Posted: 8:27 p.m. Wednesday, Oct. 19, 2011

Up to 50 arrested in illegal cigarette trafficking ring

By Mark Winne and Tahnee Tangherlini

DECATUR, Ga. —

Channel 2 Action News had the only news crew at the scene Wednesday as federal, state and local officers fanned across the metro area to raid businesses and arrest 50 suspects after a four-year undercover investigation regarding the illegal trafficking of cigarettes.

The investigation, spearheaded by the Atlanta Field Office of the Bureau of Alcohol, Tobacco, Firearms and Explosives, involved efforts by several businesses to evade paying taxes on cigarettes.

The Special Agent in Charge of ATF for Georgia told investigative reporter Mark Winne the loose network of business people evaded approximately $2 million in taxes just for the cigarettes trafficked during the undercover operation, but he said he believes it could have cost Georgians millions more of taxpayer dollars.

"The tax loss for the diversion of cigarettes into the criminal markets costs the taxpayers many millions of dollars per year," ATF Agent in Charge Scott Sweetow said.

"It was a big evasion of taxes here in the state," Georgia Revenue Commissioner Doug MacGinnitie said.

Law enforcement officers from several agencies, including ATF, the Georgia Department of Revenue, Gwinnett County Sheriff's Office, Lawrenceville Police and DeKalb County Police, gathered at a command post at the Lawrenceville Police Department on Wednesday morning, to spread out and execute search warrants at five wholesale businesses and 50 arrest warrants all the way from Gwinnett County to Macon.

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Sweetow told Winne the ATF launched the investigation four years ago when the agency came across a scheme to sell cigarettes with fake tax stamps or no tax stamps.

"The defendants got a hold of cigarettes that they were told had no tax stamps or outright counterfeit tax stamps," Sweetow said.

Sweetow said ATF worked with the State Department of Revenue to open a long-term undercover operation.

An ATF agent told Winne undercover operatives inserted themselves in the supply chain and supplied cigarettes to businesses that should not been buying them.

"What started out as a small case eventually ballooned into a statewide case that involved not just corrupt retailers, but also working our way up the chain to corrupt wholesalers," Sweetow said.

"This is not a new problem but the scope of it I think would startle most people," said Sweetow.

Officials noted the consequences for Georgians from having lost millions in tax dollars.

"Businesses who do the right thing and pay taxes are having to compete against folks who aren't," MacGinnitie said.

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"When you are stealing and it is stealing millions of dollars in tax revenues from the state of Georgia, that money has to be made up through other means," Sweetow said.

ATF Special Agent Richard Coes said several employees were detained then released at Sunny Wholesale in Decatur.

"Illegal contraband cigarettes were sold and delivered to this location," Coes said.

A man who indicated he worked security at Sunny's and was not arrested told Winne he did not know about illegal cigarette sales there.

A second crew was also at the scene of a raid executed at a second location of Sunny Wholesale in Forest Park.

Winne was told the owner of Sunny Wholesale would arrive at the location but he had not as of Wednesday evening. Winne contacted the owner's lawyer who has represented him in other matters but the lawyer said he has not yet been retained in this case.

An ATF official said as of Wednesday evening, they had arrested 42 of 50 suspects in this case.

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