One frigid afternoon last January, two men transferring cigarettes to a van from a Glen Allen rental storage unit were interrupted by robbers who ordered them to the floor and held them at gunpoint. The thieves finished loading the vehicle and then drove it off with $90,000 worth of cigarettes and $25,000 in cash.
Four men have been charged by federal authorities in that robbery and three other recent Richmond-area holdups that netted hundreds of thousands of dollars’ worth of cigarettes and cash.
Though illegal and enormously profitable, there has not been the kind of widespread deadly mayhem associated with cigarette trafficking as there once was with crack cocaine in Virginia, particularly in the Richmond area. But cigarette trafficking is generating the same sort of associated crimes, among them burglary, credit card fraud, identity theft, money laundering — and possibly murder.
“The related crimes are staggering,” said William V. Pelfrey Jr., an associate professor of criminal justice at Virginia Commonwealth University’s Wilder School of Government who is one of the few academics in the country to examine illicit cigarette trafficking. “This is a significantly understudied area, particularly given the substantial revenue available and the potential for organized crime activity.”
For law enforcement, the problem with cigarette smuggling is the great payoff and low risk for criminals.
“If you get caught with a bag of cocaine, you (can) go to prison for 30 years,” Pelfrey said. “You get caught with a U-Haul full of cigarettes, you lose it and you may go to jail for a year or two, but the profit margin is even higher for the cigarettes than for that small bag of cocaine,” he said.
Brian Swann lived through the deadly crack cocaine era of the 1990s as part of the Bureau of Alcohol, Tobacco, Firearms and Explosives in Richmond. Now, he works as a consultant for the Henrico County-based cigarette manufacturer Altria Group Inc.
“I believe that cigarette trafficking, in many ways, mimics what we saw then on a much smaller scale,” he said. “The problem is cigarette trafficking continues on across state and in some cases international boundaries.”
Maureen Kokeas, first deputy sheriff for New York City, said she sees robberies there similar to the recent Richmond ones involving cigarette traffickers. “These guys are robbing each other ... and less than half of these robberies are going to get reported.”
“We have informants that come in and tell us, ‘This guy is robbing storage facilities,’ and it’s the word on the street, but nobody’s really calling 911,” she said.
Evading cigarette excise and sales taxes is the engine that powers interstate trafficking.
Virginia has the second-lowest tax in the country, at 30 cents a pack, and New York City has the second-highest combined city and state tax of $5.85 a pack. Traffickers driving from Virginia to New York can make thousands of dollars in illegal profit for each car, van or truck load. New York’s legislature shows no signs it will lower its tax, and Virginia’s lawmakers continue to turn down proposals to increase the tax.
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Pelfrey said people trafficking cigarettes also may be trafficking drugs, guns or other contraband and may even trade drugs and guns — as has happened in some cases — for Virginia cigarettes.
“Then there’s the theft and threat of violence associated with holding and storing significant quantities of a valuable commodity — cigarettes — and large quantities of cash,” he said.
“Other trafficking activities such as human and firearm trafficking are shrouded in violence — cigarette trafficking may soon be as well,” Pelfrey wrote in a study published last year in the Criminal Justice Policy Review, an academic journal.
A 2013 report by the staff of the Virginia State Crime Commission said Virginia police agencies were aware of armed robberies among competing cigarette traffickers.
Four Richmond-area men were charged in federal court last month with conspiracy to commit armed robberies — including the Jan. 7 robbery described above — that netted $300,000 worth of cash and cigarettes.
An FBI affidavit filed Feb. 11 described the victims as commercial cigarette distributors in the Richmond area.
The robberies were all committed during daylight. The first occurred Nov. 11 at 12:35 p.m. A man drove off in a van from a cigarette wholesaler in the 4100 block of Meadowdale Boulevard in Chesterfield County after buying more than $31,000 worth of cigarettes at a tobacco store. Authorities said the van was followed out of the lot by a maroon Ford SUV.
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Twenty minutes later, in the 1700 block of Brook Road in Richmond, the van was rear-ended by what is believed to be the same maroon SUV. The driver got out of the van and was confronted by two men, at least one of them armed, who hijacked the van.
In another robbery, on Nov. 25, an employee of a cigarette distributor had just bought more than $50,000 worth of cigarettes from the Costco store on Mall Drive in Chesterfield when his van was hijacked at gunpoint from the store’s loading dock.
The circumstances suggest the alleged perpetrators knew when and where to commit the robberies — two of which occurred at storage unit rental facilities popular with cigarette traffickers — or just got lucky.
According to court documents and the testimony of an FBI agent, one of the four men arrested, Mickel Marzouk, 28, of Glen Allen, first claimed to be one of two victims in a cigarette and cash robbery Feb. 9 at a storage rental unit in the 3900 block of Deep Rock Road in Henrico.
Marzouk said he was at the storage rental facility to sell the other victim cigarettes. But he was subsequently charged with conspiracy in the robberies. The Feb. 9 robbery occurred with law enforcement standing nearby.
Court records show Marzouk racked up a number of traffic violations in Henrico and was charged there last May with possession of more than 5,000 cigarettes, but the charge was dropped.
In the Nov. 25 robbery at the Costco store, defendant Derrell Walker of Richmond admitted that he was alerted to the presence of an employee of the Cigarette Outlet store who was loading cigarettes into a van at the rear of the Costco store.
A Chinese national, his son and a New York man pleaded guilty Monday in a trafficking scheme that sent between $3.6 and $5 million worth of untaxed cigarettes out of Virginia aboard "Chinatown" commercial buses for illegal resale in New York.
Walker pleaded guilty in federal court on Tuesday to two counts of possessing and brandishing a firearm in the furtherance of a crime of violence and admitted participating in other cigarette robberies.
Walker, 35, has a long record of assault, firearm and drug violations in Richmond dating to 1999 and faces a minimum of 32 years in prison and a maximum of life when sentenced June 30.
According to an FBI affidavit, another defendant, Mohamed El Shamy, 35, an Egyptian national also living in Glen Allen, drove a 2003 van registered to him at “Waverly Tobacco Wholseal (sic),” a business El Shamy “is associated with.”
In a hearing last month, U.S. Magistrate Judge David J. Novak said, “These are gunpoint robberies. Somebody could have really got hurt here.”
He rejected bond for El Shamy, citing among other things the possibility he might flee to Egypt. “I don’t think we’d ever get him back,” Novak said.
The fourth defendant is Karon Grant, 30, of Richmond, who was convicted of drug convictions in Richmond in 2003 and 2008. Only Walker has thus far entered a plea in the case.
Court orders have been issued in the case sealing unspecified documents concerning each of the defendants for 90 days on the grounds that revealing them would jeopardize an ongoing criminal investigation.
At least one, if not all, of these robberies were reported to police.
However, Pelfrey said that in cases where both the victims and robbers are involved in cigarette trafficking, the victims often do not report robberies because they do not want to explain how they came to be in possession of thousands of dollars in cash.
Or, he said, “they don’t want to say, ‘My storage unit got broken into and I had $80,000 worth of cigarettes in there.’ ”
There is evidence some people trafficking cigarettes out of Virginia are willing to kill.
In a 2010 case, Xing Xiao, a Fairfax man part of an Asian cigarette trafficking gang in Virginia and New York, was sentenced to 18 years for attempting to hire a hit man to murder someone he believed had stolen 15,000 cartons of cigarettes — worth as much as $700,000 — from him.
Xiao was one of 14 people charged with purchasing or trading drugs, dozens of firearms and more than $8 million for 388,000 cartons of contraband cigarettes to sell in New York.
In a more recent case, two of 16 Palestinians convicted in a smuggling ring that moved $55 million worth of Virginia cigarettes to New York also were charged with conspiracy to murder witnesses suspected of cooperating with law enforcement.
Basel Ramadan of Ocean City, Md., the alleged leader of the ring, is still awaiting trial; Yousseff Odeh of Staten Island, N.Y., has been convicted. They were accused of attempting to hire a hit man who turned out to be an undercover police officer .
The plot unfolded while the two were being held at the Rikers Island jail in New York last year. The gang, broken up in May 2013, moved 1 million cartons of Virginia cigarettes to New York and laundered $55 million in proceeds.
The month after Ramadan’s smuggling operation was shut down, there may have been a cigarette trafficking-related slaying in the Richmond area.
On June 27, 2013, Abdelmagied Elsayed Hussein, 32, was shot to death at his apartment in Chesterfield by three masked men who had earlier abducted his wife at a mini-storage facility off Jahnke Road.
The men forced her to drive to her apartment after confronting her at the family-rented storage unit just after midnight, four hours before the shooting.
Chesterfield police would not disclose what was in the storage unit — traffickers commonly use units to store cigarettes before shipment north or prior to sale to others who illegally take them to other states.
Early in their investigation, Chesterfield detectives received information that the slaying could be related to cigarette smuggling, but they said they are continuing to probe any possible link to organized crime. A law enforcement source said the slaying is believed to have been related to cigarette trafficking.
Hussein died of gunshot wounds in the parking lot outside his apartment in the 600 block of Bristol Village Drive. The killers ran from the apartment, stealing the family’s sport utility vehicle that was discovered in flames two hours later near Boat Lake in Byrd Park, police said.
Pelfrey said it is possible there have been other Virginia murders and robberies, but they are hard to connect to cigarette trafficking.
“They’re treated as home invasions,” he said. “Somebody knows that somebody else just got a bunch of money from a big (cigarette) sale, so they do a home invasion, or it’s a robbery or another kind of violent crime, and sometimes people get hurt.”
And a lot of these crimes are never reported to police.
Pelfrey helped the Virginia Department of Criminal Justice Services develop training for local law enforcement on identifying, investigating and interdicting cigarette traffickers.
One of his primary concerns is the draw for organized crime of cigarette trafficking’s high profit and low risk — convictions result in much less jail or prison time than drug trafficking.
Right now, cigarette trafficking appears to be largely conducted at a gang level or what law enforcement would even describe as a micro-gang — three or four people working together for a short time, he said.
“But the amounts of money are just so copious it is going to interest organized crime networks that will likely endeavor to take over some of these trafficking networks ... and corner the market,” he said.
“The risk is that with organized crime, with a well-structured gang, there is a much higher level of risk of violence.”