Feds raid locations linked to cigarette smuggling ring

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by CHRIS INGALLS / KING 5 News and KING 5 News Staff

Bio | Email | Follow: @cjingalls

KING5.com

Posted on July 13, 2011 at 5:15 PM

Updated Thursday, Jul 14 at 11:20 AM

SEATTLE -- It’s a stunning number.

Crooks have committed an estimated $24 million crime against Washington taxpayers. They did it by smuggling illegal cigarettes into the State and evading hefty taxes.

Wednesday morning, federal investigators started fighting back. 

Agents from the Bureau of Alcohol, Tobacco and Firearms hauled dozens of boxes out of a home in Kenmore.  Inside the packages were packs of Vietnamese made Marlboro cigarettes.

"They are legitimate cigarettes that can be legally purchased in Vietnam”, says ATF agent Mark Lieser.  “It becomes illegal when they are imported into the United States without the tax stamps."

A ring was secretly shipping the smokes here bypassing the $40 a carton state and federal tax, the ATF said. The bureau estimates the ring evaded $24 million in taxes in three years, money a struggling state desperately needs.

Last year, the KING 5 Investigators went undercover to reveal how the cigarette black market exploded after Washington hiked its tax to one of the highest in the nation. Cigarettes purchased for $7 a cartoon in Vietnam could sell for $70 here.

Ahn Nguyen is one of the dealers we caught.  She was later arrested for food stamp fraud. The two crimes seem to go hand in hand.

The feds also searched two White Center businesses Wednesday that are linked to the cigarette case. They accuse Asian Bubble Tea of paying food stamp recipients pennies in cash on the dollar for their benefits.

While the feds go after the merchants, state investigators from the Department of Social and Health Services were also on scene in a new effort aimed at individuals who repeatedly sell their benefits.

“(We’re going to) target clients who are trafficking and using those cards a number of times.  we want to find out who those folks are,” said Steve Lowe, the head of DSHS’s new fraud and accountability unit.  "That's our job to get them off benefits so they aren't trading them for cash."

In all, 16 search warrants were executed at homes and two businesses Wednesday.  Two people have been arrested and more arrests are expected.

The Seattle Police Department and the U.S. Department of Agriculture also took part in Wednesday's raids.

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