Criminal organizations profit off cigarettes by buying them in bulk from states with a low tax, then shipping them to states with a higher tax.
South Carolina charges $5.70 per carton in state tax, for example, while New York City charges $5.75 per pack — not carton — in state and city taxes.
Only the Carolinas and North Dakota do not require that wholesalers stamp their cigarettes to indicate that they paid taxes. Criminal rings often buy cigarettes without stamps from wholesalers, then deliver them to states with higher tax rates.
Retailers there slap on counterfeit stamps and sell the cigarettes at a discount. Authorities estimate that state and federal governments lose $5 billion annually to cigarette trafficking.
This is how the federal agents’ investigation unfolded, according to unsealed documents:
A Charlotte-Mecklenburg police officer first connected with a man named Khaled Fadel Ibrahim in September 2009 and told Ibrahim he stole cigarettes from trucks in Virginia.
The officer introduced Ibrahim to another undercover officer working for the federal Bureau of Alcohol, Tobacco, Firearms and Explosives, and the two officers later met Kamal Z. Qazah, Alquza’s nephew.
The agents told Qazah that they stole cigarettes from Virginia, and Qazah said he could turn a profit of $300 to $600 per case, according to court filings. After developing a relationship with Qazah, the agents asked him about money laundering, court records show.
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