WASHINGTON - U.S. Senator Herb Kohl today introduced legislation to prevent cigarette trafficking on the black market where profits are funneled to organized crime and terrorist groups. Recently, large trafficking networks were uncovered in North Carolina and Michigan, where some of the people involved were prosecuted for providing material support to Hezbollah. It is believed these individuals provided millions of dollars to this deadly terrorist organization. The Bureau of Alcohol, Tobacco and Firearms (ATF) informed Kohl's office that there are other ongoing cases involving cigarette trafficking and terrorist groups, and they believe the connection between cigarette trafficking and terrorists is much more widespread than the number of public cases suggest.

"Tobacco smuggling has developed into a popular, and highly profitable, means of generating revenue for criminal and terrorist organizations -- a multibillion dollar a year phenomenon," Kohl said. "That money is often raised right here in the United States, and then funneled back to these international terrorist groups. Cutting off financial support to terrorist groups is an integral part of the protecting this country against future attacks."

Hezbollah, for example, earned $1.5 million between 1996 and 2000 by engaging in tobacco trafficking in the United States. Al Qaeda and Hamas have also generated significant revenue from the sale of counterfeit cigarettes. In 1998, the ATF had six active tobacco smuggling investigations. In 2005, that number swelled to 452.

Cigarette trafficking, including the illegal sale of tobacco products over the Internet, costs states billions of dollars in lost tax revenue each year. It is estimated that federal tax losses to Internet cigarette sales will reach $1.4 billion this year. As lost tobacco tax revenue lines the pockets of criminals and terrorist groups, states are being forced to raise college tuition and restrict access to other public programs.

The Prevent All Cigarette Trafficking (PACT) Act will:

• Strengthen the reporting requirements for interstate cigarette sellers.

• Increase the criminal penalty from a misdemeanor to a felony and create a substantial civil penalty for violations, including violations of the reporting requirements and state tobacco tax laws.

• Grant federal and state law enforcement officials more powers to investigate and prosecute violators.

• Prohibit the United States Postal Service from delivering tobacco products

The 9/11 Commission report recommended that law enforcement increase efforts to track terrorist financing because "information about terrorist money helps us to understand their networks, search them out, and disrupt their operations." The Commission also pointed out that: "Counterterrorism investigations often overlap or are cued by other criminal investigations, such as money laundering or the smuggling of contraband. In the field, the close connection to criminal work has many benefits."

Kohl's bill is co-sponsored by the Senate Judiciary Committee's Chairman Patrick Leahy (D-VT) and Ranking Member Arlen Specter (R-PA), and Committee members Charles Schumer (D-NY) and Jon Kyl (R-AZ).

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