Every day there is something new in the news about mandated taxes and hikes. People want to tax this and tax that and politicians try to get away with guilt tripping society in to taxing everything from sugar to gas. Now there is a new hustle that is coming right around the corner as a direct result of massive taxes; the cigarette smuggling hustle!
What's the Story?
New York officials are calling a loosely terrorist linked cigarette smuggling ring one of the largest busts of its kind. Sixteen Palestinian men are being accused of selling cigarettes without paying the taxes that New York demands. In the process, it is alleged, these men made $55 million in profits through their black market dealings. What makes cigarette smuggling such an excellent hustle was that the whole smuggling ring does not appear "black market" in any way. That is part of what makes it so lucrative
There was no mention of any time frame that it took these men to make this money. Officials also never said how long the potential prison sentences may be for these men. My guess is that they won't be able to get them for anything more than tax fraud and tax evasion. That is 10 years max if they want to make an example of these smugglers.
Two brothers were the brains of this entire operation. When they were arrested these two brothers, Samir and Basil Ramadan, had $1.5 million stashed in black trash bags at their home and in their cars. Apparently this whole scheme ended up costing the state of New York around $80 million in tax revenue. I guess you have to be careful when you mess with the tax hoarding "mafia-state".
Quick Note about this Group of Cigarette Hustlers: Are They Terrorists?
So the state of New York and investigators are claiming that this group is "connected" to known terrorists. Here is what the real story is...
There was only two connections that this group of people had to terrorists. I think the state police are trying to cast a bad shadow on these tax dodgers by making it seem like they are terrorists or connected to terrorists. No doubt because they want to find any excuse possible to make examples of them with harsh punishments.
What really happened that created the claims that these men were linked to terrorists is rather non-substantial. In the 1990's one of the sixteen men in the ring of cigarette smugglers ran a legitimate business that was PARTIALLY funded by a man named Omar Abdel-Rahman. Omar Abdel-Rahman is a cleric who is completely blind and has been in prison for decades. Mr. Rahman, who has nothing to do with the cigarette smuggling ring, is serving a life sentence for conspiracy to destroy landmarks in New York City with bombs.
So if I work for a business that a criminal invests in does that make me connected to their crimes? I don't think so! I am not a sympathizer and I think terrorists should get shot in the head with no empathy. But working for a business that a criminal invested in DOES NOT make YOU a criminal!
The second "terrorist link" that these cigarette smugglers had was even more obscure. Officials claim that one of the men in the group was the "confidant" of man who shot up a school bus full of Jewish students in 1994.
The word "confidant" was spoken by the officials, not imagined by me. The word "confidant" is simply a word that means close associate or friend whom you discuss private matters with. Saying "confidant" just makes this group of profiteers seem sinister and conniving when in fact they are simply tax dodgers. Again, I can not emphasize how little I empathize with terrorists and murdering scum, but the simple fact that one of these men was the friend of someone who committed a serious crime DOES NOT mean they are in any way guilty of the same crime that person committed. A good example is Charles Joseph Whitman, a University of Texas student who was actually fairly popular among his peers yet snapped and killed 17 people at his college. If one of the students at the same college committed a crime and happened to know him would we say that person is "linked"? No, of course not!
These are the only two links that these sixteen smugglers had to terrorists. That is not evidence or proof of any kind and should not impact their sentencing or carry any weight in the trial.
So How Does the Cigarette Hustle Work?
So here is what these sixteen tax dodging cigarette smugglers did to make the big bucks that they made. The first thing they did was secure a legitimate wholesale supplier in Virginia by posing as a legitimate retail business or company that sells cigarettes. Since there are over 60 wholesale cigarette supply companies in Virginia this wouldn't have been too difficult. Once they secured the cigarettes they had them transported to Delaware where they stored the cigarettes in storage facilities. Next they take these cigarettes to a state with some of the highest tobacco taxes in the nation; AKA New York City. These means higher prices for legitimate suppliers and business and more potential buyers for the smugglers because of these higher prices real suppliers are forced to pay by the state of New York.
Now here is where the real hustle comes. The officials make it sound like they personally sold these cigarettes in markets and shops. With 55 million in sales that means they would have had to sell over a million cartons at the current price BY THEMSELVES! That is just about impossible. What they really did was sell them to other independently owned businesses such as markets and shops at a wholesale price that beat out the competition. What I can honestly assume is that these people falsely informed legitimate businesses that they had paid taxes on the cigarettes they were selling them to. The companies that bought cigarettes from these smugglers could than afford to sell the cigarettes at a much lower price and still make a profit and pay their own taxes at the same time! This is a pretty simple hustle!
What a Perfect Hustle!
What makes the cigarette hustle even better is that it is completely inconspicuous. Who is going to pull over a semi-truck stocked with cigarettes? Especially if the sixteen smugglers operated falsely as a legitimate business and supplier. All you need is a EIN number after registering a business, some fake licenses, business cards and a semi-truck for transport (if the cigarette companies did not in fact transport the cigarettes for the smugglers because many companies will do that for their customers) and most police would not know the difference even IF they did happen to pull over the smugglers during transport.
This has got to be the ultimate hustle with very limited consequences. Compare this to cocaine and you will see just how much safer selling cigarettes without paying a tax is.
Why is Cigarette Smuggling Happening in The First Place?
Much like drugs that are extremely restricted, the taxes and restrictions on tobacco are becoming so high that many people are starting to see just how much more profitable it can be to go underground. What scares me is that cigarettes becoming illegal is getting closer and closer. We all know what happens when products and services become illegal. Not only does it usually dramatically increase the price, but it also increases the violence and crime people will be willing to use to buy and sell that product.
The state is truly to blame in this situation. If it were not for the extraordinary taxes that are placed on tobacco people would not be willing to take the risk of smuggling cigarettes in the first place. We all know that people should try and be healthy but imposing financial consequences on people who choose to engage in activities such as smoking is not the right way to do it. There are two great words that define the activity of imposing taxes on bad habits; Social engineering.
The state is not only finding ways to make money by using guilt and bias to tax society, but they are also bowing down to the pressures of insurance companies who want more people to pay for insurance, but less people to actually need insurance after they pay for it. Essentially, lobbyists for health insurance companies persuade politicians to tax "unhealthy activities" so that less people will be as likely to choose an unhealthy activity and thus they will have to pay less in settlements. It is pretty simple. Not only that but liberal America believes that they know what is good for you better than you do.
Will Cigarettes Go Underground?
With the state of increased taxation the way it is I can easily foresee a future in which cigarettes become the equivalent of possessing a illegal narcotic. If cigarette taxes continue to get higher and higher there will be more and more people who use tobacco persuaded to buy the low priced and un-taxed cigarettes available in the underground. If cigarettes ever become illegal it will be Prohibition all over again. Dealers and smugglers will run the world of tobacco if things continue to persist as they are. This is America and people are supposed to be able to choose. Don't let the world of politics and the morally self-righteous dictate what is and isn't good for you! If you want to smoke than smoke. If you choose not to smoke than that is YOUR choice, not a choice that should be imposed on others!
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