Chinese made fake Marlboro cigarettes showing up around Wasington, D.C..

July 15, 2009 - Federal authorities seized 12 million counterfeit Marlboro cigarettes made in China from a Springfield, Virginia storage unit, the largest bogus cigarette bust in the region's history, a Bureau of Alcohol, Tobacco, Firearms (ATF) and Explosives spokesman told The Washington Examiner.

Back in July 2008 we warned that Philip Morris International (PMI) was making a mistake when it licensed production of its Marlboro cigarettes to China National Tobacco. Changsha Cigarette Factory of China Tobacco Hunan Industrial Corporation has established a partnership with Philip Morris to produce Marlboro cigarettes for the latter company. The factory plans to produce 1,000 cases of Marlboro cigarettes in August, 2008. There's a strong possibility that fake Marlboro cigarettes just might flood the world markets.

Agents came across the 60,000 packs of smokes July 2 after they arrested Bing Feng Mai who had agreed to trade the counterfeit cigarettes for untaxed cigarettes with an undercover ATF agent, court documents filed in Alexandria's federal court said. By then, the undercover agent had sold Mai $2 million of untaxed cigarettes over a period of four months, an ATF agent wrote in a sworn statement.

As taxes on cigarettes have climbed in some jurisdictions, the shipping of untaxed smokes has become big business, authorities say. For example, New York City slaps $1.50 onto the state's $2.75 cigarette tax, and in Fairfax County the state and local tax combined is 80 cents.

Cigarette counterfeiting is immensely lucrative, with profits easily rivaling those of the narcotics trade. While a pack of fake Marlboros costs 20 cents to make in China, it can fetch up to 20 times that amount in the United States. And though a drug trafficker might land a life sentence if caught, a cigarette counterfeiter usually receives a comparative slap on the wrist—a handful of years in jail or possibly a fine. (China's Marlboro Country The strange, underground world of counterfeit cigarettes by Te-Ping Chen, Slate, 6/29/2009.)

Meanwhile, Chinese counterfeiters have seized the opportunity for profit and have been flooding the market with hundreds of millions of fake cigarettes, according to U.S. Customs estimates.

"Counterfeit cigarettes are a big problem," said ATF spokesman Mike Campbell. "We know what goes into our cigarettes, but we don't know what goes into the counterfeits." Campbell said the fakes can be poisonous and often contain higher levels of harmful chemicals than their legitimate counterparts do.

The cigarettes Mai was holding in two public storage units in Springfield were Marlboro Reds and they were determined to be counterfeit by analysts in a Philip Morris lab, the statement said. The fakes were found in large cardboard boxes with "Made in China" printed on the side.

The undercover agent told Mai he wanted to sell the bogus smokes in Puerto Rico and asked if it would be possible to purchase 60,000 cartons every six months, documents said. Mai reportedly responded that it would be "easy" to keep the agent supplied, and added that he could have the cigarettes sent directly from China to Puerto Rico.

Mai is being held without bail, court records show.

Reference: ATF seizes 12 million counterfeit Marlboro cigarettes made in China by Freeman Klopott, Washington Examiner Staff Writer, 7/14/2009.