Two Illinois men accused of smuggling unmarked cigarettes over state lines face felony charges in Washington County.
Mohammad Abdul Majid and Iman Ugurlu, both of Illinois, were charged last month with felony-level aiding and abetting in the sale of untaxed tobacco and another felony count of aggravated forgery for allegedly transporting more than $78,000 in cigarettes from Wisconsin to Minnesota.
They were charged in Washington County District Court via warrant Feb. 9. They are scheduled to make their first court appearance March 9.
According to the criminal complaint, a Minnesota State Patrol trooper pulled the men over on June 2, 2016, when Abdul Majid, the driver, missed a weigh-in station off of Interstate 94 in Lakeland.
Ugurlu told the trooper they were making a delivery to Hudson, Wis. but had missed the exit. He added that he had been working for his uncle's company, Statewide Distributor's Inc., which listed a Beloit, Wis. address, according to the complaint.
The trooper grew suspicious after reviewing their truck rental agreement, which originated roughly 100 miles away from Beloit in suburban Chicago, the complaint said.
Authorities seized the tobacco loaded in the back of the 2,600 pound Penske truck after the trooper followed the men to the inspection station.
An investigation found the Beloit warehouse's address led to a bar and grill. The delivery address in Hudson is an intersection between a Goodwill and auto body shop on Coulee Road.
Neither company was listed as licensed tobacco distributors in Minnesota or Wisconsin, the complaint said.
Authorities estimated the taxable amount of the tobacco to be just more than $74,000. Minnesota taxes tobacco products at 95 percent of the wholesale value.
In Minnesota, possessing, distributing or selling 20,000 unstamped packs of cigarettes - or an unpaid tax value greater than $1,400 - is a felony.
Black market vendors typically sell unmarked, or untaxed, cigarettes from low-tax states to high-tax states. Other times, they skirt paying federal and state excise taxes altogether by counterfeiting brand-name cigarettes.
Stores that buy unmarked tobacco products can then charge normal prices on tobacco and pocket the remainder.
Wisconsin has the 10th highest tobacco tax rate in the country, trailing Minnesota which has the fifth highest tobacco tax rate in the country.
A 2016 report by free-market think tank Mackinac Center for Public Policy suggests cigarette smuggling has increased in Minnesota after lawmakers increased the tobacco tax rate in 2013.
The study also estimates that more than one-third of cigarettes consumed in 2014 were smuggled smokes.