Smoking cigarette 370.
(photo credit: Daniel Munoz/Reuters)
NEW YORK – An extraordinary multi-agency policing effort came to a climax on
Thursday, as search warrants executed from New York to Virginia led to 16
arrests in connection with a cigarette smuggling ring that authorities believe
is the work of Hamas and Hezbollah operatives.
The scheme, which took in
at least $65 million, involved Palestinians smuggling up to 20,000 cartons of
cigarettes per week from low-tax states, for illegal resale across state lines.
The cost in lost tax revenue to
New York State alone is estimated at $80m., authorities said. Based on previous
operations, investigators believe the proceeds were being channeled to the two
Islamist terrorist organizations in the Gaza Strip (Hamas) and Lebanon
“The proceeds from this alleged scheme can be used to fund a
host of other criminal acts that threaten national security and public safety of
Americans at home and abroad,” said James T. Hayes Jr., special agent in charge
of Homeland Security Investigations in New York.
All members of the
enterprise were Palestinians between the ages of 37 and 62, the New York Police
Department said on Thursday.
Leading the group, the police said, were
brothers Basel and Samir Ramadan, who lived in New York while running the
The Ramadan brothers allegedly bought their cigarettes in bulk
from a wholesaler in Virginia and stored their stockpile at a facility in
Delaware. They expanded their operations by depositing more than $55m. from
their illicit sales into small businesses in Maryland, according to the
allegations, and the money they earned from those businesses was then used to
buy more cigarettes in Virginia.
The question now facing federal
investigators is where the proceeds went.
“The association of some of the
suspects in this case [with Brooklyn Jewish teenager] Ari Halberstam’s killer,
[terror mastermind] the Blind Sheikh [Omar Abdel-Rahman] and a top Hamas
official concerns us,” New York police commissioner Ray Kelly said. “While it
hasn’t been established yet where the illicit proceeds ended up, we’re concerned
because similar schemes have been used in the past to help fund terrorist
organizations like Hamas and Hezbollah.”
While sources say that investigators are "following the money," the US doesn't expect foreign intelligence or law enforcement agencies to cooperate such that they will have sufficient evidence against the perpetrators to charge them with committing or conspiring to commit acts of terrorism.
In 1995, Operation Smokescreen
busted a similar operation that US authorities believe topped $8m. in illicit
revenue for Hezbollah. The operation involved numerous local and federal
agencies, including the State Department’s Diplomatic Security Service, the US
Bureau of Alcohol, Tobacco, Firearms and Explosives, and the FBI.
cigarette packs sold in New York City must bear a joint New York City and New
York State tax stamp, and only licensed stamping agents are authorized to
possess untaxed cigarettes and use such a stamp.
Agencies involved in the
latest operation apparently used electronic and physical surveillance methods to
track down the crime ring.