Judge Finds UPS Liable for Shipments of Cigarettes
U.S. District Judge Katherine Forrest said UPS is liable for having illegally shipped hundreds of thousands of cartons of untaxed cigarettes in New York, depriving the state and New York City of millions of dollars of taxes.
The Road to Sustainable Urban Logistics
The Road to Sustainable Urban Logistics presents the findings of qualitative research, along with an online survey conducted by GreenBiz in June 2017 among a sample of respondents within the GreenBiz Intelligence Panel.
- UPS Industrial Buying Dynamics Study: Buyers Raise the Bar for…
- UPS 2017 Pulse of the Online Shopper™ Study
- The Growth of the Circular Economy
- 2016 UPS Pulse of the Online Shopper
- All Resources
UPS is a global leader in logistics, offering a broad range of solutions for the transportation of packages and freight, including innovative delivery options for the global consumer market; the facilitation of international trade, and the deployment of advanced technology to more efficiently manage…
- Company Quicklook
A Reuters report said that UPS “illegally shipped hundreds of thousands of cartons of untaxed cigarettes, depriving the state and New York City of Millions of dollars of taxes, with U.S. District Judge Katherine Forrest saying the state and the city are entitled to compensatory damages and fines.
And the judge added in the report that UPS’s high degree of culpability infers significant penalties are appropriate, saying that “"UPS largely relied on its size and weak internal procedures to excuse blatantly culpable conduct. But there were many, many people within UPS who consciously avoided the truth, for years."
While the city and state were looking to recoup more than $872 million from UPS, the report said Judge Forrest could determine the amount of the award by April.
In the court’s decision, UPS was accused of shipping more than 683,000 cartons of untaxed “contraband” cigarettes, going back to 2010, to unlicensed wholesalers, unlicensed retailers and residences, oftentimes from smoke shops on Indian reservations, said Reuters, which the plaintiffs said stands in violation of an October 2005 agreement UPS made with New York State not to ship cigarettes to unlicensed dealers and individual consumers.
And UPS, said Reuters, was also accused of violating federal laws against racketeering and cigarette trafficking and New York’s public health law.
In comments provided to Logistics Management, UPS said that it is still evaluating the court’s lengthy decision.
“The Court has not yet issued a final ruling, and will do so only after the parties make further submissions,” UPS said.
“We are pleased that the Court found that UPS's current tobacco compliance program is adequate, and declined to award plaintiffs the injunctive relief they sought or to appoint a monitor to oversee UPS's compliance program.”
“These are frequent shippers originating volumes of packages from Indian (native Americans) reservation,” he said.
“The tobacco taxes don't apply to cigarettes sold on Indian reservations. The folks with access to these purchases set up web sites to peddle the less expensive cigarettes at a big discount. They then ship the orders via UPS, FedEx, USPS etc.”
“So to get a good shipping rate one has to engage a sales rep. He has a financial incentive to onboard the shipper. At some point any intelligent rep figures out the scam. The carriers had already had a consent decree from being previously caught but some sales reps memories are short when it comes to making budget and earning a bonus.”
You must be logged in to post a comment. Login.
Jeff Berman is Group News Editor for Logistics Management, Modern Materials Handling, and Supply Chain Management Review. Jeff works and lives in Cape Elizabeth, Maine, where he covers all aspects of the supply chain, logistics, freight transportation, and materials handling sectors on a daily basis. Contact Jeff Berman