Grand jury indicts man accused of cigarette smuggling
Wednesday, October 6, 2010
ST. LOUIS (AP) -- A St. Louis man who federal agents say helped smuggle nearly 29 million cigarettes from Missouri to Illinois to profit from differences in their sales taxes on smokes has been indicted on more felony counts.
A federal grand jury has charged Ghalib Shahjamaluddin, 43, with two counts of knowingly possessing, shipping, transporting and distributing contraband cigarettes, as well as two felonies claiming he knowingly trafficked the black-market smokes without keeping government-required records.
The indictment replaces a federal complaint filed last month that accused the cigarette wholesaler with a smuggling-related conspiracy count.
Authorities claim Shahjamaluddin paid an undercover investigator $4.3 million for 144,000 cartons of contraband cigarettes from Missouri -- home to the nation's lowest cigarette tax -- and sold them in neighboring Illinois, where the per-pack state tax is six times higher. Shahjamaluddin often sold the smokes around Chicago for the going price -- and made a hefty profit by pocketing the difference, investigators say.
Shahjamaluddin's profits were poured back into his smuggling operation when he wasn't sending tens of thousands of dollars to India, according to an affidavit by Lissa Jordan, a Bureau of Alcohol Tobacco, Firearms and Explosives agent, filed with last month's criminal complaint.
Shahjamaluddin, the only person charged in the scheme so far, remains jailed without bond at the request of the U.S. government, which considers him a flight risk if freed and a threat to obstruct prosecution or injure or intimidate potential witnesses or jurors.
A message left Tuesday with Burton Shostak, one of Shahjamaluddin's attorneys, was not immediately returned.
Jordan, in her affidavit, described Missouri as rife for such trafficking due to the state's 17-cents-a-pack tax rate for cigarettes. Illinois' tax is 81 cents more.
Court papers don't specify how much Shahjamaluddin supposedly profited, though the government's efforts to quell big-money trafficking have been long-standing.
In January, the AP reported that during the previous three years undercover ATF agents in Virginia funneled more than 250 million cigarettes onto the nation's streets through black market sales targeting smugglers. The stings had yielded about five dozen federal arrests.
The Department of Justice, the ATF's parent agency, has estimated that federal, state and local governments lose out on $5 billion annually in tax revenue from cigarettes sold through illegitimate channels.
Cigarettes are deemed contraband if the packs don't bear state tax stamps in the jurisdiction where they are sold. Shahjamaluddin, who according to court documents owns Cheap & Cheap in St. Louis County, often accepted cigarettes from an undercover agent that he knew had fake Missouri tax stamps, Jordan wrote.
Shahjamaluddin was indicted last week on the same day a Chicago man admitted in federal court in East St. Louis, Ill., that police caught him with $1,550 in bogus $50 bills. Katrell Irvin acknowledged in court the counterfeit bills were to buy large amounts of cigarettes in Missouri that he intended to take back to Chicago.