Virginia Cigarette Smuggling Sting Yields No Arrests After 19 Months


Earlier this year, Hampton, Virginia police shut down a 19-month cigarette smuggling sting operation because officers are suspected of the inappropriate use of funds and personal property. The operation yielded no arrests or criminal charges. According to the Daily Press:

For the past seven months, three of the police officers involved with the undercover operation have been under scrutiny. Those officers, including a major who is one of the police department's highest-ranking officers, were put on administrative leave with pay on Feb. 23 following allegations of misconduct.

Officials declined to press criminal charges following a Virginia State Police investigation, but a separate city investigation is ongoing.

Launched in June 2010, the operation was originally a joint investigation with the Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), but Hampton officers discovered an ATF agent (who had originally approached them about setting up the sting) was selling cigarettes on the side. The ATF withdrew from the case, and in September 2011 its agent was sentenced to over three years in jail.

Cigarette smuggling is profitable because wide disparities in state and local taxes mean cigarettes can cost $5 (or more) per pack in high-tax states like New York and Illinois than in low-tax Virginia.

In Hampton, law enforcement set up shop in a warehouse and put ads online indicating that their cigarettes, which were purchased from Phillip Morris at a special discount available to the ATF, were untaxed—meaning even more profit for smugglers.

Though exact figures were not available, it appears millions of dollars worth of cigarettes were sold onto the black market. Between January 2011 and August 2012, the Daily Press identified $3.15 million in operational expenditures including:

nine vehicles; XM-Sirius satellite radio subscriptions; and plane flights, hotel accommodations, steakhouse dinners, "show tickets" and other costs related to what the city says were training trips to New York, New Jersey, Northern Virginia, Washington, D.C., and Las Vegas.

The documents show several "cash withdrawals"—sometimes thousands of dollars at a time—from the account, with no additional details provided to the Daily Press about the withdrawals.

[Law enforcement] spent $394,341 for nine new vehicles, at an average price tag of $43,815.

Hampton officials say that funding for the operation, with the exception of officer salaries, did not come from Hampton taxpayers and that the investigation may yet result in charges in other jurisdictions where law enforcement collaborated with Hampton police.

Reason readers will recall that the ATF unleashed 250 million cigarettes onto the black market between 2007 and 2010. That apparently did not stop cigarette bootlegging.