ST. LOUIS - Criminals are seeking out St. Louis to make thousands as contraband deliver drivers. Cigarette smugglers like St. Louis because they can make a quick buck just by crossing the bridge into Illinois.
Fox 2 captured exclusive undercover video of a suspected cigarette smuggler in north St. Louis City. He was buying cartons of cigarettes from several stores. He told one store clerk he was heading to Chicago where he could make thousands of dollars in profit.
Assistant U.S. Attorney John Ware said their office often works several cases at a time.
“The structure is very mafia like. You have the same sort of inherent structure, where you have businesses as fronts to purchase the cigarettes to distribute and use couriers and also engage in other illicit activities through the stores,” he said.
Federal investigators raided dozens of stores in St. Louis and St. Louis County in May 2017. Agents also found reported illegal gambling machines and synthetic drugs. All told, 35 people were indicted after these raids. The case is still in court. Five people have pleaded guilty, including one man who did so Monday, July 9.
“…Anything that these guys can do to make a dollar,” Ware said. “In other places in the country, cigarette smuggling has funded terrorist organizations, so money goes back overseas, which is one reason to stop it as well.”
Missouri is known as a mecca for cigarette smugglers because it has the lowest tax in the country at just 17 cents. Every surrounding state is over a dollar. Criminals see a pipeline of profit leading to Chicago, where the combined city and state cigarette tax is $6.16 per pack.
New York is another high tax market. A $50 carton of cigarettes purchased in St. Louis could sell for twice that amount in New York or Chicago. That's still cheaper for illegal buyers in those cities than visiting a store.
Though cracking down on cigarette smuggling doesn’t rank as high as fighting violent crime, Ware said it’s still important because “the shadow economy is hurtful to depressed areas. That’s one reason why you see legitimate businesses not surviving in depressed areas. These other stores engage in illicit activities and undercut legitimate business and that ultimately hurts those poor neighborhoods.”
Two years ago, voters considered raising the cigarette tax in St. Louis with two propositions on the ballot. Both measures failed.
The tax gap has only grown in recent years, which means we may see more of this crime.