April 11, 2014
By Stephanie West
Albany, NY – Attorney General Eric T. Schneiderman has announced that his office has filed a $70 million lawsuit against Federal Express Corporation for unlawfully shipping nearly 80 million contraband cigarettes to consumers across New York State in violation of federal and state laws. The lawsuit joins and expands upon a complaint filed in December in Manhattan federal court by the City of New York and adds extensive claims of FedEx’s unlawful shipments around the state.
The joint complaint alleges that, between 2006 and 2012, FedEx made nearly 33,000 illegal shipments of cigarettes to consumers in New York State, amounting to over 400,000 cartons of untaxed cigarettes and a direct tax loss to the state of over $10 million. Each illegal shipment carries a maximum penalty of $5,000.
The shipments were in clear violation of an agreement FedEx entered into with the New York State Attorney General’s Office in 2006, in which it agreed to cease all unlawful cigarette deliveries to consumers both in New York and throughout the country. The lawsuit further alleges that the company engaged in a pattern of racketeering activity with various cigarette retailers to traffic contraband cigarettes in violation of the federal anti-racketeering statute.
“FedEx’s blatant disregard for its long-standing agreement with New York, as well as federal and state law, enabled tens of millions of cheap, untaxed cigarettes to be shipped to New Yorkers,” Attorney General Schneiderman said. “Not only has FedEx cheated the state out of millions in tax dollars — but many of these cigarettes may have ended up in the hands of teenagers, who are particularly vulnerable to low-priced cigarettes. Illness and death caused by cigarette smoking is the number one preventable public health epidemic of our day. If we can make cheap cigarettes less widely available, we can discourage young people from smoking and limit this public health disaster."