Local police agencies helped bring down an alleged criminal ring that flooded four states and the Capital Region with millions of cartons of untaxed and illegal cigarettes. Officials say the untaxed cigarettes cost New York at least $80 million in tax revenue.
Authorities also expressed concern the ring, which involved small grocery stores and markets throughout Albany and Schenectady counties, was similar to others helping to fund terrorist organizations.
A 244-count indictment charged 16 people with enterprise corruption, money laundering and related tax crimes, according to a news release Thursday from state Attorney General Eric Schneiderman and New York City Police Commissioner Raymond Kelly.
Search warrants were executed a day earlier along the East Coast, yielding handguns, millions of dollars in cash and thousands of cigarette cartons from homes, cars and storage facilities.
“By cheating New Yorkers out of tens of millions of dollars in tax revenue, this dangerous criminal ring was able to generate astounding profits that we are still continuing to trace,” Schneiderman said in the release. “Not only did this organized crime ring hurt law-abiding mom-and-pop shops and other businesses in New York by putting those who do pay taxes at a competitive disadvantage, there is a very real concern about the possibility of violence related to this type of enterprise.”
The sale of untaxed cigarettes also hurts small businesses and undercuts the state’s public health campaign to discourage smoking, he added.
In all, law enforcement seized more than 65,000 forged New York City and New York state cigarette tax stamps and nearly 20,000 untaxed cigarette cartons. So far, $55 million in illegal sales have been uncovered, but officials say the investigation is continuing, in part to determine where all the illegal proceeds ended up.
“The association of some of the suspects ... concerns us,” Kelly said in the release. “While it hasn’t been established yet where the illicit proceeds ended up, we’re concerned because similar schemes have been used in the past to help fund terrorist organizations like Hamas and Hezbollah.”
Over the past year, law enforcement has used financial records and electronic and physical surveillance to track down the alleged head of the enterprise, Basel Ramadan of Ocean City, Md. Ramadan and his brother, Samir, allegedly obtained cigarettes from a Virginia wholesaler, Cooper Booth Wholesale, and stored them in a Delaware facility. Several days a week, alleged co-conspirator Adel Abuzahrieh drove from Brooklyn to Delaware to give the Ramadan brothers tens of thousands of dollars in cash for the cigarettes.
The criminal enterprise consisted entirely of Palestinian nationals, according to the indictment. It included several New York-based cigarette distributors and resellers who transported cash between New York and Delaware, sometimes more than $100,000 per trip, in exchange for about 20,000 cartons of cigarettes a week. The distributors then handed the cigarettes over to resellers, who would sell them to Arab-owned markets and grocery stores throughout Brooklyn, Queens, the Bronx and Staten Island.
One of the resellers — Mohannad Seif, 39, of Brooklyn — allegedly sold untaxed cigarettes to grocery stores in Albany and Schenectady counties.
The Ramadan brothers generated more than $10 million in profits, authorities say, and deposited more than $55 million from their cigarette sales into local financial institutions in and around Ocean City.
The investigation by the New York State Attorney General’s Organized Crime Task Force and the New York City Police Department was helped by more than a dozen agencies, including Homeland Security Investigations, the New York National Guard Counterdrug Task Force, the New York State Department of Taxation and Finance, the New York City Sheriff’s Office, the Albany Police Department, New York State Police, the Kings County District Attorney’s Office, Delaware and Maryland state police and U.S. attorney’s offices in Delaware, Maryland, New Jersey and the Eastern District of New York.
The indictment, unsealed Thursday in state Supreme Court in Brooklyn, charged 16 suspects with enterprise corruption, and other enterprise-related crimes. Each defendant faces up to 81⁄3 to 25 years in prison.