Feds seize illegally imported cigarettes from Vietnam

Federal agents in Seattle seized 6,500 cartons of cigarettes and more than $200,000 in cash Wednesday as part of a sweeping investigation into the illegal import of Marlboro Reds, 555s and other Philip Morris brands from Vietnam.

Mark Leiser, the assistant special agent in charge of the Seattle field office of the federal Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF), said agents executed 14 search warrants at three businesses and 11 residences, where they seized the cash and cigarettes.

He said agents also seized five vehicles that were either purchased with illegal proceeds or were used to transport the cigarettes, which were shipped to the Seattle area through the U.S. mail.

Those involved in the scheme avoided paying taxes on the cigarettes, defrauding the federal and state governments of an estimated $24 million since 2008, Leiser said. He estimated that the 6,500 cartons seized on Wednesday alone represented $262,000 in lost tax revenue.

Leiser and Brad Kleinknecht, the inspector in charge of the U.S. Postal Inspection Service, gave only vague details of their joint operation at a news conference Wednesday at the Jackson Federal Building in downtown Seattle because the affidavits outlining their investigation have been sealed in U.S. District Court.

No one was taken into custody Wednesday, but arrests are expected once the U.S. Attorney's Office reviews the case and makes charging decisions, Leiser said.

The warrants were served in Seattle, Kenmore, Shoreline, Kent and Tacoma, ATF spokeswoman Cheryl Bishop said.

"It was common knowledge in the areas where they were sold," she said.

In Vietnam, a carton of Marlboros costs $7 to $9 in U.S. dollars. In Washington — which has one of the highest tax rates on cigarettes in the nation at a little over $3 a pack — that same carton costs $79 to $85, according to Postal Inspector Jerry Styers.

In spring 2010, officials with the state Liquor Control Board contacted the ATF with information about street-level sales of cartons and packs of cigarettes from Vietnam that lacked tax stamps, Leiser said. Investigators determined that cigarettes were being sent through the mail to Seattle-area residents, who then sold cartons for $20 to $30 less than what a smoker would pay at legitimate retail businesses, he said.

The state tax on a carton of cigarettes is $30.25, plus $10.07 in federal tax, Leiser said. In Washington, the money is used to subsidize public education and the health-care system and help fund public-works projects, he said.

"For those who say these kinds of investigations are a waste of money or that it's a victimless crime, I would say they're wrong," Leiser said.