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.
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 for the
alleged illegal shipments and $165 million in penalties. The
decision in that case is pending.
A spokesperson for UPS denied the allegations.
"Since 2005, UPS has continued to work with regulators on this
issue. In fact, UPS agreed to stop delivering cigarettes to
consumers nationwide at that time--a policy that went beyond the
requirements of federal and state law," the spokesperson said.
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
Access Investor Kit for FedEx Corp.
Visit
http://www.companyspotlight.com/partner?cp_code=P479&isin=US31428X1063
Subscribe to WSJ: http://online.wsj.com?mod=djnwires