New York City is using a federal statute designed to prosecute the Mafia in order to sue a black-market cigarette vendor who it says cost the city $6.5 million in lost taxes over about a six-year period. Mayor Mike Bloomberg just issued a press release announcing the suit, in which he said sites such as Cigarettesdirect2u.com had shipped some 4.37 million packs of cigarettes into the city after taking orders in Kentucky, California, and Michigan.
The vendors operated between 2003 and 2006, said Eric Proshansky, an attorney for the city. "They bought [cigarettes] illegally, or they bought them from states like South Carolina where there was no cigarette tax," he told the Atlantic Wire via telephone. "[Buyers] put in an order, and the [vendors] put them in the mail. It's no different from ordering on Amazon."
The city is suing under the federal Contraband Cigarette Trafficking Act. It's also using the federal Racketeering Influenced and Corrupt Organizations (RICO) Act, designed to prosecute mob bosses for the crimes of their subordinates. While it was created to prosecute the Mafia, Proshansky said RICO was "an effective legal tool for violations like this" because it "allows us a broader jurisdiction, greater damages, it permits conspiracy claims."
Proshansky said the city would likely seek $20 million or more in damages, fees and penalties.
Most stores in New York sell cigarettes for $11 to $15 a pack. At Discountcigarettes.com, which is not named in the suit, but appears high in a Google search, they go for around $2 a pack.