NCJ Number
78847
Date Published
1980
Length
31 pages
Annotation
The application of the criminal and civil penalties of the Racketeer Influenced and Corrupt Organizations Act (RICO) to cigarette 'bootlegging' is discussed.
Abstract
The States and the Federal Government tax cigarette sales and use at different rates. Typically, cigarette 'bootlegging' consists of evasion of these taxes by smuggling cigarettes out of low-tax States into high-tax States without paying the higher taxes. Tax evasion activities cost high-tax States and localities an estimated $391 million in revenue losses annually. The chief Federal statutes relating to punishment of cigarette tax evasion are the Jenkins Act, the Mail Fraud Law, the Trafficking in Contraband Cigarettes Law, and RICO. All of these statutes except the Jenkins Act fall within Title 18 of the Criminal Law and impose more severe sanctions on cigarette smugglers than do State taxation laws. RICO, in conjunction with the Trafficking in Contraband Cigarettes Law, is the prosecutor's best weapon against today's sophisticated organized smuggling operations. RICO may be used against cigarette manufacturers, the source of the supply of bootlegged cigarettes. A manufacturer violates RICO by entering into a conspiracy with bootleggers, who have engaged in racketeering activity amounting to a 1962 prohibited activity. Prosecutors should, where possible, bring cases against manufacturers in jurisdictions such as the District of Columbia Circuit, where knowledge of the conspiracy alone is sufficient. The civil remedies of RICO are formidable (triple damages to victims and injunctive relief) and the standard of proof is lower than in criminal proceedings. The threat of RICO action may suffice to deter manufacturers from selling cigarettes to known smugglers. A total of 105 footnotes are listed. (Author summary modified)