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Excerpts from: Tobacco executives charged in $1.2-billion fraud
Operation built around high taxes and fast boats

By PETER CHENEY and VICTOR MALAREK Globe and Mail [03/01/03]

Eight top tobacco executives have been charged with fraud and conspiracy after a four-year RCMP investigation into what has been described as "an unholy alliance" between a Canadian corporate giant and a network of smugglers who sold its products on the black market.
The executives, along with JTI-Macdonald Corp. (formerly known as RJR-Macdonald), have been charged with defrauding the Canadian government of more than $1.2-billion in tax revenue by channelling cigarettes to criminals based in the United States, who smuggled them back into Canada through native reserves. . .

Police say the executives orchestrated a scheme that sent cigarettes made at plants in Montreal and Puerto Rico to smugglers in the United States, avoiding Canadian duties and taxes. The illegal operation ran from 1991 until 1996, police say.

"This revenue was the proceeds of crime," said RCMP Inspector Robert Davis, who headed the investigation. "The accused supplied the Canadian black market with Canadian-blend tobacco products manufactured both in Canada and Puerto Rico, knowing that these products were being smuggled back into Canada and onto the commercial market." . .

Four of the charged executives now live in the United States. Three live in Switzerland, and one is in British Columbia. None has been arrested, but they are scheduled to appear in a Toronto courtroom on March 26. Also named as an unindicted co-conspirator is Larry Miller, a high-flying cigarette smuggler serving a 17½-year sentence in a U.S. federal prison.