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German Court Jails Cigarette Gang Leader

A German-Russian criminal was sentenced on Monday to nine years imprisonment by a German Court following a complex international investigation co-ordinated by OLAF.

The investigation involved authorities in Germany, Poland, Belgium, Latvia, Estonia and Switzerland as well as OLAF.

The Berlin-based criminal was arrested by German Customs in March 2011 during a raid on one of the largest illegal cigarette factories ever discovered in Poland. He was convicted for evading Tobacco Duties and VAT when importing tobacco into the European Union and for the production of illegal cigarettes. Three accomplices still awaiting trial will face similar charges, the European Commission said in a press release.

His Russian-speaking gang had been producing cigarettes in various illegal factories in Poland and the Transnistrian region in Moldova and selling them in the EU since the end of 2005. More than EUR 50 million in taxes were evaded by the gang while smuggling 1,200 tons of tobacco from 2006 to 2011.

The illegal cigarette factory in Poland was raided shortly after production had started. The criminals changed the location of their factories frequently in a bid to defy law enforcement authorities.

If it had continued to run, financial losses to the taxpayers in the EU would potentially have been at least EUR 6 million a week, it is estimated. Evidence gathered during the raid shows that further deliveries of tobacco were planned. The quantity of tobacco seized was sufficient to produce around 120 million cigarettes which is equivalent to about EUR 24 million in revenue losses.

Customs estimates that the overall profit made by the four main suspects would have been as much as EUR 40 million for the illegal production and sale of untaxed cigarettes over the five year period between 2006 and 2011. Most of the cigarettes were destined for the British market where Excise Duties are high.

The operation resulted in the seizure of more than EUR 2.3 million worth of assets in Germany including real estate, jewelery, gold and cash (EUR 230,000 in Lithuania and EUR 9,000 in Latvia). Twenty Bulgarian and two Lithuanian workers were arrested during the operation and have already been charged for working in the illegal factory. They have each been sentenced to one year imprisonment in Poland.

Customs investigators uncovered a very complex illegal trade route that supplied the cigarette factory in Poland with tobacco.

by RTT Staff Writer

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