Man accused of orchestrating smuggling ring involving millions of cigarettes between Mo., Ill.

By Jim Suhr, AP
Thursday, September 30, 2010

Feds: Man smuggled cigarettes from Mo. to Ill.

ST. LOUIS — The U.S. government’s crackdown on the illegal practice of interstate cigarette smuggling has produced federal charges against a suspected kingpin who investigators say sent nearly 29 million cigarettes from Missouri to Illinois, where the state tax on them is six times higher.

Court documents obtained Thursday by The Associated Press allege Ghalib Shahjamaluddin paid an undercover investigator $4.3 million for 144,000 cartons of contraband cigarettes from Missouri, which has the nation’s lowest cigarette tax, and sold them in Illinois for the going price — a hefty profit for him.

Those smokes often made their way to Chicago, where Shahjamaluddin’s profits were poured back into his smuggling operation when he wasn’t sending tens of thousands of dollars to India, according to an affidavit by Lissa Jordan, a Bureau of Alcohol Tobacco, Firearms and Explosives agent.

Shahjamaluddin, 43, is charged with conspiracy to knowingly transport, receive, possess, distribute or buy contraband cigarettes — a felony punishable by up to five years in prison.

Shahjamaluddin, a Missouri cigarette wholesale who’s the only person charged in the scheme so far, remains jailed without bond at the request of the U.S. government, which considers Shahjamaluddin a flight risk if freed and a threat to obstruct prosecution or injure or intimidate potential witnesses or jurors.

Messages left Thursday with Shahjamaluddin’s federal public defender were not immediately returned.

Jordan, in the affidavit first reported Thursday by the St. Louis Post-Dispatch, described Missouri as rife for such trafficking due to the state’s 17-cents-a-pack tax rate for cigarettes, compared to 98 cents charged in Illinois.

Missouri tobacco distributors are “inundated” with out-of-state buyers — smugglers known as “runners” — who often make multiple cigarette purchases in a short period, then send them elsewhere for resale “at significant profit,” according to Jordan.

Court papers don’t specify how much Shahjamaluddin’s supposed enterprise profited, though the government’s efforts to quell the big-money trafficking has been a long-standing one.

In January, the AP reported that during the previous three years undercover ATF agents in Virginia funneled more than 250 million cigarettes onto the nation’s streets through black market sales targeting smugglers. The stings as of then yielded about five dozen federal arrests.

The Department of Justice, the ATF’s parent agency, has estimated that federal, state and local governments lose out on $5 billion annually in tax revenue from cigarettes sold through illegitimate channels.

As part of the crackdown, federal prosecutors last November in Virginia charged 14 people from three states and the District of Columbia with paying more than $8 million for 77 million cigarettes over the course of a year and smuggling the smokes to New York, where state per-pack are a nation-leading $4.35. Two are accused of paying an undercover agent posing as a hit man to kill a couple over missing cigarettes.

In February in Miami, American Roman Vidal, 57, was sentenced to two years in prison after having pleaded guilty to fraud counts linked to his smuggling of more than 27 million cigarettes to accomplices is Spain, Great Britain, Ireland and Germany, then trying to avoid paying roughly $6 million in customs and tax duties.

In the latest case, according to Jordan, Shahjamaluddin bought the 144,000 cartons of cigarettes from an investigator who infiltrated the suspected smuggling ring. Cigarettes are deemed contraband if the packs don’t bear state tax stamps in the jurisdiction where they are eventually sold. Shahjamaluddin often accepted cigarettes from the undercover agent that he knew contained fake Missouri tax stamps, Jordan wrote.

During a June transaction, Jordan alleged, Shahjamaluddin paid $153,300 in cash for 4,200 cartons of cigarettes in June.

Shahjamaluddin, who according to court documents owns Cheap & Cheap in St. Louis County, told the court he drives a 2006 Nissan Altima and earns $7,000 a month working at a check-cashing business while his spouse makes $1,100 a month.

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