New York State has become a sanctuary state for terrorist funding. Apparently the “bad guys” are raising money by buying name-brand cigarettes from Indian reservations for as little as $30, attach counterfeit tax stamps, and resell them for more than double the amount they paid. It is illegal for reservations to resell these cigarettes to non-Native Americans without paying the applicable taxes and it is up to the applicable state governments to make sure there is no hanky-panky. Thanks to NY State abdicating its responsiblity, the terrorists are making are making a bundle. Congressman Peter King ran an investigation and the results are below:

Tobacco and Terror

As Ranking Member of the Committee on Homeland Security, I am acutely aware of the threats our nation faces from international terrorism. But even I was taken aback a few months ago when New York State Law Enforcement officials approached me about a possible terrorist nexus as close as the neighborhood convenience store. Recent investigations suggested a disturbing trend: that well-organized cigarette smuggling operations are sending millions of dollars in profits annually to the Middle East, possibly to our enemies. I immediately ordered my staff on the Committee to investigate the matter further, and what they found is disturbing.The report released by the Committee this week, entitled “Tobacco and Terror,” found that New York State’s refusal to enforce certain tax laws has created a market where cigarette smugglers can operate without fear of reprisal; and even worse, these smugglers are indeed sending a large portion of their profits to groups such as Hamas and Hezbollah. It all starts with New York State’s decision to turn a blind eye when it comes to the resale of cigarettes on the state’s Native American Indian Reservations. This so-called policy of forbearance allows smugglers to purchase a carton of name-brand cigarettes from the reservations for as little as $30, attach counterfeit tax stamps, and resell them for more than double the amount they paid. It’s important to note that it’s illegal for reservations to resell these cigarettes to non-Native Americans without paying the applicable taxes, yet it happens almost daily.In fact, manufacturers and distributors continue to flood New York’s Native American Indian reservation smoke shops with more than 40 million cartons of cigarettes each year — far more than can actually be consumed by reservations themselves. At this rate, every man, woman, and child would have to consume 15 packs of cigarettes per day to account for the large volume of cigarettes sold to the reservations. So it’s no surprise that current estimates show that the state of New York is losing hundreds of millions of dollars in tax revenue a year, but that hasn’t been enough for lawmakers to stop looking the other way when it comes to Indian reservation tobacco sales. But the report finds that this is far more than just a matter of lost revenue for New York: it is a matter of national security. Each year, millions of American dollars are being sent to Hamas and Hezbollah, two organizations that wish nothing more than to do harm to America and our allies, including Israel. The report identifies three recent cases in which cigarette smugglers were tied to overseas terrorist groups. In one case, convicted smuggler Mohamad Hammoud made over $8 million in cigarette smuggling between 2000 and 2002. Hammoud funneled at least $100,000 of those profits to Hezbollah.It’s not uncommon for such large sums of money to be sent abroad. The profit margins for cigarette smugglers are staggering. In New York City, where cartons must sell for a minimum of $70, a smuggler can make more than $50,000 from one 1,500 carton load. According to law enforcement, a well-organized smuggling ring that includes smugglers and retailers will generate between $200,000 and $300,000 per week. However, criminal activity of this kind extends far beyond New York. The report cites one case where illicit cigarettes were transported to Michigan by a group with ties to Hezbollah. Smugglers willing to travel south to “tobacco states” like Virginia and North Carolina can buy a pack of cigarettes for as little as four dollars — half the cost of the same pack of cigarettes in New York and New Jersey — and bring them back north for resale. Officials estimate that, in total, cigarette smugglers are sending millions of dollars to dangerous overseas terror networks annually. The more than $50,000 from one contraband load would be enough to fund as many as 10 USS Cole bombings. In just several weeks of illicit cigarette trade, a motivated terrorist cell could generate sufficient funds to carry out another September 11 style attack, in which operational costs were estimated to be $500,000. As a nation we must do everything we can to prevent another devastating attack on our homeland; and that is why we must bring the illicit cigarette trade in New York and across the country to an immediate end.I have called on the Governor of New York to immediately step in and end the dangerous policy of forbearance that creates this illegal market. By collecting taxes on the resale of cigarettes at Indian Reservations, the state could stop the terrorist pipeline, cutting off the smugglers’ supply of illicit cartons. I have also called on my colleagues on the Committee on Homeland Security to hold a Congressional hearing on smuggling in the United States.

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Under current law, trafficking in illicit cigarettes in this country is a low-risk, high-profitability operation — and that’s exactly why Congress must take the lead in strengthening our current cigarette trafficking laws. It is absolutely imperative that we close the loopholes in the law and deny radical Islamist terrorist groups moneymaking opportunities here and around the world. After all, the security of our homeland depends on it.