Forty-three people have been indicted for allegedly being part of a cigarette trafficking network that resold an estimated $30 million of Virginia cigarettes on the black market, Henrico County police said Friday.
The network used falsified documents to create 29 fictitious businesses in the Richmond area, which allowed them to make large bulk purchases of tax-exempt cigarettes so they could be resold out of state for a “substantial profit,” police said.
Investigators said traffickers in the network would go to big-box stores to buy cigarettes before sending them up to northern localities such as New York City, where high taxes make illicit smokes a relative bargain.
Henrico Police Chief Humberto Cardounel said cigarette traffickers operate a cash-based business that exchanges thousands of dollars and leads to other related crimes, such as fraud, thefts, robberies, shootings and assaults.
“Cigarette trafficking is not just about the cigarettes,” Cardounel said. “It’s about the associated crime it brings to our community.”
About 600,000 cartons of cigarettes, worth more than $30 million, were purchased in Virginia, according to Henrico police. They were bought mostly in Henrico and other parts of the Richmond area to be resold on the black market, police said.
“The value of those cigarettes almost doubles in some of our northeastern states,” said Mike Palkovics, Henrico’s deputy chief of investigative operations.
The investigation started in 2016 amid complaints from citizens and business owners about suspicious activity, police said.
A total of 743 indictments were brought against the 43 defendants. The charges accuse them of cigarette trafficking, embezzlement and fraudulent purchase of cigarettes, said Shannon Taylor, Henrico commonwealth’s attorney.
“What is incredible about this current investigation and prosecution is the volume and the number of individuals who are going to be involved,” Taylor said.
Most of the suspects are originally from the northwest African country of Mauritania, and some are from Morocco, Egypt and Iraq, said Henrico police detective Robert Matson.
Some of the proceeds from the network went to buy “high-end vehicles,” but it’s unclear what much of the money was used for, Matson said.
Just a week before Friday’s news conference at the Henrico County Public Safety Training Building, Gov. Terry McAuliffe held a signing ceremony in the same building for a new state law that aims to crack down on cigarette traffickers.
That law creates a system where people who want to purchase cigarettes for resale have to get a special certificate from the Virginia Department of Taxation, a provision that will go into effect in January. The law also creates various requirements regarding who can get that certificate. Purchasers have to wait at least 30 days before obtaining a certificate and, during that time, state officials conduct a background check on the potential cigarettes purchaser.
The aim is to ensure that only legitimate businesses can get certificates needed to buy cigarettes in bulk from big-box stores.
More than 20 agencies contributed to the investigation, including the Bureau of Alcohol, Tobacco, Firearms and Explosives; the FBI; the Internal Revenue Service; and the U.S. Department of State. In addition to Henrico, law enforcement authorities in Richmond, Chesterfield, Hanover and Colonial Heights took part in the investigation as did the Virginia State Police.
Nineteen of the suspects have been arrested, but the rest remain at large, police said. Most of the defendants have been living in Henrico, Matson said.
The county is no stranger to cigarette trafficking cases.
Prosecutors say that in a case that’s not related to the one announced Friday, a Henrico couple led a trafficking operation that moved massive quantities of cigarettes purchased in Virginia up north.
Qiuyue Chen, 36, and Fu Chen, 43, along with other associates, bought $23.2 million of cigarettes in Virginia intended for out-of-state sale, according to prosecutors. They have been convicted of various charges and are scheduled to be sentenced next week.