The Cigarette Bootlegging Racket

by The Other Guy | July 29,2020

Old-fashioned type cigarette machine
Old-fashioned type cigarette machine

This was a racket scheme that started way back in the 1960s in New York City and a few other northeastern states that had started taxing cigarette sales heavier.

Under the guise of dissuading the public from the newly discovered unhealthy consumption of tobacco, certain states began to levy a heavy tax on retail cigarette sales.

It also became a good excuse as another major revenue producing source for New York State. By heavily taxing the sale of tobacco, the state coffers swelled with many additional millions that they wouldn’t have otherwise seen.

Collectively between the federal, state, and city taxes imposed, racketeers soon saw the potential for big profits by smuggling cartons of cigarettes up from several southern states where the tax levy was negligible.

By 1965, it had become a somewhat steady racket for organized crime. And by 1967, it had become the rage for certain mafia “crews” and individual mob guys to specialize in “cigarette bootlegging”, or “butt-legging” as it was now being called.

Many states became subject to cigarette smuggling but with their heavy tax levies, New York, New Jersey, Pennsylvania, and Massachusetts were among the top states losing the most tax revenue because of the bootlegging.

Side Note: Cigarette smuggling is a pervasive problem not only in the United States but in Europe and other countries as well.

For instance, in Italy, illegal cigarette smuggling has been a major multimillion-dollar racket for the Italian Mafia for many decades since at least the late 1940s. Only with their entrance into narcotics manufacturing (heroin) and international smuggling in the early-mid 1950s did the Mafia’s interest in cigarette smuggling somewhat subside.

But even with that shift in focus, there were some mafia crews who continued solely with the cigarette racket. The Neopolitano Camorra were firsts among equals when it came to the cigarette trade.

Map of state to state tax disparity
Map of state to state tax disparity

At that time, the tax in North Carolina was only .2 cents per pack, while New York State’s tax was .15 cents per pack. New York City excise taxes were another .4 cents per pack, plus a special nicotine tax of another .4 cents per pack totaled .23 per pack. Smuggled by the truckload, big profits could be had by the smugglers.

In 1967, it was estimated that nearly half of all cigarette sales in New York City were “bootlegged.” State authorities estimated the loss of tax revenue to the state exceeded well over $400,000,000 a year.

Depending upon who was doing the smuggling, the bootleggers could run up anywhere from a car trunk full to a truckload into the city. Cars, panel vans, 16’ footers, 24’ straight trucks, and even tractor-trailer loads was not uncommon.

As the problem became more pervasive and law enforcement started to crack down, other methods had to be employed by the smugglers to evade the state troopers or various task forces that had been formed to specifically try and combat this growing problem.

Soon, specially designed trucks with elaborate camouflage were made so as to trick investigators. These designs ran the gamut from having a tractor-trailer loaded front to back with legitimate products such as a load of foodstuffs or pallets loaded with boxes (several pallets of which would contain the cigarettes), to 40-foot moving vans full of household goods that had the front of the trailer loaded top to bottom with cases of cigarettes.

The wealthier and more sophisticated racket guys built even more elaborate designs. Some had trucks built with false bottoms or fake walls that shortened the length of the inside of the truck. Behind the false front wall would be stacked top to bottom with butts, the rest of the inside would be filled with regular merchandise. It was hard to tell that the inside was shortened.

One police stop along the interstate of a seemingly normal flatbed truck carrying a full load of lumber was discovered to actually be a hollowed-out facade. When the cops got up close they sensed something was wrong.

The lumber (although actual wood) was not loose individual pieces but all connected together as one. Upon playing with various switches and release levers, they soon discovered the lumber was not full-length pieces as it would seem.

It was a huge boxed out hatch that popped open, revealing hundreds of cases of cigarettes. This single load was worth well over several hundred thousand dollars once sold on the streets of New York…whoever was behind the scheme were very creative wiseguys indeed!

Butt-Smuggling was big business!
Butt-Smuggling was big business!

Remember, that back in the 1950s, 1960s and 1970s, cigarettes were still a tremendous rage among the general public. Most people smoked. It was considered normal and few thought twice about the potential health risks involved.

That made for a tremendous market for racketeers by which to dispose of their “product.” Men, women, and teenagers across the larger spectrum of society thought nothing of lighting up. In fact, it was often considered very “en vogue” to smoke.

Just check out any old movie and you’ll see all your favorite old movie stars and leading men and women smoking their heads off. From Frank Sinatra in “Tony Rome”, to Sean Connery in “James Bond” and Dean Martin in “Matt Helm”, it was considered “cool” to smoke.

Free advertising for the mob as it were. Wiseguys couldn’t have asked for anything more!

Once the cigarettes had reached the city it was as easy as pie to distribute them. Everybody likes to save money…Everybody!

I don’t care if the customer was a housewife, a postal employee, blue-collar construction worker on a job site, or a white-collar button-down executive on Park Avenue, they all wanted to save money on a product they consumed daily.

Hell, even some cops, judges and the judiciary would quietly buy the bootlegs…it was no big thing!

Side Note: Because smuggling cigarettes seemed like a harmless activity, albeit criminal, many policemen and others in law enforcement often took a very lax approach to investigating and arresting those involved.

Wiseguys and racketeer smugglers were also often able to bribe many cops because of this innocent Damon Runyon perception of those engaged in the racket.

These untaxed cigarettes would often be sold by hustlers and others streets guys out of car trunks or sold wholesale to the owners of neighborhood candy stores, groceries and bodegas, area taverns and coffee shops, dry cleaners, etc.

And at each level of sales, everybody made money along the chain of distribution.

There were even some mob guys who handled the racket from top to bottom, from smuggling them up into the Northeast from wholesalers down in North Carolina to the actual street distribution and final sales.

But the more common method for the bigger operators, at least, was to lay out the financing for the initial purchase of a truckload. Then have several “overseers” handle the actual logistics of purchasing and smuggling the cigarettes into the city, and then quickly distributing the whole load out to prearranged “wholesalers” who bought in bulk.

These distributors would then dispose of their loads by breaking down the shipment into a smaller amount of cases and selling through their own established network of “salesmen” to the public. Individual cartons of 10 packs per carton which was very common to buy.

Confiscated smuggled cigarettes
Confiscated smuggled cigarettes

Another major outlet for Italian organized crime was through the individual sale of single packs of cigarettes. They were able to accomplish this through their almost ironclad control of the vending machine business. An old, dependable standby and a time-honored underworld racket.

Along with the mob’s control over, and their supplying, to restaurants, bars, nightclubs, and other retail establishments jukeboxes and pinball games they also commonly distributed cigarette machines.

In fact, cigarette machines were one of the more lucrative type vending machines they handled. As I discussed earlier in this expose, the sheer popularity of smoking cigarettes demanded that type of wide distribution.

The smoking public wanted the convenience of throwing a few coins into a nearby machine and having their favorite brand drop down through the slot for a quick and easy nicotine fix as it were. Whether it be a pack of Marlboro, Parliament, Camel, or any other number of brands these machines carried, cigarette machines became a major outlet for bootleggers.

Side Note: It had been well documented that major racketeers and mafiosi were often at the top of the vending racket. Genovese bosses Tommy Eboli, Gerardo Catena, Mike Miranda, among many others held ownership in Tryan Cigarette Service, Runyon Sales Corp., and Bally Corp., respectively. These companies were among the largest vending machine outfits in the Big Apple.

There were literally hundreds of other mafiosi from all Five Families, as well as other top mafiosi throughout the country who dominated this field. Buttlegging and vending machines went together like “bread and butter.”

Most vending machine racketeers were not smugglers themselves but were allied with mob guys who were. But of the ones who did operate both rackets, it became an extremely lucrative racket field of endeavor.

A “cradle to grave” kind of thing where they were able to buy the smokes down south for a pittance, and then got top dollar up in New York through “retail” sales in vending machines. This provided a huge profit margin to work off of. What could be better, right?

Well, I’ll tell you what could be better! The fact that up until the later 1960s, the smuggling and sales of untaxed cigarettes was only a misdemeanor in New York City and New York State. Other states had the same toothless laws on the books as well.

For many years smuggling was not even considered a priority by law enforcement. Most guys who were even arrested got off with a simple violation or misdemeanor conviction. Ninety-nine percent of those convicted paid only a small fine and received either a clean dismissal or at worst a probation or “suspended” sentence of 60 or 90 days to 6 months.

Of the notorious few who had such a long criminal record of repeat cigarette smuggling arrests and convictions, the most anybody got was a bullet in the can (1 year in jail)…but that was a rare occurrence.

News reports of cigarette smuggling
News reports of cigarette smuggling

A good example of this is when reviewing the arrest statistics for 1970. Of the 141 arrests made for either transporting, possession, or sale of untaxed cigarettes made that year only one person received a jail sentence. Thirty-nine defendants were fined between $5.00 and $250.00 each, charges were dismissed outright against 82 defendants, and the remaining cases were pending.

Now, I ask you, with that kind of potential profit structure built-in and the minor fines and risk involved, is it any wonder cigarette smuggling became a popular racket back then? Of course not! I’m actually surprised that even more mob guys didn’t delve into the racket because of this.

After several major racket probes and empaneled subsequent grand juries, state legislature was finally enacted to make the smuggling, possession, or sale of untaxed cigarettes a felony. But even then the maximum penalty was only four years imprisonment…It changed little.

It was popular enough that each of the Five Families had various soldiers and associates who did indeed dabble in the racket. There were certain crews or individual mobsters who more or less specialized in smuggling. Paramount among the Five Family structure was the Colombo, Lucchese and Genovese Families.

The Colombo Family was probably the most deeply enmeshed in the racket. Their involvement has been well documented over the years. And although many Colombo associates handled untaxed cigarettes, undoubtedly any list of “first among equals” would have to include mob figure Anthony Granata.

Based out of Brooklyn, Granata became a notorious figure to authorities regarding smuggling. He was arrested numerous times on cigarette smuggling related charges. He controlled a huge network of smugglers who handled their own A to Z organization for the wholesale purchase and ultimate disposal of an untold number of truckloads of butts over a series of years.

An example of one of his arrests was in March of 1973. Granata and five in his crew of smugglers were arrested for transporting 11,000 cartons of cigarettes from Weldon, North Carolina into New York. Police arrested the six as they were unloading the truckload of illegal smokes into a Flatbush, Brooklyn warehouse.

The Brooklyn District Attorney estimated that Granata’s ring had cost the city and state $11,000,000 a year in sales and excise taxes. They were all charged with possession of untaxed cigarettes, and Granata was additionally charged with having offered a $7,500 bribe to one of the arresting officers.

Smuggler Anthony Granata nabbed!
Smuggler Anthony Granata nabbed!

It was Granata’s sixth arrest for cigarette smuggling. NYS had previous tax assessments and civil judgments against him for a whopping $2,500,000 related to his smuggling convictions. But because he ostensibly owned no assets, not a red cent had ever been collected from him.

Prosecutors said that Granata’s ring smuggled an average of 100,000 cartons per week into New York, for a steady loss of $230,000 in tax revenue. They would typically sell to consumers for $3.70 per carton as opposed to the normal price of from $4.70 to $5.00. They already had a solid profit built into the $3.70.

As a comparison, in North Carolina, a retail pack sells for .29 cents. In New York, that same pack sells for between .65-70 cents…a huge markup and disparity because of the heavy tax levy imposed. Organized crime worked the spread.

Law enforcement authorities said that Granata controlled a thirty-man organized crime smuggling ring that operated six days a week dispatching truck drivers down to North Carolina on a rotation to haul back 100,000 cartons a week. This went on for many years.

To show the extent of his operation, within one seven-month period from September 1966 thru April 1967, the Granata gang moved over 1,109,920 cartons into New York.

Treasury agents crack down!
Treasury agents crack down!

Another spinoff operation of Granata’s was that of Joseph (Sam) Pontillo. He was a top subordinate of Granata who later handled part of the day-to-day operations once Granata became too “hot.”

Pontillo was nabbed in 1968 with 2,200 cartons of smokes in New Jersey. In 1969 he was arrested again in possession of 3,600 cartons of untaxed cigarettes after leaving a “drop” in New York.

The city of Charlotte, North Carolina was the most popular location to buy the cigarettes. They had the lowest prices because of the low .2 cent taxes there. But other cities and states such as those of Virginia, Maryland, and South Carolina were also good sources for smugglers, especially after federal officials began investigating and cracking down on North Carolina’s distributors.

Millions upon millions of dollars in bulk sales that the Sales & Excise Tax-Task Force investigators say cost the city of New York millions in lost revenue.

By the late 1970s, the tide had started to turn with the passage of a new law making it a federal crime and an automatic felony for the possession or transportation of more than three hundred cartons of illicit cigarettes across any state line. A crime now punishable by up to five years in prison and/or a $100,000 fine on each count.

With the passage of this new law in November of 1978 to combat the smugglers, both the Federal Bureau of Investigation (FBI), as well as the Bureau of Alcohol, Tobacco & Firearms (ATF) of the U.S. Treasury Department now had jurisdiction.

The result was an all-out assault like never before by both local, state, and federal authorities on the traffickers. “The Federal Cigarette Bootlegging Contraband Law” slowly but surely started to yield the desired results.

A prime example of this was in 1980. Two top Colombo Family associates were nabbed along with seven other bootleg ring members on federal charges for the transportation and possession of untaxed cigarettes.

Charged with operating a major multimillion-dollar a year Mafia-run cigarette smuggling and distribution network, they both were immediately jailed on $250,000 bond by a federal judge.

Future Colombo Family “soldier” Joseph (Joe Legs) Legrano, and Family “associate” Vincent (Jimmy G) Gati, both of Staten Island, were picked up in connection with the alleged $13,000,000 bootlegging operation that NYS Taxation and Finance Commissioner James H. Tully Jr., said had defrauded the State of New York of more than $5,000,000 in taxes over a period of four years.

Now, it could be argued that Granata, Legrano, and those like them were doing the general public a big favor by saving the average person a shitload of money. A “Robin Hood and his Merry Band of Hoodlums” sort of thing… But somehow I don’t think the authorities saw it quite that way. Lol

Another big spinoff racket seemingly created overnight became the hijacking of tractor-trailers coming into the New York and Tristate area carrying loads of legitimate cigarettes from major manufacturers. The Philip Morris Company, the A.J. Reynolds Tabacco Company and other national brands that shipped their products into the region became major targets of professional thieves and mob truck hijackers.

Always a specialty of the mob to begin with, grabbing a tractor-trailer filled with a $300,000 or $400,000 load of legitimate cigarettes became easy pickings. Snatching trailer loads of cigarettes on an almost weekly basis became big business for mob hijackers.

Buttleggers get nabbed!
Buttleggers get nabbed!

Surnames that would later on become well known in gangland were involved in illegal cigarette trafficking almost from the beginning. A few good examples of this were the aforementioned future Colombo soldier Joseph (Joe Legs) Legrano, Joseph(Crazy Joey) Gallo, Gregory Scarpa Sr., Joseph (Joe Lane) Gentile, and Rosario (Black Sam) Nastasa.

Not to be outdone by their mafia contemporaries, Lucchese Family soldier Michael (Big Mike) LaBarbara was a well-known hood who also dabbled in the untaxed-cigarette trade, which he had an arrest for by the mid-1960s.

LaBarbara was tied into the Paul Vario regime, a notorious capo who within a decade would gain infamy with his disciple Jimmy (The Gent) Burke, who was another cigarette hijacker, for their involvement in the $5.8-Million dollar robbery at JFK International Airport in Queens, NY.

Other Vario crew members active in cigarette bootlegging included soldiers Bruno Facciolo and Danny Cutaia from the Canarsie section of Brooklyn who ran distribution rings in that area of Kings County.-Lucchese mobster Savino (Sam) DeBendictus was a convicted mob hijacker and gambler also deeply immersed in the vending machine rackets. He owned two vending firms in Hicksville, Long Island.

The veteran Lucchese soldiers, brothers James and Felice Falco, aka Jimmy and Philly Black, were also engaged in the vending machine racket in Queens and Long Island for decades. They operated in the regime of Tony Ducks Corallo and later Ettore (Eddie) Coco.

In 1971, future Lucchese bigwig Aniello (Neil) Migliore was tied to the cigarette smuggling trade as a “behind the scenes” financier.

In an extensive Newsday expose on the racket, Migliore was said to be the money man behind a multimillion-dollar North Carolina to New York City trafficking ring that ran a steady suitcase filled with $100,000 down to wholesalers on a regular basis in order to purchase and then smuggle back in false bottom trucks full truckloads of smokes.

And of course, if Migliore was involved then his longtime capo and direct superior Joseph (Joey Narrow) Laratro was as well. No doubt Laratro was the real source of funds that fueled the operation.

The wealthy Laratro had relocated down to Hallandale, Florida in 1971. Nonetheless, Neil continued to oversee their rackets and dutifully reported to Laratro on a monthly basis for years thereafter.

Another important facet of the racket was the stealing of state-issued cigarette “tax stamp” machines. By snatching these “official” state-owned machines the bootleg racketeers could now attach a legitimate tax stamp to each pack or cigarettes…that made them “golden.”

In time, the more sophisticated of the gangs even started manufacturing their own machines to produce “counterfeit” tax stamps for the same purpose. It allowed the traffickers to now sell seemingly “legitimate” cigarettes through the thousands of vending machines the mafia controlled throughout New York City, its neighboring territories, and adjoining states.

A tax-stamp counterfeiting machine
A tax-stamp counterfeiting machine

Now, instead of having to surreptitiously sell unstamped cartons of cigarettes out of car trunks, gas stations, candy stores and bars at cut-rate bargain prices, the bootleggers could now get top dollar for their product by selling them right in the open to the public and charging full retail prices for a pack from cigarette vending machines…this was a major score and a half!

For many years cigarette bootlegging became one of the most profitable and low-risk underworld rackets around. It was often likened to what alcohol bootlegging had been for the underworld back in the 1920s.

But as time passed the steady use of the newly enacted “RICO Law” of 1970 (Racketeer Influenced and Corrupt Organizations Act) would slowly become the deterrent law enforcement had always sought to finally help stem the flow of the illegal cigarette trade.

By the early 1980s, cigarette bootlegging by Cosa Nostra no longer held the same allure as it once did for them.

Between the newly discovered health hazards of smoking, coupled with new national campaigns to dissuade the public from its use, the consumer desire wasn’t there any longer…It became the old law of “supply and demand.”

Regardless of the mob’s desire to continue the racket, the profit was just no longer there for them. When the racketeers considered their vastly reduced consumer base and the now draconian penalties of up to twenty years in prison under the RICO statute, the cigarette bootlegging racket soon faded out.

Postscript

As a devout mob researcher and historian, I consider the decline of the cigarette bootlegging racket a prime example of the smaller “footprint” that Cosa Nostra in general has today.

The Mafia has always survived and thrived because it was willing and able to provide an eager public with services the American people much desired, but that the United States government denied them.

Harkening all the way back to 1920 with the newly enacted Volstead Act that made the manufacture, possession, or sale of alcoholic beverages illegal. Liquor bootlegging became the catalyst and “cash cow” for over a decade to make many a racketeer very wealthy men while keeping the American public “wet” so to speak.

Likewise, because the pastime of gambling was an illegal activity denied to the public…enter the mob!

Whether it was the policy game (numbers), horse and sports betting or varied casino games, racketeers provided a key service and product that people wanted. The gambling “business” made millionaires out of many racket guys and made for steady and lucrative mob careers.

Pornography was another major cash cow for the mob. Sex sells whether it’s legal or not. Always has and always will. And for many decades it was a multimillion-dollar racket. Nearly all mob crews had some representation in the skin trade.

Illegal narcotics is another of many other products that was outlawed to a desiring public, which in turn gave many Cosa Nostra figures an opportunity to make big money.

Today, it is a very different story. Between “Lotto”, the Daily Number and a hundred other variations the government runs, the numbers racket is dead. OTB, or the off-track betting business has been legal for upwards of fifty years. So the horse business went out the window. And sports betting is on its way to become legal.

Everywhere you turn there is another legalized casino popping up. Las Vegas, Atlantic City, Upstate New York, Connecticut, Florida, etc….So mob guys who ran illegal floating dice games and underground casinos are like fossils today.

With the advent of the internet and the general legalization of the pornography industry, it went mainstream. The profit in it went out the window. The allure of it being an illicit, underground product provided by the underworld became a thing of the past. Although it’s still somewhat of a seedy trade, today many major legitimate companies and businessmen produce these films and photos. Click on the net and it’s right in front of you…for free no less!

Marijuana is now legal in many states. Pills and other narcotic type drugs are also easily accessible. So even the drug dealers are getting a run for their money.

Between online “Pay-Day” loan companies, credit card companies who beg you to open an account and take one of their cards, banks and so many other legal sources for money, even the neighborhood shylock has stiff competition today.

It is almost comical when you really think about it. What it really comes down to is that when the government wasn’t “in the business”, any of the above named industries were categorized as a “vicious racket” that preyed on an innocent public.

But once the government decided to go into that given “racket”, suddenly it was no longer a “vicious racket that preyed on the public and ruined lives”, but a wonderful “business” now able to generate a new revenue stream of taxes and employ thousands of people.

The narrative soon turned to a dialogue encouraging these activities in order to benefit and fund school budgets, build roads, etc. What happened? The moral abyss that they portrayed the dreaded gambling racket or liquor trade to be is no longer?

It has now somehow become an above board and wholesome activity that is encouraged and advertised nationwide on television, billboards, the internet, newspapers, and a hundred other ways in order to reach the public so they spend their money?

THIS is the duality and hypocritical position of our government. When they are not doing it, those who do are labeled “racketeers and hoodlums”. Once the government jumps into the water, then it’s all good and holy! …Lol, what a crock of shit huh?

Most importantly is that once they legalize a given former “racket”, they make sure to pursue any individual still involved in that activity with a vengeance…. arrest and conviction is the name of the game.

They try and jail people for doing the same exact thing that they do. Under the false pretense of “Law and Order.” I guess the government is like the Mafia in that regard. They wanna dominate the field. They don’t like the competition! 😎

Until next time…”The Other Guy!”

This article was originally posted “here