Ohio-based R + L Carriers has avoided prosecution by New York State attorneys after agreeing to a settlement over alleged shipments of illegal cigarettes into the state. The agreement was announced by the four NY State District Attorneys who investigated the allegation, Nicole Duvé of St. Lawrence County, Derek Champagne of Franklin County, David Foley of Chautauqua County, and Thomas Spota of Suffolk County.
According to the state, R + L, came under investigation following the discovery of two truckloads of untaxed cigarettes seized in St. Lawrence County in early 2012.
“The investigation revealed that an out-of-state company had been making massive shipments of untaxed cigarettes to various locations in New York State, and that many of the shipments were made through R + L Carriers of Wilmington, OH,” the attorneys said.
The agreement is not an admission of guilt, and no further action will be taken against R + L if it follows procedures set up as a result of the investigation, the state said. The investigation covered violations of New York State law from 2010 through Sept. 3, 2013.
It is illegal to ship cigarettes, including “premium” and “native” brands, into New York State without a state tax stamp or to deliver cigarettes to an unlicensed or unregistered business within New York State.
“The bootlegging of contraband cigarettes is a major problem for state revenues and for public health, and it is gratifying to make some significant progress in enforcement,” said Duvé.
“In cigarette trafficking there are often brazen violations,” noted District Attorney Spota. “Traffickers sometimes claim that cigarettes are exempt from the laws if they are manufactured on a reservation, or are being delivered from one reservation to another. There is no basis in the law for such claims, and this agreement reflects that.”
According to Foley, this agreement is acknowledgement that trucking companies must abide by all laws and can’t simply pick up a load and claim innocence. There were no specifics regarding the allegations against R + L released.
“Trucking companies need to be aware of the applicable statutes. They don’t have to look the other way when their customers ship cigarettes. They can adopt reasonable due diligence procedures to avoid carrying illegal shipments,” Foley said.
In New York State, trucking companies can only deliver cigarettes to “authorized recipients such as licensed wholesalers and registered retailers. The Tax Dept. maintains a website that allows anyone to check whether the party to whom cigarettes are to be delivered is properly licensed or registered,” Champagne added.
R + L has a fleet of nearly 13,000 power units serving all 50 states plus Canada, Puerto Rico, the U.S. Virgin Islands, and the Dominican Republic.
Under terms of the agreement, as released by the District Attorneys, R + L has agreed to the following conditions:
- R + L will not knowingly violate relevant statutes like the Tax Law requiring tax stamps on packages of cigarettes, the Public Health Law prohibiting delivery of cigarettes to businesses that are not licensed or registered by the Tax Department, and the 2010 federal PACT Act that seeks to prevent cigarette smuggling and ensure the collection of cigarette taxes.
- R + L is adopting a new Cigarette Policy [that] recognizes that New York law puts strict limits on cigarette deliveries. These limits apply to “premium” brands and “native” brands alike. The law generally does not allow shipment of cigarettes for sale in New York State when the cigarettes do not bear New York State tax stamps. The law generally does not allow shipments to a business not licensed or registered by the Tax Department as a wholesale or retail dealer. The authorized businesses are listed at http://www8.tax.ny.gov/CGTX/cgtxHome. R + L will only accept shipments of cigarettes for delivery to recipients who are licensed or otherwise authorized by New York law to receive such deliveries. Customers will be required to certify their awareness of and compliance with applicable New York laws prior to using R + L to ship cigarettes in New York.
- R + L is adopting a detailed set of compliance procedures to help avoid any future violations of law and will train its staff in the new policy and procedures.
- R + L will cooperate with further investigations of illegal cigarette trafficking by providing the above-listed District Attorneys with documents and witnesses upon request.
The company will also pay $140,000 to the American Lung Association and the American Cancer Society to be used for smoking prevention and cessation programs in the above counties.
According to a statement from the New York State District Attorneys office, if R + L fully complies with all these requirements, then criminal prosecution will not be pursued.
“R + L is to be commended for adopting these ground-breaking compliance procedures,” said Duvé. “The procedures should protect against further incidents in which R + L customers are able to use the company for illegal shipments of cigarettes. We hope that robust cigarette compliance procedures will become standard in the trucking industry.”