Mayor Michael R. Bloomberg today announced two undercover investigations spearheaded by the New York City Department of Finance (DOF) that have led to 20 arrests and several indictments of cigarette smugglers and tax stamp counterfeiters. The operation targeted cigarette bootleggers and tax cheats. Mayor Bloomberg was joined by Finance Commissioner Martha E. Stark, Health Commissioner Thomas Frieden and Consumer Affairs Commissioner Gretchen Dykstra at the announcement.

"Cigarette tax evasion costs the City an estimated $40 million in lost tax revenue annually, revenue that the City desperately needs to fill our $4.8 billion budget gap," said Mayor Bloomberg. "These operations targeted wholesale smuggling from Virginia and the sale of smuggled cigarettes to retailers in New York City. The success of this operation means the City and State have taken a significant step toward collecting the full taxes due New York City."

Finance Commissioner Martha Stark said, "Cigarette wholesalers and retailers must comply with their tax obligations or face the criminal consequences. We will be vigilant in enforcing the cigarette tax and in working with our partners at the State Department of Taxation and Finance and in law enforcement to go after would-be traffickers in untaxed cigarettes."

City, state and federal tax and law enforcement agencies worked together to identify and investigate businesses and individuals moving contraband cigarettes north to New York City. From May until August 2001, undercover agents identified individuals who purchased and then loaded thousands of cartons of cigarettes into trucks and vans. These vehicles were followed back into the New York area where the cigarettes were sold to area retailers at costs far below wholesale.

The second operation began in November 2001 after the Department of Finance's Office of Tax Enforcement received allegations that many delicatessens and smoke shops were selling and purchasing untaxed cigarettes. Working closely with the State and Districts Attorney, DOF investigators conducted an undercover operation to identify those willing to buy untaxed cigarettes.

"Tax cheats are nothing more than common criminals who hurt honest merchants and deprive government of necessary revenues to run essential programs," said New York State Commissioner of Taxation and Finance Arthur J. Roth. "We intend to work aggressively to help stamp out this problem."

"I want to thank our partners in tax and law enforcement, the Districts Attorney from Brooklyn and New York County, and the State Department of Taxation and Finance for their support and the critical role they played in the success of these undercover operations," added Mayor Bloomberg.

The possession and transportation of a pack of cigarettes that does not have the official joint City and State tax stamp is illegal. Counterfeit tax stamps can be detected upon close inspection, and are easy to remove. Official stamps are not removable. Citizens can report the sale of counterfeit stamped or smuggled cigarettes by calling the Department of Finance's Tax Evasion Hotline at (718) 403-4310.