Earlier this year, Hampton,
Virginia police shut down a 19-month cigarette smuggling sting
operation because officers are suspected of the inappropriate use
of funds and personal property. The operation yielded no arrests or
criminal charges. According to the
Daily Press:

For the past seven months, three of the police officers involved
with the undercover operation have been under scrutiny. Those
officers, including a major who is one of the police department’s
highest-ranking officers, were put on administrative leave with pay
on Feb. 23 following allegations of misconduct.

Officials declined to press criminal charges following a
Virginia State Police investigation, but a separate city
investigation is ongoing.

Launched in June 2010, the operation was originally a joint
investigation with the Bureau of Alcohol, Tobacco, Firearms and
Explosives (ATF), but Hampton officers discovered an ATF agent (who
had originally approached them about setting up the sting) was
selling cigarettes on the side. The ATF withdrew from the case, and
in September 2011 its agent was sentenced to over three years in
jail.

Cigarette smuggling is profitable because wide disparities in
state and local taxes mean cigarettes can cost $5 (or more) per
pack in high-tax states like New York and Illinois than in low-tax
Virginia.

In Hampton, law enforcement set up shop in a warehouse and put
ads online indicating that their cigarettes, which were purchased
from Phillip Morris at a special discount available to the ATF,
were untaxed—meaning even more profit for smugglers.

Though exact figures were not available, it appears millions of
dollars worth of cigarettes were sold onto the black market.
Between January 2011 and August 2012, the Daily Press
identified $3.15 million in operational expenditures including:

nine vehicles; XM-Sirius satellite radio subscriptions; and
plane flights, hotel accommodations, steakhouse dinners, “show
tickets” and other costs related to what the city says were
training trips to New York, New Jersey, Northern Virginia,
Washington, D.C., and Las Vegas.

The documents show several “cash withdrawals” — sometimes
thousands of dollars at a time — from the account, with no
additional details provided to the Daily Press about the
withdrawals.

[Law enforcement] spent $394,341 for nine new vehicles, at an
average price tag of $43,815.

Hampton officials say that funding for the operation, with the
exception of officer salaries, did not come from Hampton taxpayers
and that the investigation may yet result in charges in other
jurisdictions where law enforcement collaborated with Hampton
police.

Reason readers will recall
that the ATF unleashed 250 million cigarettes onto the black market
between 2007 and 2010. That apparently did not
stop cigarette bootlegging.