By Angela Chen
United Parcel Service Inc. was accused of shipping more than 136
million contraband cigarettes across New York over the past five
years, in a lawsuit filed by the state of New York and New York
City.
A representative from UPS wasn't immediately available for
comment.
The suit, filed in federal court in Manhattan, seeks $180
million in damages and penalties. Last year, the state filed a
similar suit against FedEx Corp., seeking $70 million.
UPS had agreed in 2005 to stop delivering cigarettes to
unauthorized recipients. The lawsuit accused UPS of shipping nearly
700,000 cigarette cartons between 2010 and 2014, leading to a tax
loss of about $5 million for the city and $30 million for the
state.
The lawsuit also accused UPS of collaborating with various
dealers to traffic the contraband cigarettes, and it said at least
70 packages were marked as having been handed to a child. Under New
York law, it is illegal to sell cigarettes to minors.
"We allege that the entities that ship these cigarettes through
UPS earn enormous profits by avoiding the payment of required taxes
and that the fees collected by UPS to ship these untaxed cigarettes
are paid out of these illegal profits," said New York City
Corporation Counsel Zachary W. Carter.
Write to Angela Chen at angela.chen@dowjones.com
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