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Bureau of Alcohol, Tobacco, Firearms and Explosives

For Immediate Release

October 19, 2011

Contact: Special Agent Richard Coes, PIO

Cell: Cell: (404) 931-0988

ATF Executes 50 Plus Warrants in Undercover Organized Tobacco Diversion Sting

Federal and State Government Lose Millions in Tax Revenue

ATLANTA – The Bureau of Alcohol, Tobacco, Firearms and Explosives (ATF) Atlanta Field Division, together with officials from the Georgia Attorney General’s Office, Georgia Department of Revenue, the Gwinnett County District Attorney’s Office, the Lawrenceville Police Department, and the Gwinnett County Sheriff’s Department, announced today a large-scale enforcement operation involving the execution of multiple arrest, search, and seizure warrants in connection with the illegal trafficking of cigarettes in Georgia. ATF and participating agencies executed seven search warrants and 50 arrest warrants for violations of state law involving the illegal possession, sale and distribution of contraband cigarettes.

ATF’s three-year investigation began in an effort to help Georgia deter criminals from defrauding the state out of millions in tobacco tax revenue. Many of these organized tobacco diversion cases initially begin with one or two individuals but grow exponentially as the profits from these schemes are actualized.

Those engaged in the manufacturing and distribution of contraband tobacco products are able to reap substantial profits by avoiding payment of federal and state taxes, said ATF Atlanta Field Division Special Agent in Charge Scott Sweetow. Using a wide variety of sophisticated techniques, ATF disrupts and eliminates criminal organizations by identifying and arresting offenders who traffic illegal tobacco products. It remains ATF’s goal to ensure that all tobacco businesses are competing on a level playing field. The defendants that were arrested today made it nearly impossible for legitimate businesses to compete and are accused of defrauding the state out of millions of dollars in tax revenue. Those funds could have been used for the betterment of our communities.

Today’s successful operation is the result of a strong collaborative effort among federal, state and local law enforcement, said State Attorney General Sam Olens. By working together as a cohesive unit, our law enforcement partners were able to identify and apprehend individuals participating in racketeering activity, which included defrauding the state and federal governments of revenue by evading cigarette and cigar excise taxes. These arrests send a strong message that if you do not play by the rules in Georgia, you will be prosecuted to the fullest extent of the law.

The Department of Revenue's Alcohol & Tobacco Division director and agents stand ready to assist our colleagues in law enforcement in combating and hopefully eliminating this kind of illegal activity, State Revenue Commissioner Doug MacGinnitie said today. The action taken in this case should send the message that any such future activity will meet with a strong and coordinated response.

The potential financial gain of tobacco smuggling is immediately apparent. By selling non-tax paid cigarettes at, or just below tax paid prices criminal organizations are able to net a substantial profit. Organized criminal groups, including those with ties to terrorist organizations, have increasingly engaged in the illegal trafficking of tobacco products, particularly counterfeit and lawfully manufactured cigarettes. Prior to 2003, ATF averaged about 40 new diversion investigations annually. Since 2003, ATF has initiated more than 1,050 tobacco diversion investigations, with an average of 131 investigations per year.

Through tobacco diversion investigations, ATF disrupts and eliminates criminal organizations by indentifying and arresting offenders who traffic illegal tobacco products. In addition, ATF conducts financial investigations in conjunction with ongoing criminal investigations in order to seize and deny further access to assets and funds used by criminals and terrorist organizations.

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