eD~. BTRSET. NEW~ YOItK.'~. N, ~ Y. 10017 212' 0H2.3670 e4 4 K19L. x..leeY Tnaf [n~p.nr. NEW ' YORK„SLTNDA'Y,1NIA'Y'9~, 1971 rarM h-'a ~,. -AI-4 i.mv ~~ r..n x~.. C.~ Mt Ln. LIU,{: Muaur W .IR~~ /e. lCrime Thrives on_ $ootlegged' Cigarettes ~~. By~LINDA~CHARLTON: ' Cigarettess arc thce morning' !cou; h, tha~e other halt~ of'~f a cup of cof(ee. But increasingly ~ 'acrussthe) countrythcy, a'rce alcn a' major source of' worry . for revcnuc-hungrystatc legis- ta CUresand. of'profit.for organ- iled crime. The legislatures;., inn tlieir'frantic' search far money to meet ballooning, budget de- mands,, are raising cigarette taxes to:r'aise revcnues. As they ,do; and as the legal prices of, cigarettes spical, so does the attraction ot' illicit' but far cheaper boottegged I cigarettes. Penalties have been increasedd and efforts are being, made: to tighten enforcement, but the tdlsparity in state cigarette taxes is becoming more, acute. Itwas: 'thisdisparity that'created the'e initial money-making opportu- nity; which organized cnme' hasl been quick- to grasp and con-' tinues to exploit. Officials:A're ConcernedAside from the revenue loss itself, this is whatconcerns of- ficials: Thatt tens aff thousands, of: cartansofcigarettes; pur=ehas'ed Iegallyy in statex such as North Carolina, are moved with an cfficiency, that demonstrates ,professionalism into: athen states, wherc they are sold it- logal ly, ! In New Yark„ a flourishing: market: Governor Rockefeller has called for a thorough exam- ination of underworld involve> ment 1w contraband-q9garerttee traffic'. An investigation; ex- pected to take.severaf months,s was started' by the State In- 'vestigation Commission last week: An afte'rn:oon stroll along the main street' of' Bristol, on the;, iTen:nessee-Viiginiabordcr„ is,ai''deceptively quiet' introductionl' dowhat is knownaimonetaxl o(ficials and tobacco men as~ the' Fast Coast'problem." Sun- shiru, checkers the sidewalk in front of George's Confectionery ry at 635 State Street: lBusiness is steady, it' not brisk, even an a Sunday'after- noon, and most ofthrcustom-ers igryore the racks.o(' papersand, magazines and ghe' dis- rlivsof candy andd sunclasacsinifavnrn(the a garettes that line one walll afthe: narro~w, open-frnnted store'. George Waldem stocks' moree than 50 af the available brands and subdivisions-flltercdl men- tholated, long, longer and long- esellsking-sizecil;ar- est. H "-~ ~~. '-~_• r ~'`Ir ~~~ . m.owrra..o~»....C.Il. Gray store In Rocky Mount, N:C.,,believed'by tax',officialc to be' a source of'supply for cigarette bootleggers. Newspaper photographer was attacked after taking this', picture. ettes: the largest,sellers,S'or3tt amount, since the corner drug- loften tfiroug~the37niOI 9taRes cents' a pack, or, $3 ' a rarton„ store in, Queens or the, candy imails, the cigarettes move out and super-kings, or 100's, for store in Greenwich Village h'as's otNOrth~CaroUinanorthtoNew 34 cents andIS3.10! He.can af-to;add. $1.60in state and citylYork and .themid.Atlantia ford to;'his; storre iran the cigarette tax: to everycartoni Istates:and south to Floridat out V~irginiasidea of' State. Street. But a.lot ofNew. Yorkera.are of' Kentuckytoy theM,iddle, Aliot'. of D6fferencebuyiog~theincijr'arettes:fora lot iWest, into everyhij;h-taxstatey less from their neighborhoad. ,fromitsm nearest'.low-tax~ neikh-His's prices include 2t=.% centsbootlegger' or through one of ibar.,It.is, according.to Nathan In atatet c:igarette: taxx a. paek- hisoutlets; and soo arethe.resi- ;Mitcheih director of, theSpecialOn the Tennessee side of State dents of other high-tax statcs. lnvestigationsBureau af, the Street, "I forget )ust'.what fa The problemheganimNewYorkINewYorkState.l'kpartmenvof. Is over there, but It'salot af. April 1„ 1965, when the statr.IlTaxatlon~.and.Fina'nce,"impas-dif(erence, II knaw;' Mr.. Wal•cigarette taxwas doubled, from, sible" to establish the amountt den saitl. five', to,10 cents a packi but it f tax revenue lost ffirough That Is why Charles Hagy, has become nationwide arothev Ilicit sales. owner of the Book Nook at states followed suit. New York State Tax Depart•I 418' StateStreet, had' the cig-'?yy bootlegger won't.deliver' enL officers, . recently estl- arette-vendingmachineg taken nated the total taxIass outof: his~~ stora "ltwasn't,'~em unless': 1ta'kr fnun ca'r• (city~, worththa space,"he" said- 'tons."said a residentaf'a'~ high- a'nd state)) aR: 56:9-million a'"You can just.atep,.acrossthe, !tax: state whose packsof kin~- ~ar„ Jbseph~ Carten assldtanCdircctoz of tfia:Special I'nvestl streetand't get'em 10 cents a~sized, filter-tips': bear North gationsBureav,saidheth'oughtpack' cheaper." he went an, Carolina's pink tax stamp. ~a figure of' between S'20-millionn gesturingtoward' Virginia. Cig...`yhait'd 1I pay, hirn?' Let's seeland,S30-millionannuallywouW arettes sold in Tennessee--1'S. Ibe, more reallstic;, a~ cigarettee cents was the rlce the were -$13 for four cartons:° He P y wholesalers' group esumates not gaing; torin~ Mn Hagy'•sIlearnedof the bootlegger In aI,hetive-year, loss Wall atates estab1ishmen¢-include. Tennes-neighbnrhood tavern;J he said,. 'to'o total 5441-milllom ' see's tax of' 13 cents a pack. Iwheni"somebodyn told: me this. I That differential, acute' as it Iguv could get me ciparettes:" I, 3 Ftt1PTlata Agents 1s', does not' represent' the ex- The route~man system is the i In 1969', the bureau's task' tremes', which run from, Penn- most usual system for dlsp,os+ ~force afatiout 70 agents made' sylvaniat! 18 cents a pack to Iing of bootlegged,cigarettes ac- 1219 arrests and seized 63,500 North Carolina's two cents a cording to the tax authortttes„ cartons of'cigarettes; in 1970,1 pack. North Carolina. which in but it is known that state ciG- :,therei were 123 arrests and 104',- 1970 produced 16 billion pack- arette stamps, applied legally 200 cartons seized, It was' ages ofcigarettes;f more than Idy the.wholesaler, can be:coun• hoped, a'ccording.toM'r. Mitch-half thenational total of 29'hil- iierfeited; andd that someretail-..qle rhat. Nrrth r'aroiin,'s, cig- lion packages;,had no state cig- lers, sometimea under durecc, ;,,rrute tax "wnuldlat tra.t etim-arette tax at all until.October, wtll defy the inspectionodds: ~natr cnmepart nflhetra(fir-, 1969, y selltng.th'eg eontraband. make it slightlj, Icss.prnfilable Soo tliecartonofe ctgarettesli Most large organizations, _hutevrn~ thatdidn't helfti,l" tha'tcan bei s~~oldi, taxes paid from faetoriess to advertising; Tax offirialc cnnrrde thaP and profit',included; for $2.35 lagencies, in a hieh-tax area thcy arc ahietn intercept only at.a gas station outside Spring, ~such as New York.City; haveaa very small fractioni of the Hope, N:C., cannot be sold ini Iregular source of'supply: illicit cig~arettes. Williami F. New York City an the sam 'm tc k ;e, , tck; Trailer„ Plane ~ Jacobs Jr., director of the Cig, basis~.faranything;likethe,sameI a.. , Bytruc'k; trailer„ plane andl, rctte Tas Bureau in Pennsyl; vania's StatrRevenue Depart- .

0!rganized! Crime'C,.!'hrives On BootleggL Cigarettes Contimued: From Page I', !Ittent;, said: "Thebig, unan- awered question is how much are we losing. N'obodyy caw really' say." " I In . Tennesse!e,n which is bor., deredd by the Inw-tax statcs :ofl Virginia' . North Carolina andj Kentucky(three. centsapack);I thedirec,tor'or the tobacco-tax junib hasonlythrce fitllatime 'agents. Hesays, with an out. spoken annoyance, thatt is eclioed morc or less modcrately 1by' his's countcrpattsinother high-tax states, that he also hasl Ilttle cooperation'from hiss low• tax neighbors, 'Theyjust' smilewlien you ask them iorr help,"'he declarcdl I Charles Dunn; the young: di- rector of the State Burcauof, Investigation, saidlin an inter-I view in hisRalcigh, N. C.,, pppfticc:"Wr have, cooperated wtth any agenc!y that asks:"' I But Mr., Dunn stressed'that o ,"thcre,is, n law being violated. 'in North' Carolini' by the boot', leggcrs. "You can buy as many from measyoue got, moncy' to'o buy,"said: MackCullenJudge. inI his rundown'servicen stationn e hard'd by the railroad!tracks'in, ' Wcldnn; N.. C.,, a town fewer STATE CIGA?ETTE TAX RATES t than 15 miles from the, . state''concem the NorthiCarolina aui border and ljust'off northisouth! Ihoriticsis pre!cisely'that-who. Route 301, known'iur"Tobacco: the bootleggers are: Road." "There aree some indications. .Nih:Judgc95.undcrindictmc'nt tbaforganized.crimeedements' for violettng' the. JenkinsAct,I aretied in;•' Mr. Dunn saidl. ~ a Federal Iaw,thaL.prohibitsthe. One: ••md',ication"' might, beintcrstatc shipment of cigar-1 the saga of rhe', Weldan Ciga-I cttess without notifying the taxl authorities in th'ee destination' rette.Company, whichaperatedh sta,te. from a building on Tobac!coIvPr: Judge~ and his two sons,~ be, loaded" outside Gtay's: according to the authorities, op- lierved'd to bee shipp.ng as many erated a' thriving mai.l-orderi as 1,000 cartonsof'c!igarettes a cigarettebustness, severallcom-II day to NewYork: The com-panies; in 1967, Mr.Jud,ge told'pany+s' "re!gistered'' agent" was a reporter that he, had paid', Alfred JI,Pa!ladino of Broaklyn taxeson.aboutlS9-millionworthl a man with an'arres~t:record-ofn ciCarettes,, bathh mail-ordbri ItinonUS--da~tiotglba kto the nmte- andn direct~, sales~, in 1966', Now, ~ howeverl although order form.si! iteen-thirtieson charge~sas va- l d forl . the Peanut's Company Peanut is the,nicknameof'one ofhis'f sons'. - still lie an thel dJtsty desk-top. Mr. Judge said h'ee was's not in the, mail-order b'usinesss anymoree andt that. he did not know he was violating the law. A', Gangsteri Anybody ,; G~ensoqenp.ak.eoiM.yT/97f'. , . , TM M. Ye,k Tfm.. Mn e, lrrt The wide disparities In stade taxes are spurringpationwide traffic'in bootlegged aigarettes ~"_. as recelwng sto en goo s and bookmaking. Mr. Paladiito, for some time a~a resident of'a.trailer camp near Weldon, isnolongerin thee state, thee authorities note with pleasure. Weddon. Cigarettes. Iconvictedin March.ot'violating',th'e Jenkins Act and' fined. $1.000,1 :rout of business. Its Buthe is impatient with any, place hasbeens taken by'the questioning, about hiscustom+ Apal Distributing Company, ers:'-HowcanI tell who.walks[nc.,,ot.Roanoke Raptds: N. C., in?" hee asked. "it cou,idbe'd a'I incorporated', April 26;~ the inc gangster; it could be anybody, ~ corporation, papers, according He does.nof think it is'any.to the Secretaryof'State'sreca of' his.business~. "When I'I wentt ords, show' onlyonedirector:~l into ~ Macy's'. [hei had'' just re- 'lawrencePaladino; Aifred!Pa1-I turned, from a hearing in the adino's son. United. StatesCourt Housein There aree the reminiscences ' New York on his case] to buy a 1ofClydeHooker,the.chiefoffoundithemselvesptcked'up.atath'erstateinthenationor!any' pair of' pants;they didis'',t. ask police in Rocky Mount, N, Q IIth'e otHer end, ot the runhe areaofthea world." who'.I'.was." ~Ilas'mall cityy north of.RalhsgH I said;,and quite.soon, "wedidn't` But one of' the:aspects.e of'the where the roadsiee gas.stationa have.no more traffic problem at bootlegging situation that doesj Ibegio to sprout:thn ••Cigarettesl al6:" The bootleggers moved: . ' else!where. 03635341 kThe Boys" Behind the Illicit Cigarette aperafians' cashlsaidJ "These guys' are profes,lincreaaing rate, many statesI eently in charge of the Gambino'' thin is strietl "Ever g: y y down there now-nobody:ll'takel6tonals~" he' said, 'They, know rep,ort; htjacked on the, way figarettr operation, lost sa loadl a. check,•' said, a man' who'somethmg; catch him witfi altrom, manufacturer too ware-Ithat.had got sa!fely all!the.way ~would rather be! known just as broad„ and..gethim up aga!instlhous:e or wholesaler.Ilo Brooklyn. The-drtver parked~l IJbe lthe: wall." I Once at theirr destination, the thrtruck, wentt for a cup of . "Down' there" was North'. Andlas.profeas;ionals, he.saidllciga.rettes are disposed,of,. Joe coffee and ca~meout too see, a~ ;CSrolina, and. Joe;, a formcrthe boysge~nerally disdain the'said', to retailers; pohecman standing' att thee member of the. Carlo Gambino.ingenious disguises nf the:small- New York, a compaxa~tivrlylfende'r: Joerecalled: crime,family.,grinned.as'hlcre!- :time.operator-the.ctgarettesrahnrt'run fromNnrth'Carolma~ '"He~~ panicked whrn, hee sawca!iled: "Onee nf throse svhme, pac~kcd'd behind dummy c„^g:-',and',aguaranteed ma!rket, isa!,th.o truck and ca'llcdl Fudfysalerngnt'.stuck for S:IOOd1(3-,erates-infavorof ordmary{luerativ~e a!reafnr th'ehmys'r[R;cezzn]:.a~nd saidlth'ey'tl'.pinked thr.y'qaxe, hima houncer." Irentedd trucks. Thcn: if aa truc!k-Iri!•,arettenpera'tinns, but, ac-!upthc Ioadi" Rivezza called the Nllh ruph "thr.hny!s" paid nff:loa~d is<rizcd-it. happens~ he'.cardine to Joe: "Anysta'.te: that'pnliurto repnrt' thee truck-on the rhrek; in'cashn tt, mcant,estimated,nnee ouGnfIO trips-Ilas a' high ciparettr tax, the-wliich' he'e happened to own-hc end nP a useful devii r for at the nutcide--nnly the ccnn-birFCst' mainritynf, . them [hnnt ac. .,tidrn. "HCe bleww the! Inad," I~nsurin,;:thecontinved.cnopera•Ifiscated ugarettes wnuld he.a'Icggedctgarettes] arecontrolledl.tor .atd, "but':hn got the truck 'tion nf a ciqaret e whnlhsaler Iloss; thee truck is returned to'by the.boys:' ba<k:'," Thepoliccman;, as it ~•'puttir himih the pocket" by~~the rentall agency. I Not tha~t't itt always g'•.oes{harprned,s had bcen wrrtinp out ~retaininp',a canceled check: I More profitable s!till, ciga-.,~momthly: There was the.time!at,cket: the truckhad'k been I But'there are otherways,.Joelrette'scan be, and are, at anithatCharlesRivezzo,. until re-'pa~rked' beside a h'ydrant, ' -No Limit,-RactaryFresnq tsacx out an To6accoRoad',. 52.35--52,45-52155"'sign!sthat^, thesignsbe!ckoned, implored, haveearned,Route 30.l.its'.mck-{ poundcd theirmeasage; Stuck• name.. I ey's candyshops touted pecanThe. police station iss justl rotlf; sparkling:clca~n restroomss down Washington ~ Streen. from i-and. cigarettes. The north- the shabby premisess of the, bound travelercouldr buy ciga- C, L, Gray Wholesale Grocery'retteswith'everything.fromgas! Company, be,lievedl by tax de-ta, country ham to Mammy's: pattment, of f iciais here to be ! a ~ Roasted Peanu ts, and' there .was's source of supply for the boot- "No Limit" on what,he could I leggers. buy. Mt Hooker leaned': back in DwindlingBillboards! his desk chair and said, yes, Where the billboards d4vin- there: hadbeenquited a problem, ! whatwith the trucks parked ~dledinto'd the countryside, the "bumper too bumper waiting tc ~ ploughed sandy loam of theRoad!and; in its heyday,,was be~-'~IP'ae-barderedl fields was ready; No More.TraKie~,Prablem "the' tobacco plants were still.jbeing,nurtured in covere!d'd plan.t. ~ IY, createdatraffic' problemlbeds, thee bright leaf that for' one thing, hesaid, and -earned North Carolina:S3.5-bil-Ithere was something funny limn last year: about it, for another-"fo4ks~lThe! message of'the ploughedd justt don,tbuyth'.at' man,vcig-; fieldss and thee weathered ta arettes"-and sohe'assigncd'a.bacco.barnsis'.the.s3meas',that couple of policemen to "walk. of the billboards. And the right,up•"to.thewaiting trucks, state'sDe!partmemt of Conserland', note thee detaiisof'license'1'ation and Developmenq iiun a plAte, of color and make and-recent reportt on thre tobacco call it up to NewYork."' I'lindustry in the state, spedledit'•'7h'ey found. out right.quicl9 ,buh, making, plain that what'Wedidn't'sneak aroundd at all '~may, be inimical to thevital, in• he: said. And,what:heYound nut:aterest of one state rpay also,be, hee said, was that"hot. many of hinturn, a.vital, interest ot'an+ them[thedriversand . truck-othe!r: pwne'rs] diddl't have any record. "More tobacco is' grown: in ij'oo ma~nyof' them~ that were North Carolina, and more.ot it, ismanufa!ctured's into various tnoaccno proauet3',, tnarl tn' any