The Feds have charged an alleged tobacco giant with a $15 billion conspiracy and laundering of drug profits.
The case has a lot of twists and turns.
The indictment unsealed Tuesday alleges that the tobacco giant, Philip Morris International, is an “unprecedented and pervasive” criminal enterprise with a history of illegally marketing and selling drugs.
It says the tobacco company conspired to launder drug profits through “inflated sales prices, illegal discounts and sham drug sales promotions.”
The indictment says that Philip Morris has “engaged in numerous schemes” to hide the fact that the company’s tobacco products were being sold at inflated prices.
It also alleges that Philip, Morris International laundered drug profits by “using shell companies and fraudulent accounting practices to create the appearance that its products were safe.”
In a statement, the Feds said that it has charged the company with numerous criminal offenses, including racketeering conspiracy, money laundering, and other criminal offenses.
“As the federal government continues to pursue these and other offenses against the tobacco industry, we are aggressively pursuing these corporations and individuals to hold them accountable,” the statement read.
“The federal government is committed to enforcing the law to protect the American people from the threat of organized crime.”
The Feds also say that the companies “have made multiple efforts to conceal and/or manipulate information related to its tobacco products sales to ensure that the profits it generated were concealed.”
The investigation began in 2006 when an anonymous whistleblower filed a whistleblower complaint with the Justice Department.
According to a statement from the Justice Dept., the government obtained “a variety of confidential government documents and emails from an unidentified Philip Morris employee and a confidential source.”
The whistleblower alleged that the Philip Morris company knew that tobacco sales were inflated by as much as 5,000 percent and that it sold tobacco at prices “far below the actual retail price” of the product.
The government said that Philip also concealed the fact from its distributors and other customers that the products were manufactured in Mexico and shipped by the company.
“It was clear to us that Philip knew the drugs were being shipped to a number of locations in Mexico where the actual tobacco sales price was $0.40 per pack,” the Justice Deps statement reads.
“This is how the company avoided the costs of processing tobacco and marketing it in the United States.”
The DOJ said that the government had “unambiguously established that Philip and its affiliates engaged in a pattern of unlawful activity” with the intent of profiting from illicit tobacco sales.
The Justice Dept. says that the indictment “will require the company to pay substantial fines and disgorge substantial profits.”
According to a press release, the indictment is “part of the ongoing criminal investigation into Philip Morris’ illicit tobacco business in the U.S.”
The Justice Department said that in addition to the alleged conspiracy and criminal activity, the investigation also uncovered the use of sham drug promotions to promote tobacco products, “which resulted in the diversion of hundreds of millions of dollars from drug cartels and the proceeds of drug crimes.”
It also alleged that Philip “unlawfully laundered” drug profits “through an in-house scheme” where the company sold cigarettes at inflated price “in an effort to evade the $5.7 billion in fines, disgorgement, restitution and other penalties the government is seeking.”
The U.K. government is also conducting its own investigation into the tobacco case.
The FsAA charges are the largest criminal action against a tobacco company in the history of the Justice department.
The Justice Depts investigation has been ongoing for a decade, and is being led by the Department of Justice’s Office of the Inspector General.