October 22, 2019
Postal Service delivers hundreds of thousands of cartons of cigarettes annually, costing New York City and States nationwide tens of millions of dollars in tax revenues
NEW YORK—Mayor Bill de Blasio, Acting Corporation Counsel Georgia M. Pestana, and New York City Sheriff Joseph Fucito today announced the filing of a joint lawsuit with California Attorney General Xavier Becerra against the United States Postal Service (USPS) for illegally shipping hundreds of thousands of cartons of cigarettes to postal customers throughout the country in violation of federal law.
“Cigarette smuggling doesn’t just break the law – it endangers the health of countless Americans and enriches terrorists and organized crime,” said Mayor Bill de Blasio. “Yet despite all of this, our nation’s own postal service has ignored the practice and enabled one of the biggest killers in our country. It needs to end, and we intend to be the ones to end it.”
“The Postal Service has turned a blind eye to the illegal shipment of cigarettes through its facilities, undermining our health laws and causing millions of dollars of tax losses to New York City,” said Acting Corporation Counsel Georgia M. Pestana. “Further, the USPS Inspector General has warned the agency that its policy of returning contraband packages to senders instead of destroying them is in conflict with the law and allows cigarette sellers simply to try again to have their cigarettes delivered. We are asking the Court for relief, including that these illegal practices be halted.”
“Trafficking in untaxed cigarettes causes problems beyond lost revenue, said New York City Sheriff Joseph Fucito. “It is a keystone offense that bridges organized crime, terrorism and health problems that can affect every New Yorker. The words and deeds of government entities needs to be congruent with the law.”
According to the complaint, the federal Prevent All Cigarette Trafficking (PACT) Act that became law in 2010 has deterred domestic cigarette sellers from mailing cigarettes to buyers, but international vendors less subject to U.S.-based enforcement efforts have become a major source of contraband cigarettes delivered through the USPS.
Package audits conducted by a task force of federal, state and City investigators at the John F. Kennedy International Mail Facility in 2018 revealed parcels containing more than 100,000 cartons of cigarettes destined for 48 states. The packages originated from Vietnam, China, Israel, and other overseas locations. Most packages were headed to California and New York. Based on those estimates, USPS may be shipping as many as 600,000 cartons – six million packs – of cigarettes to California each year, resulting in an annual tax loss of more than $19 million. An estimated 500,000 cartons – five million packs of cigarettes – are estimated to be delivered annually to New York City and New York State, resulting in annual tax losses of over $21 million.
Congress has found that cigarette trafficking provides income to organized crime and terrorist groups. The 2018 audits contained packages of cigarettes sent by an overseas commercial shipper whose U.S. affiliates had been convicted of a variety of federal crimes related to cigarette trafficking. In 2015, the USPS had been notified that this overseas seller was illegally mailing cigarettes, but the deliveries continued as revealed by the 2018 audit.
The complaint says USPS fails to use a list of known commercial cigarette shippers provided by the U.S. Department of Justice to block shipments, and packages continue through the mail even when the contents are labeled as “cigarettes.” When USPS workers do identify contraband cigarettes, the parcels are returned to the shipper, allowing shippers to simply resend their packages, a policy criticized by the USPS Inspector General.
Cigarette smoking is one of the biggest causes of preventable premature death in the United States. Smoking annually kills more than 480,000 people nationwide, including 26,000 New Yorkers, a figure that exceeds the combined number of deaths from alcohol, motor vehicle collisions, and firearms. According to the World Health Organization, the high taxes on cigarettes that trafficking evades are the most effective policy intervention for deterring cigarette smoking, especially among young New Yorkers.
The investigations were conducted by the federal Bureau of Alcohol Tobacco Firearms and Explosives, the New York City Sheriff’s Office and the California Department of Justice.
The joint City-California complaint was filed in federal court in Brooklyn and seeks, among other relief, a permanent injunction prohibiting the USPS from delivering packages known or reasonably believed to contain cigarettes.
The complaint is being handled by Eric Proshansky and Hope Lu of the NYC Law Department’s Affirmative Litigation Division.
“Accepting and delivering contraband cigarettes is not only a health hazard for our citizens but a detriment to our state’s economy,” said California Attorney General Xavier Becerra. “The California Department of Justice will remain vigilant in pursuing contraband cigarettes that are smuggled into California.”
“Illegal cigarette trafficking not only robs New York taxpayers of millions of dollars in lost revenue, but by making cheap cigarettes available it fuels a deadly addiction that kills tens of thousands of New Yorkers every year,” said State Senator Liz Krueger. “The US Postal Service must follow existing Federal law and their own best practices and crack down on these illegal shipments. I thank the de Blasio Administration for joining California in this important lawsuit.”
"Illegal shipments of cigarettes curtail our efforts to combat tobacco cessation in New York," said State Senator Gustavo Rivera. "I commend the City for fighting to put an end to the neglect of enforcement against this illegal practice on behalf of New Yorkers and people across the country."