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Tuesday, September 12, 2006

Ind. Decisions - More on 7th Circuit Cigarette Smuggling Decision

Picking up on yesterday's opinion by a 7th Circuit panel in the case of USA v. Daryl Harper (see ILB entry here), Charles Wilson of the AP writes:

Kramer and Newman couldn't get away with cashing in on differences in state laws and neither can an Indiana gas station manager, a federal appeals court said.

The 7th U.S. Circuit Court of Appeals in Chicago on Monday upheld Daryl Harper's conviction on conspiracy and other federal charges stemming from a cigarette smuggling operation that netted hundreds of thousands of dollars.

According to court records, Harper sold cigarettes at his BP Amoco station in Hammond to partners who then illegally resold them for profit across the state line in Chicago, where taxes were as much as 75 cents higher.

Appeals court Judge Michael Kanne noted in his ruling the conspiracy's resemblance to a 1996 episode of the television series "Seinfeld."

"Kramer and Newman devised a similar scheme to capitalize on Michigan's higher deposit for soda bottles and cans by using a postal truck to transport recyclables gathered in New York for return in Michigan," he wrote. "Alas, the plan was foiled by a fanatical auto mechanic in possession of Jerry's car and JFK's golf clubs."

Trouble is - at least in the real-life case - such moneymaking plans, called tobacco diversion, are illegal.

Some of Harper's partners used counterfeit coupons to increase their profit margin, the court said.

One of the partners, Abdelhakin Al Najjar, called Abdul in court records, "became the biggest customer at Harper's store by a wide margin. ... Abdul was submitting so many coupons they could not fit in the cash register," Kanne wrote.

On one day alone, Al Najjar used more than $25,000 worth of coupons to buy some 1,700 cartons of cigarettes, court records said. The scheme unraveled in 2002 when a file clerk at the company's coupon processing center in Houston noticed the fakes.

Posted by Marcia Oddi on September 12, 2006 09:01 AM
Posted to Ind. (7th Cir.) Decisions