Seventeen busted in 52 early morning raids

Police say they have broken ring bypassing laws covering cigarillos, cigars

By JAN RAVENSBERGEN, The Gazette June 17, 2010

During the fall election campaign the Conservatives said if re-elected they would 'prevent the exploitation of children by the tobacco industry' by setting a minimum package size for cigarillos, making them less affordable for children, and also 'prohibiting flavours and additives that would appeal to child

A series of 52 early-morning police raids yesterday -on and off Montreal Island -has dismantled a well-organized criminal bypass of Quebec tobacco-tax laws covering cigarillos and cigars, Montreal police said.

With 17 suspects arrested, police said, this was the first such bust locally involving contraband distribution channels for those types of legal tobacco products.

Two rings, working in tandem, had been taking advantage of laxer labelling requirements on such smokes -which are less heavily regulated than cigarettes -to pocket large illicit profits, said Montreal Police Commander Yves Miron.

They'd been diverting an estimated $5.2 million a year of tobacco taxes from the Quebec government, he said, at a "very conservative" estimate.

Cigarillos, especially varieties aggressively marketed in peach, chocolate, honey and a spectrum of other flavours, are particularly popular with starter smokers. A 2008 Quebec government survey concluded that 18 per cent of high-school students questioned smoked cigarillos -while 15 per cent smoked conventional cigarettes.

The contraband, imported from Ontario, was being sold at full retail prices in 22 depanneurs raided across Montreal Island, Miron said, apparently for "several years." The rings were run and staffed by a mix of persons of Asian and Arab origin, added Miron, who heads a police squad that fights the underground economy.

More than 200 police officers swept into locations in Montreal, Laval, Lachenaie, Pincourt and Victoriaville. The suspects were released on conditions following questioning, for later court appearances on charges including fraud exceeding $5,000, conspiracy, and possession of counterfeit tobacco stamps.

The 22 local depanneur proprietors were not detained -but each will be pursued by Revenue Quebec. If convicted, Each faces a likely fine of at least $3,000 along with orders to repay tobacco-specific taxes evaded, plus undeclared Quebec sales taxes, plus penalties.

This was the first crackdown on contraband cigarillos or cigars in Montreal police history, said Insp. Bernard Lamothe, who runs the Montreal police organized-crime unit. The probe didn't uncover any links with conventional organized-crime organizations, he said.

Since April 6, cigarillos can be manufactured or imported only in packages of at least 20. The tearstrips on the packaging declare "Canada Duty Paid," so end users had no way of knowing they were dealing with an illicit channel, Miron said. Effective July 5, a federal ban will take effect on retail sales of all flavoured cigarillos other than menthol.

The rings were supplied by distributors on the Mohawk Tyendinaga reserve near Belleville, Ont., Miron said, and " were selling up to $ 150,000 of tobacco products each week."

Each suspect's home was raided, along with four mini-warehouses and 13 vehicles. Confiscated items included 22 cases of cigars and cigarillos, and $110,000 cash.