Leader of Black Market Cigarette Sale Gang Sentenced, Fined

Mohammed Alazzam, the leader of a ring that illegally sold millions of dollars worth of untaxed cigarettes, was sentenced in federal court Wednesday to 78 months in prison and fined more than $36 million, according to United States Attorney Preet Bharara.

The 49-year-old Alazzam’s black market gang sold the cigarettes in Westchester and New York City, many of which were stored in facilities in Yonkers and Mount Vernon, Bharara said.

“For years, Mohammed Alazzam ran an underground black market for untaxed cigarettes, costing more than $36 million in tax revenue and netting millions of dollars for himself,” Bharara said in a statement. “His conduct deprived New York’s system for taxing cigarettes – which is designed to protect public health and save lives – of millions of dollars. Today’s sentence requires Alazzam to pay for his greed by forfeiting money and his liberty.”

According to Bharara’s office, the Indictment, court hearings, and Wednesday’s proceedings:

From late 2008 through May 2011, when ALAZZAM and his co-conspirators were arrested in this case, a criminal organization led by ALAZZAM and Yacoub Kanan (the “Alazzam Organization”) ran a black market for untaxed, contraband cigarettes in the New York metropolitan area. The Alazzam Organization obtained its supply of contraband cigarettes from, among other places, the Poospatuck Reservation, in Suffolk County, New York, in quantities ranging from 300 cartons to more than 1,000 cartons at a time, for which no New York State or city taxes were paid. Once obtained, the supply of contraband cigarettes was routinely stored by the Alazzam Organization in private storage facilities, including in Yonkers, New York, and Mt. Vernon, New York. The contraband cigarettes were thereafter distributed from the storage facilities to others by way of the backs of pick-up trucks and other vehicles that traveled to and from the facilities regularly.

ALAZZAM was the leader of the organization. He organized the criminal conspiracy by, among other things, arranging for a regular supply of contraband cigarettes, paying for the supply in amounts of more than $100,000 on a sometimes weekly basis, arranging for and renting storage locations to store the cigarettes, recruiting and instructing members of the conspiracy to transport and sell the contraband cigarettes, and, when those members were arrested, bailing them out and arranging for their representation by counsel.

The Alazzam Organization was responsible for distributing approximately 100 cases of contraband cigarettes per week during the conspiracy, from December 2008 until the arrest of Alazzam and his co-conspirators in May 2011. This resulted in a total estimated tax loss of $36,195,000. The estimated wholesale value of the contraband cigarettes is $26,250,000, and the retail value is far greater. During the conspiracy, ALAZZAM bragged that his personal net profit from the criminal organization was in excess of a million dollars annually.

On May 13, 2011, ALAZZAM and ten co-conspirators were indicted for conspiracy to traffic untaxed cigarettes. While charges in this case were pending and less than two months before the scheduled trial, ALAZZAM, who had been released on conditions of bail, fled to Jordan. He thereby failed to appear for pre-trial conferences and the scheduled trial, which appearances were required as a condition of his release. On September 13, 2013, ALAZZAM voluntarily returned to the U.S. and surrendered to law enforcement officers. ALAZZAM pled guilty in April 2014.

ALAZZAM is the eighth defendant and member of the conspiracy to be sentenced in the case. Yacoub Kanan remains at large, while the other two defendants pled guilty and await sentencing.

In addition to the prison time and restitution, ALAZZAM, 49, of Westchester County, was ordered to forfeit $2,500,000.

Mr. Bharara praised the efforts of the Bureau of Alcohol, Tobacco, Firearms, and Explosives for their investigation in this case.

The prosecution is being handled by the Office’s White Plains Division. Assistant United States Attorneys Benjamin Allee and Rachel Maimin are in charge of the prosecution.

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