12 Investigates: Cigarette smuggling

Published: Jul. 11, 2012 at 10:04 PM EDT|Updated: Aug. 7, 2012 at 3:17 AM EDT
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RICHMOND, VA (WWBT) - A Richmond judge sentenced a man to 9 years in federal prison for trafficking untaxed cigarettes.

12 Investigates looked into the world of cigarette smuggling and found cigarettes are the new currency for organized crime bosses. In fact, they are worth more than heroin or cocaine. Now, federal agents are busting people around the country for selling contraband smokes.

Here's the problem — in Richmond, a pack is taxed 30 cents. In New York City, $5.85 is the tax. That's a profit of $5.55 a pack. By illegally selling a carton traffickers can pocket an extra $55.50 dollars and on a case, they can make $3,000.

"In many cases, they're making more money than they are in narcotics, because it's so much easier to traffic," said ATF special agent Rich Marianos.

It's a legal product being sold illegally, said Marianos, who helps head up the Alcohol, Tobacco, Firearm's field division in Northern Virginia. His agents are cracking down on cigarette smuggling.

"Oh, without a doubt, it's organized crime. This is organized crime at it's highest level because of the sophistication," said Marianos.

They rent storage units in Richmond and fill them to the brim with cases of cigarettes. They also rent cars or U-Haul trucks and load them up.

The criminals are using the same routes made famous during the height of drug smuggling. They're going up and down I-95, taking cigarettes from low-tax states like Virginia and North Carolina and re-selling them in high-tax states like New York.

The justice department estimates states are losing $5 billion a year on untaxed cigarettes.  "I think it's much more than $5 billion a year. I think that's a conservative figure," added Marianos.

The venture is profitable, hard to detect and more tempting to criminals because they face less jail time if caught. "If we sold, right now, all these (cigarettes) we'd probably get a probational offense. If we sold this amount in heroin, we would go to the federal penitentiary," said Marianos.

49-year-old Salah Morshed recently got 9 years from Richmond judge Henry Hudson. The ring leader was trading millions in cash, cocaine, heroin, even luxury automobiles for untaxed cigarettes.

It's a lucrative, illicit trade, attracting violent criminal gangs out of China, Vietnam, Russia and Korea. Agents go undercover for years a time, encountering murder-for-hire plots and home invasion robberies in Virginia. They find counterfeit cigarettes made in China. They also come across fake Virginia tax stamps, which are cheating the Commonwealth out of millions.

That's the trade-off for Virginia; the smugglers are showing up in Richmond, bringing with them guns, drugs and violence.

"When they will readily sell semi automatic weapons with a criminal history for cigarettes or trade. It's a problem for us and it's a problem for the community," said Marianos.

A new law just went into effect this month in Virginia. Cigarette trafficking is still only a misdemeanor, but anyone caught trying to smuggle more than 25 cartons of cigarettes will face fines up to $50,000.

Copyright 2012 WWBT NBC12.  All rights reserved.