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TRENTON
-- Attorney General Anne Milgram announced
today that the state has prevailed on all
counts of a lawsuit it filed a year ago charging
New-York-based cigarette seller Red Jacket
Tobacco with illegal business practices related
to the advertising and sale, by mail order,
of “tax free” cigarettes in New
Jersey.
In
a decision issued Friday, Superior Court Judge
Maria M. Sypek ordered Red Jacket and its
owner, Lesley A. Hoag, to pay more than $760,000
in penalties, costs and fees requested by
the Division of Consumer Affairs and the Division
of Taxation within the Department of Treasury,
and permanently enjoined the company from
doing business as it has been doing.
Judge
Sypek found that Red Jacket violated state
laws by selling cigarettes in New Jersey without
a license, and by selling cigarettes not listed
in the New Jersey Attorney General Tobacco
Manufacturer’s Directory.
“This
is an important outcome for New Jersey consumers
and taxpayers,” said Attorney General
Milgram. “Through our lawsuit, we have
put a stop to tobacco sales practices that
sought to evade taxation. We have also held
Red Jacket accountable for deceiving New Jersey
consumers with phony enticements for ‘tax
free’ product, and for selling tobacco
by mail with no regard for whether buyers
were of legal age.”
In
addition to finding that Red Jacket violated
the law by selling cigarettes not on the Attorney
General’s Directory, and by selling
cigarettes in New Jersey without being licensed
either as a tobacco distributor or wholesaler,
the judge also found that Red Jacket violated
the state’s Consumer Fraud Act. Specifically,
she found that Red Jacket sent New Jersey
consumers 60,000 Money Mailer advertisements
that contained misrepresentations.
Those misrepresentations included statements
that the cigarettes offered for sale were
“tax free” when, in fact, taxes
are due on them. Red Jacket also advertised
that, “If we don’t have it, we
can order it” when, by law, only cigarettes
on the Attorney General’s Directory
can be sold in New Jersey.
In
ruling in favor of the state on all five counts
of its lawsuit, Judge Sypek also found that
Red Jacket engaged in unconscionable business
practices including, but not limited to, selling
cigarettes without tax stamps and selling
cigarettes to a consumer without verifying
that the consumer is at least 19 years of
age.
The
state’s original lawsuit was filed on
October 10, 2008 following an undercover investigation
by the Division of Consumer Affairs.
On
two occasions, a Division investigator purchased
cigarettes from Red Jacket Tobacco, which
lists its address as a post office box in
Salamanca, N.Y., by calling the telephone
number on defendants’ Money Mailer advertisement.
The advertisement had been mailed on three
occasions to at least 20,000 New Jersey consumers.
Several
cartons of the cigarettes bought by the investigator
were brands that are not on the Attorney General’s
Directory, including the 305’s brand
manufactured by Florida-based Dosal Tobacco
Corporation.
Altogether, Judge Sypek imposed a total of
$721,500 in penalties against Red Jacket and
its owner, Hoag. The court also awarded the
state $38,245 in attorneys’ fees and
$3,031 to cover the cost of the investigation.
The Red Jacket litigation was handled on behalf
of the state by Deputy Attorney General Cathy
A. Tully.
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