Cheap `knock-off' cigarettes easier than ever to buy...
From Today's Toronto Star (Saturday December 16)
Contraband easy to buy
Cheap `knock-off' cigarettes easier than ever to buy; experts warn of
unknown health risks
Dec. 16, 2006. 09:53 AM
DALE BRAZAO AND ROBERT CRIBB
STAFF REPORTERS
Standing in his usual spot outside a grungy Queen St. E. bar, Luigi digs
into his bulging coat pocket and slides a pack of illegal cigarettes into
the hands of a 16-year-old.
The price is dirt cheap
$4 for 20 smokes
about half the cost of a legal pack.
Hundreds of these transactions take place every day in Toronto's
burgeoning tobacco black market
an illicit billion-dollar business that thrives by evading the taxes
slapped on legal cigarettes.
Ontario's enormous
and growing
underground cigarette trade robs tens of millions from government
coffers. It also undermines the "sin tax" strategy governments have long
relied upon to keep teens from developing the cancer-causing habit.
The cigarettes are illegal because they are sold without government taxes;
they don't display proper health warnings and are sometimes sold as
singles.
The international smuggling pipeline that floods Ontario with a
mind-boggling number of illegal cigarettes each year ends at corner
stores, gas stations, donut shops and sidewalk merchants like Luigi.
Police and health officials have stepped up enforcement but say the
problem is growing.
The 50-something Luigi counts among his clientele men in suits, drug
addicts and kids scoring a pack of cheap smokes in the middle of the day.
Hour after hour, he pulls bright red packs of DK's cigarettes from his
oversized blue jacket and completes the transactions.
Luigi will also sell single cigarettes for 25 cents each and cartons for
$28
an array of consumer choices that has built him a bustling street-side
business.
A fixture on the Queen St. E. strip east of Sherbourne St., Luigi says
he's been selling illegal smokes for three months. A supplier from a
native reserve drops off his shipments every couple of weeks, he said.
Of the estimated 14 billion cigarettes smoked in Ontario each year, one in
four is now illegal, according to a recently published study commissioned
by Imperial Tobacco Canada
the only comprehensive research on the illicit tobacco trade, based on
interviews with 2,300 adult smokers across Canada. The figure has been
widely accepted by police and anti-smoking groups.
"(It is) a credible estimate of the expanding scope of illegal tobacco
sales in Ontario and Quebec and should be seen as an urgent call for
government action," said Cynthia Callard, executive director of Physicians
for a Smoke-Free Canada.
Dave Bryans, president of the Ontario Convenience Stores Association, says
his organization's research also points to a massive problem.
"We estimate 25 per cent of all cigarettes are moving illegally off of
reserves in Ontario and Quebec and it's growing. No one has the will to
stop the free flow of cigarettes in this province off of native reserves
because they don't want to get into another native dispute. This is
growing out of control."
RCMP Supt. Joe Oliver says smugglers have close ties with organized crime.
"When you're trying to cut the head of the snake, it takes time." The
illegal trade "is contributing to criminal organizations and creating a
very serious public safety concern... this is not a situation where
(people) are sticking it to the taxman. They're financing organized
crime," he says.
There has been a 10-fold increase in contraband cigarette seizures by the
RCMP in the past five years
up to 369,169 cartons last year. Provincial investigators seized another
54,800 cartons last year
five times the number of a year earlier. Experts say police seizures
represent a fraction of the overall trade in illegal smokes.
RCMP generally charge alleged smugglers with unlawful possession of
tobacco under the federal Excise Act. Fines on conviction can be high.
First-time offenders face minimum fines of 16 cents per illegal cigarette.
Repeat offenders may receive the maximum fine of 24 cents a cigarette or
90 days to 18 months in jail. The RCMP can also seize smugglers' vehicles.
At the retail level, public health inspectors can charge shopkeepers who
have a business licence. They face fines of $200 to $365, seen by some as
the cost of doing a brisk illegal business.
Tobacco control officials say sales to minors are growing. Last year
Toronto inspectors laid 264 charges against retail stores for selling to
minors
more than four times the number in 2003. About one third of those relate
to illegal cigarettes, said Rob Colvin, manager of healthy environments
with Toronto Public Health.
"It's commonplace," he says. "Just go around to schools and see the
discarded packs and you'll tend to see far more of the contraband brands."
Even stores charged for selling illegal cigarettes can't seem to quit the
habit. Toronto Star reporters posing as consumers were easily able to buy
illegal cigarettes from merchants who had been warned in the past three
weeks.
The main source of illegal cigarettes in Ontario are "native" brands
manufactured in factories on reserves such as Akwesasne, which straddles
the border near Cornwall. The cigarettes are labelled as DK's, Native and
Chiefs among others.
But Chinese "knock-offs" of popular North American brands shipped to ports
in Halifax and Vancouver are also making their way on to Toronto streets
in large numbers. These counterfeits so closely resemble the real thing
that smokers could be puffing away on contraband without knowing.
The RCMP's Cornwall detachment, which keeps a close eye on Akwesasne's
tobacco factories, seized 232,901 cartons last year representing a
potential loss of nearly $10 million in tax and duty, said Sgt. Michael
Harvey. In 2000, only 2,057 cartons were seized in the area.
"Five years ago there might've been one factory (on the Akwesasne
reserve). Now they've got about 10 over there."
He says smugglers purchase the illegal smokes for $8 a carton on the
reserve then sell them for between $22 and $23. Dubbed "runners" by
police, they transport bargain-basement-priced cigarettes from reserves to
retail outlets across Ontario and Quebec.
The cost to governments is staggering. Cigarettes priced as low as $3.50
in some GTA stores cost federal and provincial coffers $1.5 billion a year
in lost tax revenues, according to the Imperial Tobacco Canada study.
One reason cigarettes are so highly taxed is to keep them beyond the reach
of youth. At Luigi's prices, a babysitting income can finance the habit.
`From the outside of the package you wouldn't be able to tell the
difference from the real cigarettes'
Michelle Paradis, RCMP spokeswoman
The Star sent a 16-year-old to buy from Luigi twice two weeks ago. The
affable butt seller handed over the cigarettes without hesitation after
collecting $4. The teen handed them to the Star immediately after. Toronto
Public Health also uses underage shoppers to test compliance with
tobacco-control bylaws.
Moments after the second sale, Luigi did brisk business selling DK's to a
flock of teens.
Confronted, Luigi admitted what he's doing is against the law, but denied
knowingly selling to kids. "Everybody is selling them," said Luigi. "I
talked to the police about two weeks ago. They said `Don't worry about
it.' They only worry about drugs."
Toronto police say they need complaints from the public to investigate.
Health officials say while they don't lay charges against street sellers
such as Luigi, who don't have a business licence, they inform the RCMP.
Health experts warn the cocktail of chemicals inside illegal cigarettes
may be even more dangerous than regular smokes.
"People who buy illegal cigarettes have no idea what they're smoking,"
says Neil Collishaw, research director for Physicians for a Smoke-Free
Canada.
Mainstream manufacturers are required to test for 44 chemicals and
publicize the findings. The main ingredients
such as tar, nicotine, formaldehyde, hydrogen cyanide and carbon monoxide
must be displayed on legal packs. Not so with illegal brands such as
DK's.
Illegal cigarettes are easy to find across the city. At variety stores,
donut shops, dollar stores and gas bars, there are plenty of Luigis
willing to risk warnings and fines.
Some carry contraband brands like Camel, Marlboro and du Maurier,
apparently manufactured in Russia or China. Others sell single cigarettes,
also against the law.
From the True Dollar Store on Dundas St. E., to Gerrard Convenience near
Parliament St., to Super Convenience in Kensington Market, storekeepers
who had already been warned by health officials for selling illegal
cigarettes were still selling when the Star visited recently.
The sign outside A.J. Singh's True Dollar Store at 132 Dundas St. E. leads
you to believe he has nothing for sale over $1. That obviously does not
include the packs of Native and DK's he sold to a Star reporter on two
visits.
Those transactions happened only weeks after the store was warned by city
tobacco control officers about selling DK's and fake du Maurier
cigarettes.
Confronted about the transactions, Singh initially said he didn't know
anything about illegal cigarettes. He later called the reporter to say he
had been warned by the city and while he used to sell a lot of illegal
cigarettes he was now only selling them "here and there."
Across town in Kensington Market, a shopkeeper denied ever selling
cigarettes to minors, minutes after she had sold a pack to Sean, 16, the
non-smoking Grade 11 student the Star used in the undercover operation.
Leaning over a sign on her cash register forbidding sale of tobacco to
anyone under 19, she was at a loss to explain why she continues to sell to
minors.
At Gerrard Convenience, the owner, who identified himself only as Yang,
blamed high taxes on cigarettes when asked why he sold illegal cigarettes
to a reporter even after being warned by officials to stop. "The
government is to blame," said Yang, who sells DK's and Chiefs. He says
it's impossible to make a living selling $10 cigarettes in the
neighbourhood near Regent Park. "I gotta feed my kids."
Recent busts provide some sense of the scale of illegal tobacco
operations.
Last Saturday, police arrested a 19-year-old Akwesasne resident attempting
to smuggle more than 700,000 cigarettes in a snowmobile trailer. Police
cars boxed in the driver as he headed west on Highway 401. Police seized
the cigarettes, the truck and the trailer.
In September, a joint RCMP and Canada Border Service operation seized
47,580 cartons of counterfeit Players' Light and du Maurier valued at $3.1
million. The RCMP estimates $2 million would have been evaded in federal
and provincial taxes if they had hit the street.
The cigarettes had been brought from China in a container with other
imported goods and were destined for a warehouse in Scarborough that was
raided by the RCMP.
"From the outside of the package you wouldn't be able to tell the
difference from the real cigarettes," said RCMP spokeswoman Michelle
Paradis. "The packaging is that good."
Three Scarborough men were charged with unlawful possession of tobacco
products.
When Ontario Provincial Police stopped two rental vans on Highway 401 near
Morrisburg early last month, they found 2,000 cartons of DK's along with
750 resealable bags of cigarettes. In all, the vans contained 550,000
illegal cigarettes destined for Toronto.
Police charged the drivers.
Three weeks ago, RCMP officials announced they had dismantled a major
cigarette and marijuana operation on the Akwesasne reserve in which the
alleged "kingpin" who owned the manufacturing plant
31-year-old William Hank Cook of Cornwall
was earning $200,000 to $300,000 a week. Cook and an American man who
lived on the U.S. side of Akwesasne face dozens of criminal charges.
The RCMP say the plant, MHP Manufacturing, was operating in the U.S.
portion of the Akwesasne reserve. The cigarettes were smuggled across the
border into Canada then trucked to various clients in Ottawa, Montreal and
New Brunswick. Leaders of the Akwesasne reserve say organized crime is
exploiting their community.
Meanwhile, RCMP sources say the plant is already back up and running
again.
Police also charge people for being "runners." Last month, a Thunder Bay
man was fined $6,500 after being found with 1,129 cartons of unmarked
cigarettes. Dwayne Beauvais, a father of four, was busted after police
stopped him for a traffic violation in June, 2005.
Beauvais told the judge he got into cigarette smuggling because he was
unemployed and had to feed his four children, three of whom suffer from
serious illnesses. He was given six months to pay the reduced fine.
Contraband easy to buy
Cheap `knock-off' cigarettes easier than ever to buy; experts warn of
unknown health risks
Dec. 16, 2006. 09:53 AM
DALE BRAZAO AND ROBERT CRIBB
STAFF REPORTERS
Standing in his usual spot outside a grungy Queen St. E. bar, Luigi digs
into his bulging coat pocket and slides a pack of illegal cigarettes into
the hands of a 16-year-old.
The price is dirt cheap
$4 for 20 smokes
about half the cost of a legal pack.
Hundreds of these transactions take place every day in Toronto's
burgeoning tobacco black market
an illicit billion-dollar business that thrives by evading the taxes
slapped on legal cigarettes.
Ontario's enormous
and growing
underground cigarette trade robs tens of millions from government
coffers. It also undermines the "sin tax" strategy governments have long
relied upon to keep teens from developing the cancer-causing habit.
The cigarettes are illegal because they are sold without government taxes;
they don't display proper health warnings and are sometimes sold as
singles.
The international smuggling pipeline that floods Ontario with a
mind-boggling number of illegal cigarettes each year ends at corner
stores, gas stations, donut shops and sidewalk merchants like Luigi.
Police and health officials have stepped up enforcement but say the
problem is growing.
The 50-something Luigi counts among his clientele men in suits, drug
addicts and kids scoring a pack of cheap smokes in the middle of the day.
Hour after hour, he pulls bright red packs of DK's cigarettes from his
oversized blue jacket and completes the transactions.
Luigi will also sell single cigarettes for 25 cents each and cartons for
$28
an array of consumer choices that has built him a bustling street-side
business.
A fixture on the Queen St. E. strip east of Sherbourne St., Luigi says
he's been selling illegal smokes for three months. A supplier from a
native reserve drops off his shipments every couple of weeks, he said.
Of the estimated 14 billion cigarettes smoked in Ontario each year, one in
four is now illegal, according to a recently published study commissioned
by Imperial Tobacco Canada
the only comprehensive research on the illicit tobacco trade, based on
interviews with 2,300 adult smokers across Canada. The figure has been
widely accepted by police and anti-smoking groups.
"(It is) a credible estimate of the expanding scope of illegal tobacco
sales in Ontario and Quebec and should be seen as an urgent call for
government action," said Cynthia Callard, executive director of Physicians
for a Smoke-Free Canada.
Dave Bryans, president of the Ontario Convenience Stores Association, says
his organization's research also points to a massive problem.
"We estimate 25 per cent of all cigarettes are moving illegally off of
reserves in Ontario and Quebec and it's growing. No one has the will to
stop the free flow of cigarettes in this province off of native reserves
because they don't want to get into another native dispute. This is
growing out of control."
RCMP Supt. Joe Oliver says smugglers have close ties with organized crime.
"When you're trying to cut the head of the snake, it takes time." The
illegal trade "is contributing to criminal organizations and creating a
very serious public safety concern... this is not a situation where
(people) are sticking it to the taxman. They're financing organized
crime," he says.
There has been a 10-fold increase in contraband cigarette seizures by the
RCMP in the past five years
up to 369,169 cartons last year. Provincial investigators seized another
54,800 cartons last year
five times the number of a year earlier. Experts say police seizures
represent a fraction of the overall trade in illegal smokes.
RCMP generally charge alleged smugglers with unlawful possession of
tobacco under the federal Excise Act. Fines on conviction can be high.
First-time offenders face minimum fines of 16 cents per illegal cigarette.
Repeat offenders may receive the maximum fine of 24 cents a cigarette or
90 days to 18 months in jail. The RCMP can also seize smugglers' vehicles.
At the retail level, public health inspectors can charge shopkeepers who
have a business licence. They face fines of $200 to $365, seen by some as
the cost of doing a brisk illegal business.
Tobacco control officials say sales to minors are growing. Last year
Toronto inspectors laid 264 charges against retail stores for selling to
minors
more than four times the number in 2003. About one third of those relate
to illegal cigarettes, said Rob Colvin, manager of healthy environments
with Toronto Public Health.
"It's commonplace," he says. "Just go around to schools and see the
discarded packs and you'll tend to see far more of the contraband brands."
Even stores charged for selling illegal cigarettes can't seem to quit the
habit. Toronto Star reporters posing as consumers were easily able to buy
illegal cigarettes from merchants who had been warned in the past three
weeks.
The main source of illegal cigarettes in Ontario are "native" brands
manufactured in factories on reserves such as Akwesasne, which straddles
the border near Cornwall. The cigarettes are labelled as DK's, Native and
Chiefs among others.
But Chinese "knock-offs" of popular North American brands shipped to ports
in Halifax and Vancouver are also making their way on to Toronto streets
in large numbers. These counterfeits so closely resemble the real thing
that smokers could be puffing away on contraband without knowing.
The RCMP's Cornwall detachment, which keeps a close eye on Akwesasne's
tobacco factories, seized 232,901 cartons last year representing a
potential loss of nearly $10 million in tax and duty, said Sgt. Michael
Harvey. In 2000, only 2,057 cartons were seized in the area.
"Five years ago there might've been one factory (on the Akwesasne
reserve). Now they've got about 10 over there."
He says smugglers purchase the illegal smokes for $8 a carton on the
reserve then sell them for between $22 and $23. Dubbed "runners" by
police, they transport bargain-basement-priced cigarettes from reserves to
retail outlets across Ontario and Quebec.
The cost to governments is staggering. Cigarettes priced as low as $3.50
in some GTA stores cost federal and provincial coffers $1.5 billion a year
in lost tax revenues, according to the Imperial Tobacco Canada study.
One reason cigarettes are so highly taxed is to keep them beyond the reach
of youth. At Luigi's prices, a babysitting income can finance the habit.
`From the outside of the package you wouldn't be able to tell the
difference from the real cigarettes'
Michelle Paradis, RCMP spokeswoman
The Star sent a 16-year-old to buy from Luigi twice two weeks ago. The
affable butt seller handed over the cigarettes without hesitation after
collecting $4. The teen handed them to the Star immediately after. Toronto
Public Health also uses underage shoppers to test compliance with
tobacco-control bylaws.
Moments after the second sale, Luigi did brisk business selling DK's to a
flock of teens.
Confronted, Luigi admitted what he's doing is against the law, but denied
knowingly selling to kids. "Everybody is selling them," said Luigi. "I
talked to the police about two weeks ago. They said `Don't worry about
it.' They only worry about drugs."
Toronto police say they need complaints from the public to investigate.
Health officials say while they don't lay charges against street sellers
such as Luigi, who don't have a business licence, they inform the RCMP.
Health experts warn the cocktail of chemicals inside illegal cigarettes
may be even more dangerous than regular smokes.
"People who buy illegal cigarettes have no idea what they're smoking,"
says Neil Collishaw, research director for Physicians for a Smoke-Free
Canada.
Mainstream manufacturers are required to test for 44 chemicals and
publicize the findings. The main ingredients
such as tar, nicotine, formaldehyde, hydrogen cyanide and carbon monoxide
must be displayed on legal packs. Not so with illegal brands such as
DK's.
Illegal cigarettes are easy to find across the city. At variety stores,
donut shops, dollar stores and gas bars, there are plenty of Luigis
willing to risk warnings and fines.
Some carry contraband brands like Camel, Marlboro and du Maurier,
apparently manufactured in Russia or China. Others sell single cigarettes,
also against the law.
From the True Dollar Store on Dundas St. E., to Gerrard Convenience near
Parliament St., to Super Convenience in Kensington Market, storekeepers
who had already been warned by health officials for selling illegal
cigarettes were still selling when the Star visited recently.
The sign outside A.J. Singh's True Dollar Store at 132 Dundas St. E. leads
you to believe he has nothing for sale over $1. That obviously does not
include the packs of Native and DK's he sold to a Star reporter on two
visits.
Those transactions happened only weeks after the store was warned by city
tobacco control officers about selling DK's and fake du Maurier
cigarettes.
Confronted about the transactions, Singh initially said he didn't know
anything about illegal cigarettes. He later called the reporter to say he
had been warned by the city and while he used to sell a lot of illegal
cigarettes he was now only selling them "here and there."
Across town in Kensington Market, a shopkeeper denied ever selling
cigarettes to minors, minutes after she had sold a pack to Sean, 16, the
non-smoking Grade 11 student the Star used in the undercover operation.
Leaning over a sign on her cash register forbidding sale of tobacco to
anyone under 19, she was at a loss to explain why she continues to sell to
minors.
At Gerrard Convenience, the owner, who identified himself only as Yang,
blamed high taxes on cigarettes when asked why he sold illegal cigarettes
to a reporter even after being warned by officials to stop. "The
government is to blame," said Yang, who sells DK's and Chiefs. He says
it's impossible to make a living selling $10 cigarettes in the
neighbourhood near Regent Park. "I gotta feed my kids."
Recent busts provide some sense of the scale of illegal tobacco
operations.
Last Saturday, police arrested a 19-year-old Akwesasne resident attempting
to smuggle more than 700,000 cigarettes in a snowmobile trailer. Police
cars boxed in the driver as he headed west on Highway 401. Police seized
the cigarettes, the truck and the trailer.
In September, a joint RCMP and Canada Border Service operation seized
47,580 cartons of counterfeit Players' Light and du Maurier valued at $3.1
million. The RCMP estimates $2 million would have been evaded in federal
and provincial taxes if they had hit the street.
The cigarettes had been brought from China in a container with other
imported goods and were destined for a warehouse in Scarborough that was
raided by the RCMP.
"From the outside of the package you wouldn't be able to tell the
difference from the real cigarettes," said RCMP spokeswoman Michelle
Paradis. "The packaging is that good."
Three Scarborough men were charged with unlawful possession of tobacco
products.
When Ontario Provincial Police stopped two rental vans on Highway 401 near
Morrisburg early last month, they found 2,000 cartons of DK's along with
750 resealable bags of cigarettes. In all, the vans contained 550,000
illegal cigarettes destined for Toronto.
Police charged the drivers.
Three weeks ago, RCMP officials announced they had dismantled a major
cigarette and marijuana operation on the Akwesasne reserve in which the
alleged "kingpin" who owned the manufacturing plant
31-year-old William Hank Cook of Cornwall
was earning $200,000 to $300,000 a week. Cook and an American man who
lived on the U.S. side of Akwesasne face dozens of criminal charges.
The RCMP say the plant, MHP Manufacturing, was operating in the U.S.
portion of the Akwesasne reserve. The cigarettes were smuggled across the
border into Canada then trucked to various clients in Ottawa, Montreal and
New Brunswick. Leaders of the Akwesasne reserve say organized crime is
exploiting their community.
Meanwhile, RCMP sources say the plant is already back up and running
again.
Police also charge people for being "runners." Last month, a Thunder Bay
man was fined $6,500 after being found with 1,129 cartons of unmarked
cigarettes. Dwayne Beauvais, a father of four, was busted after police
stopped him for a traffic violation in June, 2005.
Beauvais told the judge he got into cigarette smuggling because he was
unemployed and had to feed his four children, three of whom suffer from
serious illnesses. He was given six months to pay the reduced fine.