Black market sales of cigarettes are costing states millions in tax revenue, and ruthless criminal gangs are orchestrating the illicit trade, according to a report by NPR.
In California alone, an estimated $182 million a year is lost in unpaid excise taxes on cigarettes.
The trade is fueled by wide gaps among the states in cigarette taxes.
Black marketers buy cigarettes in bulk, in states such as Virginia or North Carolina, where the taxes are low, and then haul the contraband to high-tax states such as New York. Police say a carton costing less than $40 in Virgina can sell for more than $100 in New York City.
Edgar Domenech, who heads the Washington, D.C., field office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, told NPR that organized crime groups with ties to Vietnam, Russia, Korea and China are involved in the business.
In an investigation in northern Virginia, a particularly frightening twist emerged: undercover investigators in two instances were asked by their criminal contacts to murder their competitors.
According to Capt. Dennis Wilson of the Fairfax County Police Department, the two murders were eventually faked. The investigation wound up leading last November to the arrest of 14 suspects tied to the contraband cigarette trade.