Cops crack contraband tobacco ring in Quebec, Nova Scotia

Police arrested14 people and seized nearly 21 million illegal cigarettes in large-scale raids across Eastern Canada aimed at a major contraband ring that peddled American tobacco procured through two Mohawk communities.

Police officers in Montreal and Nova Scotia also seized video lottery machines, $20,000 in cash, cigarette cartonsand a multimillion-dollar home during theraids, carried out Wednesday morning in both provinces.

Fourteen people were arrested including a man and a woman who allegedly masterminded the contraband ring in Montreal, and two men in Cape Breton.

The ring allegedly obtained tobacco leaves from North and South Carolina through the Mohawk communities of Akwesasne and Kahnawake, then manufactured cigarettes packaged in resealable plastic bags and cartons, said Sgt. Michael Harvey of the Central St. Lawrence Valley RCMP detachment.

"The [cigarettes] were transferred across the St. Lawrence River, and delivered to smokeshacks in a lot of aboriginal communities, and in this case, [they] continued on to Nova Scotia," he said at a Montreal news conference Wednesday.

An organized crime network sold the cigarettes in the Maritimes, and funnelled profits back to Montreal where they were laundered through private ATM machines and video lottery terminals.

Tobacco smuggling is not a victimless crime, contrary to common belief, saidNova Scotia RCMP spokesman Sgt. Mark Gallagher.

"Some of the victims are people that would receive some of the benefits from the tax dollars. You know, you're looking at health care, you're looking at infrastructure when you're talking about transportation or schools," he told reporters in Nova Scotia.

"That's a lot of money taken away from those sources, from people who can actually use it."

Beaconsfield home used as transfer point

Revenue Canada estimates the ring cost at least $6 million in lost tax revenue.

Beaconsfield, Que.,residents Gerald O'Reilly, 74,and Felicitas O'Reilly, 71, the alleged ringleaders, were arrested in their home Wednesday morning and charged with fraud, money-laundering and profiting from organized crime.

The home was allegedly used as atransfer point for the illegal cigarettes.

Two Cape Breton men face smuggling and tax charges in Quebec, where they are being detained by authorities.

The 18-month investigation involved officers with RCMP, Quebec provincial police, Montreal police, Nova Scotia authorities and Revenue Canada agents.

Policehave arrest warrants outstandingfor six people.

Authorities said contraband tobaccois a growing industry in Canada.

Last year, police seized 30 per cent more illegal tobacco than in 1994, which was a record year for contraband crackdowns.

In 1994, the federal government lowered tobacco taxes in reaction to the spike in contraband activity.