Federal, Fairfax Cigarette Smuggling Sting Yields Guilty Plea
Sunday, June 7, 2009
A New Jersey man has pleaded guilty in Alexandria federal court to purchasing thousands of cartons of cigarettes, the latest in a growing number of cases targeting smugglers who buy truckloads of cigarettes in Northern Virginia and sell them in other states without paying taxes on them.
Mark A. Frondelli, 48, entered his plea May 26 in U.S. District Court to one count of transporting, receiving, possessing and purchasing contraband cigarettes. He admitted in court documents that he had purchased more than 77,000 cartons of untaxed cigarettes from undercover agents about 44 times in Northern Virginia, mostly in Alexandria and Annandale. He put them in a box truck to conceal the cartons and drove to New York and New Jersey to sell them, the documents said.
Christopher Amolsch, an attorney for Frondelli, said he was lured into smuggling by the high potential for profit. "In a down economy, he was looking for a way to make a living," Amolsch said. "It was a bad decision. He accepts full responsibility for it."
Federal officials have been cracking down for years on smugglers who buy cigarettes in Virginia, haul them north on Interstate 95 and sell them in other states without paying the required cigarette taxes. It becomes a federal crime when someone buys, sells, transports or distributes more than 10,000 cigarettes, or 50 cartons, to avoid payment of state tax.
Cigarette smuggling is difficult to stop, partly because tobacco is a legal product, and can be highly lucrative: Frondelli said in court documents that he spent more than $1.6 million to purchase the cigarettes in Northern Virginia starting in November 2007.
Smuggling operations have long relied on suppliers in Virginia, where the state tax of 30 cents per pack is among the nation's lowest, partly because of the tobacco industry's historic prominence and political influence in the state.
Smugglers purchase cigarettes in Virginia, through criminal means or legally in bulk from wholesale outlets, and sell them in the New York area. The business is profitable because cigarettes are so much more expensive in New York.
A pack of cigarettes, including the 30-cent state tax, averages $3 to $5 in Virginia, depending on the brand and the store, according to the federal Bureau of Alcohol, Tobacco, Firearms and Explosives. A pack in New York, by contrast, averages $8 to $10, $4.25 of which covers city and state taxes.
Mike Campbell, a spokesman for the ATF's Washington field office, which worked with Fairfax County police in investigating the Frondelli case, said the problem is growing worse because "in today's economy, criminals are always looking for new ways to make money with the least amount of risk or punishment."
"We're not dealing anymore with some guy who wants to come into Virginia and grab 20 cartons and sell them to a friend up north, like in the old days," Campbell said. "We're seeing larger amounts of money. It's keeping our agents and Fairfax detectives pretty busy."
Campbell said cigarette smuggling in Northern Virginia and nationally is increasingly a large-scale criminal enterprise, run by Russian, Asian and other organized crime groups.
Federal officials have also linked the smuggling to terrorism since the attacks of Sept. 11, 2001, saying that terrorists use it to fund their activities.
For more than two decades, the government has cracked down on the smuggling intermittently, and the crackdown has intensified in recent years.
Law enforcement officials said they learned of Frondelli's activities through a different tobacco-smuggling investigation. ATF agents and Fairfax detectives mounted a series of sting operations, selling contraband cigarettes to Frondelli, who would pay in cash. The agents would then follow him to the New York area and try to observe him selling the cigarettes, officials said.
Frondelli pleaded guilty to one specific transaction: paying the agents $114,170 for 5,193 cartons of untaxed cigarettes Aug. 20 in Alexandria, court documents said. But he said in a statement of facts filed in court with his plea agreement that he purchased 77,324 cartons overall, totaling more than 15 million cigarettes.
The higher amount will be used for sentencing and could increase Frondelli's prison term, prosecutors said. Frondelli faces up to five years in prison when he is sentenced Aug. 7.