THE BRONX — When PIX11 recently walked into one bodega on Prospect Avenue in the Bronx, the cashier quickly pulled back three cigarettes, known as “loosies,” that he was offering a customer, who was left holding the cash in his hand.
This is the world of bootleg cigarette sales that generates millions in cash—and not much sales tax for New York State.
But there’s a much larger concern for local law enforcement and federal agents who try to crack down on the smuggling.
They believe a good portion of the millions in profits are going overseas to the Middle East and Africa.
In the past, some cigarette smugglers have had ties to terrorist groups.
“In New York City right now, probably 60 percent of the cigarettes are ‘bootlegged,’ said Tom Stanton, a former chief investigator with the New York State Department of Taxation and Finance.
“And there’s no trail for that money at all. It’s tens of millions in cash.”
PIX11 took another look at the world of cigarette smuggling, after the Bronx District Attorney announced 20 people and six corporations were indicted July 9th in a major smuggling operation that brought in 44,000 cartons of untaxed cigarettes from Virginia in a five month period.
The Bronx defendants ran delis and bodegas and placed the orders with the Virginia end of the ring, according to DA Robert Johnson.
“Some of the proceeds were sent to a number of the defendants’ home countries in Africa and the Middle East,” said D.A. Johnson.
The main suspects in Richmond, Virginia—Rabih Saleh and Moeen Khan—owned and managed a chain of mattress stores and dollar stores. They were accused of hiring people to buy cheap cigarettes at places like Costco and Sam’s place in Virginia—before the smokes purchased for about $5.00 a pack were driven almost daily to the Bronx.
One smoker on Prospect Avenue said she could get a pack of cigarettes for $7.00, a savings of at least five dollars compared to taxed cigarettes that go for $12 to $15 a pack in New York State.
“Cigarettes, you’re making four to six dollars a pack,” Stanton said of the bootleg distributors in the Bronx. “And there’s no audit trail.”
The Bronx indictment charged Mohamed Mustafa and Hiyad Chaib ran the Bronx end of the ring. The cigarettes were often delivered to a private home on Matthews Avenue in the Pelham Parkway section of the Bronx, where we noticed a small, rolled-up steel door near the driveway—and fancy bars over the ground floor windows. A white Mercedes sat in the driveway.
When we went to one of the bodegas that was named in the indictment, Express Deli on Randall Avenue, a man who said he was the manager told us, “The owner’s not here. He’s overseas.”
When we asked where the owner lived, he replied “Yemen.”
The manager said the owner was his son. He showed us two packs of Newports that he said had legitimate, New York tax stamps on the bottom.
PIX11 reported more than a decade ago on the history of cigarette smuggling and ties to terrorism.
The first truck bombing of the World Trade Center in 1993 was financed by cigarette smuggling.
One of the convicted bombers, Nidal Ayyad, worked for a ring based in Bay Ridge, Brooklyn.
Two brothers in North Carolina were convicted in 1992 of sending millions to the militant group, Hezbelloh, in Lebanon.
In 2013, one of the defendants in another Brooklyn ring had long-time ties to Rashid Baz, the Lebanese cab driver accused of shooting up a van full of Orthodox Jewish students on the Brooklyn Bridge in 1994.
The shooting with assault weapons left 16-year old Ari Halberstam dead. When the 2013 arrests were made, New York State Attorney General, Eric Schneiderman said, “We are very concerned about where the money went.”
Now, in 2015, another, alleged smuggling operation has been busted in the Bronx.
One of the defendants, Nabil Ahmed Al-Jomai, ran five delis.
The various defendants are facing charges of enterprise corruption, criminal tax fraud, and money laundering.
New York State lost nearly three million dollars in tax money. But the larger question is how many millions ended up overseas.