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Big Tobacco's New York Black Market
How America’s Top Cigarette Firms Fueled a Billion-Dollar Underground Trade
WASHINGTON
America's three top tobacco firms -- Philip Morris USA, Lorillard, and R.J. Reynolds -- supplied two-thirds of all cigarettes sold last year through New York State's Indian reservations despite ample evidence that those sales fuel a billion-dollar black market, according to an investigation by the International Consortium of Investigative Journalists (ICIJ), a project of the Center for Public Integrity in Washington, D.C.
This investigation is the latest in the ICIJ series on cigarette smuggling -- Tobacco Underground. The illicit trafficking of tobacco is a multibillion-dollar business, according to the ICIJ series, fueling corruption, organized crime, and terrorism; robbing governments of needed tax money; and spurring addiction to a deadly product.
New York's 10 sparsely populated Indian reservations cannot possibly consume all the cigarettes their smoke shops purchased -- 6.4 billion in 2007 -- so the bulk end up sold untaxed online or bootlegged to New York City, robbing the state and the city of more than $850 million in tax revenue, according to an ICIJ analysis of wholesaler tax data filings to the state. Bootleggers and online merchants have netted an estimated $500 million from the New York trade since 2000, ICIJ found.
This week, New York Governor David Paterson signed into law a bill designed to stop the flow of tax-free cigarettes from Indian reservations. But it remains unclear whether the legislation will be successful. Past laws have encountered opposition from Indians, leaving the state reluctant to enforce cigarette tax laws on reservations.
ICIJ's investigation reveals the role played by Big Tobacco and their direct distributors as suppliers of the vast majority of cigarettes sold untaxed on Indian reservations. The inquiry relied on internal company sales data, tax filings and court documents, as well as dozens of interviews with law enforcement officials, cigarette wholesalers, and smugglers.
Among the findings:
- As New York State struggled with a massive fiscal crisis in 2007, Lorillard, Philip Morris, and R.J. Reynolds funneled 4.3 billion tax-free cigarettes to smoke shops on New York Indian reservations -- more than 25 percent of the companies' combined total sales in the state.
- Lorillard, maker of the popular Newport brand, sold 40 percent of its cigarettes in New York, 2 billion of them, through reservations -- more than any other manufacturer.
- To distribute through the reservations, tobacco companies have relied on a handful of wholesalers who ship billions of untaxed cigarettes to Indian stores. One in three cigarettes sold in New York last year was channeled, untaxed, through these wholesalers, who are being sued by New York City for complicity in cigarette smuggling
Mounting legal pressures have left some manufacturers scrambling to unravel their ties to Indian reservations. Philip Morris this year dropped three of the state's largest suppliers of untaxed cigarettes. One distributor was caught allegedly diverting Marlboros to a notorious smoke shop owner on the Long Island Poospatuck reservation. Another distributor allegedly sold millions of cigarettes to seemingly fictitious smoke shops, also on the Poospatuck, whose listed addresses were nothing more than light posts, trees, and dumpsters.
Today's release also features an exclusive story on the rapidly growing online trade in untaxed tobacco: SMOKE2U: Tobacco Sales Take Off in Cyberspace. From 2000 to 2006, despite states' best efforts to crack down on the trade, the number of online cigarette sellers spiked from 88 to 772.
Largely based on Indian reservations, the sites boast a colorful array of names such as Smoke2U.com and EZTobacco.com. While most sites are in the United States, ICIJ's reporting found online vendors are increasingly moving overseas -- beyond the reach of effective U.S. law enforcement.
The Tobacco Underground website uses interactive and multimedia resources, from a map of global smuggling routes to interviews with experts and undercover video, to help readers grasp the scope of the growing illicit trade in contraband tobacco.
This project is supported by the Johns Hopkins School of Public Health, with organizational support provided by Carnegie Corporation of New York, the Ford Foundation, the JEHT Foundation, the John D. and Catherine T. MacArthur Foundation, the Park Foundation, the Rockefeller Brothers Fund and other generous institutional and individual donors.
The Center for Public Integrity is a nonprofit organization dedicated to producing original, responsible investigative journalism on issues of public concern. The Center is non-partisan and non-advocacy. We are committed to transparent and comprehensive reporting both in the United States and around the world.
LATEST NEWS
100+ People Dead in Texas—Just 2 Months After Former National Weather Service Chiefs Warned of 'Nightmare' Scenario
While the agency and outside meteorologists say the NWS provided timely and accurate forecasts, the fatal flooding is generating fresh alarm about cuts and open positions.
Jul 07, 2025
As the official death toll from catastrophic flooding in Texas ticked above 100 on Monday, concerns over vacancies as well as job and potential funding cuts at the National Weather Service continued to mount—even as the NWS and independent meteorologists insisted that the agency had "issued timely warnings in advance of the deadly floods."
The flooding came just over two months after all living former directors of the NWS published a letter sounding the alarm about President Donald Trump's proposed budget for fiscal year 2026 and its cuts to the National Oceanic and Atmospheric Administration (NOAA), the parent agency of the NWS in the U.S. Department of Commerce.
The five men—Louis Uccellini, Jack Hayes, Brig. Gen. D.L. Johnson, Brig. Gen. John J. Kelly Jr., and E.W. "Joe" Friday—wrote on May 2 that "even if the National Weather Service remains level funded, given the interconnectedness of all of the parts of NOAA, there will be impacts to weather forecasting as well. We cannot let this happen."
"These proposed cuts come just days after approximately 300 National Weather Service... employees left the public service to which they had devoted their lives and careers," the ex-directors pointed out. "That's on top of the approximately 250 NWS employees who were fired as a result of their probationary status in new—often higher-level positions—or took the initial buyout offered by the Trump administration in early February."
"That leaves the nation's official weather forecasting entity at a significant deficit—down more than 10% of its staffing—just as we head into the busiest time for severe storm predictions like tornadoes and hurricanes," they continued. "Our worst nightmare is that weather forecast offices will be so understaffed that there will be needless loss of life. We know that's a nightmare shared by those on the forecasting frontlines—and by the people who depend on their efforts."
Discussing recent job reductions with The Associated Press on Monday, Uccellini, whose tenure leading NWS included Trump's first term, warned that "this situation is getting to the point where something could break."
"The people are being tired out, working through the night and then being there during the day because the next shift is short-staffed," he said. "Anything like that could create a situation in which important elements of forecasts and warnings are missed."
For the flooding in Texas, the NWS Austin-San Antonio office had five meteorologists working, rather than two, as part of its "surge staffing" protocol.
However, Tom Fahy, the legislative director for the NWS Employees Organization, a union that represents government workers, also told NBC News that the agency's Austin-San Antonio office does not have a permanent science officer, who conducts training for and implements new technology, or a warning coordination meteorologist, who has contact with media.
That office "is operating with 11 staff meteorologists and is down six employees from its typical full staffing level of 26," NBC reported. The nearby San Angelo office "is short four staff members from its usual staffing level of 23. The meteorologist-in-charge position—the office's top leadership position—is not permanently filled. The office is also without a senior hydrologist."
Despite some open positions at the two offices, the NWS began warning of potential flooding as early as Thursday morning, and as conditions worsened overnight, the agency issued its first warning for "life-threatening flash flooding" for parts of Kerr County at 1:14 am Central Time Friday, according to CNN.
"But questions remain about how many people they reached, whether critical vacancies at the forecast offices could have affected warning dissemination, and if so-called warning fatigue had been growing among residents in a region described as one of the most dangerous in the country for flash flooding," the network noted.
As Fahy put it to Politico: "The crux of this disaster is a failure of the last mile of communication... The forecasts went out, they communicated the forecasts, they disseminated the watches and warnings. And the dilemma we have is there was nobody listening at 4 o'clock in the morning for these watches and warnings."
Wisconsin-based meteorologist Chris Vagasky similarly told NBC that "the forecasting was good. The warnings were good. It's always about getting people to receive the message... It appears that is one of the biggest contributors—that last mile."
As The New York Times reported:
In an interview, Rob Kelly, the Kerr County judge and its most senior elected official, said the county did not have a warning system because such systems are expensive, and local residents are resistant to new spending.
"Taxpayers won't pay for it," Mr. Kelly said. Asked if people might reconsider in light of the catastrophe, he said, "I don't know."
As of Monday evening, 104 people are confirmed dead, most of them in Kerr County, which includes Camp Mystic, a Christian all-girls summer camp that lost at least 27 campers and counselors. The AP reported that "search-and-rescue teams carried on with the search for the dead, using heavy equipment to untangle trees and wading into swollen rivers. Volunteers covered in mud sorted through chunks of debris, piece by piece, in an increasingly bleak task."
In a statement to multiple news outlets, the NWS provided a detailed timeline of its alerts. The agency also said that it "is heartbroken by the tragic loss of life in Kerr County" and "remains committed to our mission to serve the American public through our forecasts and decision support services."
U.S. Senate Minority Leader Chuck Schumer (D-N.Y.) on Monday sent a letter to Roderick Anderson, acting inspector general at the Department of Commerce, urging an investigation into "the scope, breadth, and ramifications of whether staffing shortages at key local National Weather Service... stations contributed to the catastrophic loss of life and property during the deadly flooding."
"The roles left unfilled are not marginal, they're critical," he emphasized. "These are the experts responsible for modeling storm impacts, monitoring rising water levels, issuing flood warnings, and coordinating directly with local emergency managers about when to warn the public and issue evacuation orders. To put it plainly: They help save lives."
White House Press Secretary Karoline Leavitt lashed out at him and reporters for such scrutiny on Monday, saying that "unfortunately, in the wake of this once-in-a-generation natural disaster, we have seen many falsehoods pushed by Democrats such as Sen. Chuck Schumer and some members of the media. Blaming President Trump for these floods is a depraved lie, and it serves no purpose during this time of national mourning."
In addition to the president's so-called Department of Government Efficiency—previously led by billionaire Elon Musk, the richest person on Earth—pushing layoffs and retirements, Trump's administration is working to boost fossil fuels that drive the global climate emergency.
As Common Dreams reported earlier Monday, a study published by ClimaMeter found that the floods in Texas were caused by "very exceptional meteorological conditions" that cannot be explained merely by natural variability.
Former Common Dreams staff writer Kenny Stancil is a senior researcher at the Revolving Door Project, which has documented "Trump's attacks on disaster preparedness and response."
"The deadly Texas floods will not be the last manifestation of extreme weather turbocharged by fossil fuel pollution," Stancil wrote in a Monday blog post. "In an era of escalating climate threats, we need a stronger public sector with more resources to mitigate risks, help people weather storms, and adapt to the future."
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'Holding The Line': Municipal Workers' Strike Enters Second Week as Philly Refuses to Pay Living Wage
"We got people that work and repair the water mains and can't afford their water bill," said union leader Greg Boulware last week. "I don't want to be rich. We just want comfort inside the city that we serve daily."
Jul 07, 2025
Philadelphia's largest municipal workers' strike in over 40 years is entering its second week after negotiations with the city broke down this weekend.
Over 9,000 sanitation workers, 911 dispatchers, water services workers, crossing guards, and other city employees walked off the job last week, demanding that the city increase their salary enough to meet the rising cost of living.
But even with trash piling up on the streets and other city services understaffed, Mayor Cherelle Parker (D) would not agree to the demands made by AFSCME District Council 33, Philadelphia's largest blue-collar union.
Parker has offered a pay increase of 8.75% over the next three years, which she described as historic.
But DC 33 president Greg Boulware said that's far too little for municipal workers, many of whom are among the city's "working poor," to survive.
"It's not like as if our members are making $80,000, $90,000 a year," Boulware said. "A 2% increase on those would be significantly higher than it would be on somebody making $40,000-$45,000 a year. So, her math truly is not mathing, and you're clearly not paying attention to the working people that are going on in this city."
The average municipal worker in Philadelphia makes around $46,000, which is $15,000 less than the median income in the city and less than half of what a single adult needs to live comfortably, according to a study by SmartAsset.
"We got people that work and repair the water mains and can't afford their water bill," Boulware said at a rally last week. "We got people that repair the runways at the airport and can't afford a plane ticket. I don't want to be rich. We just want a comfort inside the city that we serve daily."
The union initially asked for an 8% raise for the next four years, which the city dismissed. This weekend, they pared their proposal down to 5%, but the city still did not budge.
Parker has insisted that her smaller proposed increases are merely what is "fiscally responsible," and that the city cannot afford to offer more.
The union has disputed this, pointing out that Parker herself is budgeted to receive a 9% increase to her salary of more than $240,000. That increase alone is nearly half the current salary that the average DC 33 member makes in a year.
As of Monday, negotiations have stalled, with no clear end in sight. With a throng of picketers behind him, Boulware told NBC 10, a local affiliate, that the union was working on a third proposal, and that negotiations may resume Tuesday. But he seemed to expect more obstinacy from the city.
"We've been there to be able to sit and meet and negotiate," he said. "It doesn't seem like the city quite honestly wants to entertain any of the questions that we have about things and actually have a true dialogue... That's how you negotiate and that's not truly what's been going on."
Despite the city's refusal to budge, momentum around the strike has continued to grow. On Friday, rapper LL Cool J dropped out of a 4th of July festival in the city, saying, "There is absolutely no way I can perform across a picket line."
Other AFSCME councils around Pennsylvania have joined pickets in solidarity. This includes Philadelphia's Council 47, which represents thousands of "white collar" city workers.
With mounds of trash accumulating on streets, sometimes becoming as "tall as people," the environmental activists with the Sunrise Movement have also joined in the effort to pressure the city. On Monday, activists hauled bags of trash into the lobby of City Hall, labeled with the words "Meet DC 33 Demands" written in yellow tape.
AFSCME, meanwhile, has stated its resolve to fight on as the strike has gained national attention.
"City workers are holding the line until they get a FAIR contract with the wages and benefits they deserve," the national union's account wrote on X Monday. "One day longer, one day stronger, no matter what it takes."
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LA Residents Hurl Profane Insults at Border Patrol After Agents Sweep Local Park
"You are not helping by snatching people!" yelled one local woman.
Jul 07, 2025
Los Angeles residents lobbed profane insults at U.S. Customs and Border Protection agents on Monday after they swept through the city's MacArthur Park.
Los Angeles-based news station KTLA reports that masked, heavily-armed federal agents were in the park as "part of an apparent immigration raid" although exact details about the operation are not known as of this writing. A video taken on the scene by Mel Buer, an independent labor journalist in the California city and posted on social media website Bluesky showed many agents riding through the park on horseback.
Border patrol walking McArthur park here in LA
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— Mel Buer (@melbuer.bsky.social) July 7, 2025 at 1:49 PM
Los Angeles Mayor Karen Bass (D) reacted angrily after seeing reports of the agents—some of whom had visible Border Protection patches—in the park and she went to the area to tell them to cease their operations.
"Minutes before, there were more than 20 kids playing—then, the MILITARY comes through," Bass wrote in a post on the social media website X. "The SECOND I heard about this, I went to the park to speak to the person in charge to tell them it needed to end NOW. Absolutely outrageous."
Additional videos posted on Bluesky by Buer showed angry Los Angeles residents following the agents as they drove slowly down the street away from the park while pelting them with verbal abuse.
"Get the fuck out of here!" one male resident can be heard shouting at the agents.
"You guys are a bunch of pussies!" yelled another.
Shortly after this, a woman can be heard scolding the agents: "You are not helping by snatching people!"
After Bass spoke with what I assume is a DHS rep, they packed shit up and headed out. The whole neighborhood turned out to chase them out of the park. Some fruit was thrown, alot of yelling
[image or embed]
— Mel Buer (@melbuer.bsky.social) July 7, 2025 at 2:29 PM
California Attorney General Rob Bonta, a Democrat, condemned the federal operations in Los Angeles shortly after they occurred.
"The actions of [Immigration and Customs Enforcement] and CBP during the raids in Los Angeles are not about safety or justice—they're about meeting enforcement quotas and striking fear in communities," he wrote on Bluesky. "We've filed a brief supporting a challenge to ICE and CBP's unlawful practices. We won't back down and we won't be silent."
Los Angeles has become a focal point in the Trump administration's mass deportation operations. President Donald Trump last month deployed the National Guard to the city after some protests against ICE operations there turned violent.
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