Updated, 1:31 p.m. |
FedEx’s ground-carrier division will pay New York City $2.4 million to settle a claim that the shipping giant delivered untaxed cigarettes to consumers in New York, the city announced Friday.
From 2006 to 2009, the city said, FedEx Ground delivered about 160,000 cartons of cigarettes that New Yorkers had ordered from CigarettesDirect2U.com, a site based in Kentucky that was shut down in 2009 by the federal authorities for violating statutes on tobacco sales.
The $2.4 million in damages is equivalent to the $15-a-carton tax that should have been paid to the city on those sales, said Eric Proshansky, a lawyer for the city.
FedEx Ground said in a statement that it had “admitted no wrongdoing, but agreed to the settlement to avoid what would have certainly been a prolonged and much more expensive resolution process.” It added, “We fully support New York City’s efforts in this matter and are cooperating with New York City to ensure that shippers comply with our policy against illegal tobacco shipments.”
The city also has a pending suit against CigarettesDirect2U.com itself. The company sold 400,000 cartons to city residents before it was forced to fold, Mr. Proshansky said.
The federal Contraband Cigarette Trafficking Act forbids the delivery of untaxed cigarettes to anyone other than licensed stamping agents, such as cigarette wholesalers.