Two Chinese men who peddled counterfeit cigarettes smuggled from China in a WeChat group were sentenced to two years of probation and six months of Home confinement, and both had to repay the government more than $35,000.
Cigarettes are the most expensive in the United States in New York City, so people were selling cigarettes from China. Two Chinese men who were arrested in September 2019 for peddling counterfeit cigarettes smuggled from China in a WeChat group pleaded guilty on or about October 13, 2020, and were sentenced this Monday (8) to two years of probation and six months of home confinement, with the two men required to repay the government more than $35,000, at a rate of 10 percent of the defendants’ gross monthly income, until paid off.
The indictment in federal court in the Southern District of New York revealed that FBI agents began targeting the tobacco smuggling network that Hai Jiao Dai and Xin Hui Zhou were part of in late 2018, which smuggled large quantities of cigarettes into the United States, transporting them from China to New York and elsewhere, in part through international air carriers. To avoid taxes, the cartons containing the cigarettes were often labeled with trade names such as light bulbs, cell phone cases and other items of low retail value. The untaxed cigarettes are then sold on the U.S. black market.
Afterwards, the undercover agents pretend to purchase a certain number of counterfeit cigarettes of a famous brand. Soon after, Dai Haijiao and Zhou Xinhui informed the undercover agents in a WeChat group that the cigarettes had arrived and provided a courier number, requiring delivery with one hand and payment with the other.
According to the courier number, the law enforcement officers found out from the international air transport company that the content of the customs waybill of the shipment was filled in as “data line” and the quantity was “500 pieces” valued at USD 0.31 each. And the actual load was cigarettes.
On or about May 18, 2019, Day and Chow mailed 43,200 cigarettes to Queens, N.Y., and on or about June 26, 2019, they sent another 57,600 cigarettes to Manhattan, both of which were seized by the government, according to the prosecution’s March 8 sentencing documents filed in court.
The two men originally faced six counts of conspiracy to smuggle and distribute counterfeit cigarettes, smuggling counterfeit cigarettes, smuggling articles into the United States, conspiracy to smuggle counterfeit articles, smuggling counterfeit articles and smuggling counterfeit packages. They pleaded guilty last October to one count of “failure to maintain information regarding the shipment, receipt, sale and distribution of cigarettes,” allowing the government to seize the Chinese cigarettes.
According to prosecution documents, the value of the two shipments of cigarettes was the equivalent of $5,068. According to the reporter’s estimate of the price of the two batches of counterfeit cigarettes, the average price per pack appears to be only $1. Usually, a pack of 20 cigarettes sells for $13 in New York City. Smuggling profits are staggering.
The underlying reason for the smuggling of cigarettes to New York is that the tax differential is too great. 2018, New York City cigarettes jumped to “the most expensive in the country”, New York’s cigarette tax is the highest in the country, the tax on each pack of cigarettes in New York State is $4.35, and in New York City there is an additional $1.50 per pack of city cigarette tax, which is $5.85 per pack.
The New York government’s goal is to “control the quantity with the price” to curb the growth of the smoking population. But it has also led to a situation where high cigarette taxes and high smuggling coexist. Chinatown’s third community council Chen Jialing told reporters earlier that Chinatown used to be full of cigarette sales have long moved from the stores to the network, in the network, smokers do not have to show ID cards can buy cheap (untaxed, no stamp) cigarettes, the black market is prevalent.
Of course, the government is not soft on cigarette smuggling. Dai Haijiao and Zhou Xinhui’s cigarettes were confiscated and they had to repay the government 35,039,100 yuan, with heavy interest payments for late repayment.
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