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Downtown smoke shop busted for tax evasion

The Brooklyn Paper
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Police arrested the owner of a popular Downtown smoke shop last week, part of an ongoing crackdown against the scores of tabacconists who hawk untaxed smokes to insiders in schemes that are wholly unknown by the non-smoking public.

Cops with the 84th Precinct descended on the Tobacco Shop at Lawrence and Willoughby streets and arrested Hamod Alsaedi-Hesham for allegedly selling untaxed smokes for as low as $7 a pack — more than $5 less than his price for a legal pack of cancer sticks.

The enforcement is part of Mayor Bloomberg’s attempt to curb smoking by raising taxes on cigarettes — which has more than doubled to a combined $4.25 between the city and state tax since Bloomberg took office.

The crackdown is working, at least on the city’s side. Between 2006 and the end of October, the Department of Finance has collected $3,337,481 in settlements against tax evaders and websites that sell untaxed smokes to New Yorkers.

Undercutting the system may be a “deal” for vendors and their customers, but it comes with a price — Alsaedi-Hesham faces up to four years in jail on charges of tax evasion and selling untaxed cigarettes from both the city and state.

The government requires that every pack of smokes bear both city and state tax stamps, which Asaedi-Hesham’s did not, according to an undercover detective’s report.

“[We] recovered 120 packs of cigarettes that did not have the required … tax stamp from under the floor behind the counter,” the report said.

A spokesman for District Attorney Charles Hynes wouldn’t comment on the office’s priority for these types of cases. But the spokesman, Jonah Bruno, did say, “We’ve had them before” and “we will prosecute [Alsaedi-Hesham].”

It’s a well-known loophole among the 15 percent of adults in the city who smoke: Untaxed, unregistered smokes are cheap and easy to find in bodegas that want to make a quick buck.

“A friend of mine introduced me to my guy, I just went into the bodega and said, ‘I want the Camel Lights, the $8 ones’ — that was pretty much it,” said Bushwick resident Andrea Fumagalli, who said he can’t afford the taxes, which have raised cig prices to $13.

“I don’t have much money so I have to find the cheap ones — it’s a risk these guys take because they make a profit,” Fumagalli added.

A risk, but also an easy find for vendors, who can buy smokes online, from overseas or at some Indian reservations that are known to sell untaxed cigarettes in bulk.

But the city is cracking down on reservations, too. In September, undercover agents busted several smoke shops on the Poospatuck reservation on Long Island that sold cartons of 10 packs for as low as $52 — half the price they’d go for in the city, according to the New York Post.

Updated 7:59 am, November 12, 2010
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Reasonable discourse

Rob from Greenpoint says:
Enough with the social engineering already.
Bloomberg sucks.
Nov. 12, 2010, 9:42 am
JJ from Boerum Hill says:
Ooooooh. What a surprise … merchants cheating of the cigarette tax!

The cops and the DA know perfectly well that it's widespread — and in some cases, we know from past arrests that some of the illicit profits are diverted to Middle Eastern terrorists.

The margin for cheaters in cigarettes is too great, and the social ostracizing of smokers too acute, to expect anything else.

Maybe next the police will discover that no-credit-card restaurants their cousins run are … how we put it? … skimming a little off the top before reporting their receipts for sales tax.

I'm shocked. Just shocked! That this stuff is going on under Marty Markowitz's watch.
Nov. 12, 2010, 11:45 am
k from gp says:
Too bad the owner of the store doesn't work at morgan stanley on his off days. THose guys get away with murder.
Nov. 13, 2010, 5:39 pm
Joey from Clinton Hills says:
how do those imitation Camels from China taste? I likee the price.
Nov. 14, 2010, 10:46 pm

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