US court ends major international cigarette smuggling racket aimed at EU markets

OLAF /09/10 Brussels, 18 August 2009

The European Anti-Fraud Office (OLAF) announced today that one of the players in a major international cigarette smuggling investigation has pleaded guilty before the United States courts in Miami for his part in defrauding European taxpayers of several million Euros in taxes and customs duties. The defendant had conspired with individuals located in Miami and in Spain, the United Kingdom, Ireland and Germany to smuggle cigarettes from the port of Miami into Aachen (Germany), Dublin (Ireland) and Felixstowe (United Kingdom).

OLAF Director General Franz-Hermann Brüner stated: "I welcome this development and I take note that the Acting US Attorney Jeffrey H. Sloman explicitly singled out OLAF for its outstanding contribution to the investigation". He added: "The very satisfying result of this particularly complex fraud case was a further illustration of the excellent cooperation between OLAF and both US Immigration and Customs Enforcement (ICE) and the US Department of Justice." Mr Brüner further explained: "This case highlights what can be achieved on the basis of the excellent cooperation which we enjoy with the US Customs authorities. It demonstrates the practical benefits of the 1997 Agreement on Cooperation in Customs Matters between the European Commission, the EU Member States and the United States." The OLAF Director-General concluded: "In particular, I wish to highlight the professionalism and dedication of the US ICE agents, and of the prosecutors of the US Department of Justice. Not least, the result was also achieved because of the detailed work and cooperation of the authorities in those Member States which had been the targets of the fraud, particularly Ireland, Spain, Germany and the United Kingdom."

On Friday 14th August 2009 the defendant entered a plea of guilty to all counts of the indictment. He admitted conspiring to commit wire and mail fraud in connection with the smuggling of cigarettes out of the United States and into various European Union countries in order to avoid paying more than 6.5 million US-Dollars (4.6 million Euros) in customs and tax duties. The defendant had conspired with individuals located in Miami and in Spain, the United Kingdom, Ireland and Germany to smuggle cigarettes from the port of Miami into Aachen (Germany), Dublin (Ireland) and Felixstowe (United Kingdom). Sentencing is scheduled for 10th November 2009.

This guilty plea before a US court is a major milestone in a six year investigation in which OLAF played a major part. The investigation spanned nine EU Member States and several countries in Central and South America as well as the USA.

A news release dated August 14th, issued by the United States Attorney for the Southern District of Florida and Special Agent in Charge, US Immigration and Customs Enforcement (ICE), Office of Investigations, Miami stated the following (names of principal deleted):

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CUTLER BAY RESIDENT PLEADS GUILTY TO SMUGGLING

Admits to Smuggling More than 27 Million Cigarettes out of the United States

Jeffrey H. Sloman, Acting United States Attorney for the Southern District of Florida, and Anthony V. Mangione, Special Agent in Charge, U.S. Immigration and Customs Enforcement (ICE), Office of Investigations, Miami Field Office, announce that [X] […] has pleaded guilty to conspiring to commit wire and mail fraud in connection with the smuggling of cigarettes out of the United States and into various European Union countries in order to avoid paying more than $6.5 million in customs and tax duties. Sentencing has been set for November 10, 2009 before the Honorable Alan S. Gold.

According to court documents and statements made in court today, [X] conspired with individuals located in Miami and in Spain, Great Britain, Ireland and Germany, to smuggle cigarettes from the Port of Miami into Aachen, Germany, Dublin, Ireland, and Felixstowe, Great Britain. To execute the scheme, [X], who ran the Miami portion of the operation, arranged for the purchase of hundreds of cases of cigarettes from Panama and the transportation of those cigarettes into the Port of Miami. He then arranged for the purchase of other cargo, such as yarn, wood flooring and building insulation material, to be used as cover loads to conceal the cigarettes. [X] directed the preparation of false bills of lading that only declared the cover load materials. These bills of lading were presented to the shipping companies and overseas customs services. Custom duties and taxes were based only on the falsely declared cargo and thus, no duties or taxes were paid on the cigarettes.

On four separate occasions from December 2001 through April 2008, [X] smuggled 2,702 master cases of cigarettes - totaling more than 27 million individual cigarettes - out of the Port of Miami. Based upon the false bills of lading, only a few thousand dollars of custom duties and taxes were paid on each shipment. The true custom duties and taxes that should have been paid on these shipments totaled over $6.5 million dollars.

Acting U.S. Attorney Jeffrey H. Sloman commended the investigative efforts of the ICE special agents as well as agents from various law enforcement agencies in Ireland, Great Britain, Spain and Germany involved in this case. In addition, Mr. Sloman thanked the European Union Anti-Fraud Office based in Brussels, Belgium, for their outstanding contribution to the investigation. Additional commendation was extended to Lincoln Jalelian, former Trial Attorney with the U.S. Department of Justice, Organized Crime and Racketeering Section, for his significant contribution to the case. The prosecution is being handled by Assistant U.S. Attorney Cynthia Stone.

A copy of this press release may be found on the website of the United States Attorney’s Office for the Southern District of Florida at www.usdoj.gov/usao/fls. Related court documents and information may be found on the website of the United States District Court for the Southern District of Florida at www.flsd.uscourts.gov or http://pacer.flsd.uscourts.gov


Press Release by United States Attorney for the Southern District of Florida:
http://www.usdoj.gov/usao/fls/PressReleases/090814-01.html

Press Release OLAF/09/04: http://ec.europa.eu/anti_fraud/press_room/pr/2009/4_en.htmlAll available translations.

Alessandro Butticé
Head of Spokesman, Communication and PR Unit
Tel : +32 (0)2 296.54.25
Fax : +32 (0)2 299.81.01
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