Office of the State Treasurer


January 11, 2006

Kathy Hennessy
(609) 984-7110

Treasurer Targets Illegal Practice of Cigarette 'Rebating'

 TRENTON -- State Treasurer John E. McCormac and Division of Taxation Director Robert K. Thompson announced today that the State is taking enforcement action against a licensed cigarette distributor suspected of offering illegal "rebates" to its cigarette customers.

The practice of rebating is a violation of the N.J. Unfair Cigarette Sales Act in which licensed cigarette suppliers attempt to undermine their competition by selling cartons of cigarettes below the State Minimum Price. Often these rebates are in the form of money or other items of value, commensurate with the number of cartons purchased and are provided after the initial transaction. This practice circumvents the laws enacted to ensure fair competition and protect small businesses in New Jersey 's regulated cigarette industry.

Following an investigation by the NJ Treasury's Division of Taxation, Office of Criminal Investigation, Joseph Freidman and Sons of NJ, Inc., a cigarette wholesale distributor located in Pennsauken , was charged on January 6 in Pine Hill Municipal Court with offering and giving Cigarette Rebates, an unlawful act under the provisions of N.J.S.A. 56:7-20c. The distributor faces a $1,000 fine and a 20 day suspension of their New Jersey Cigarette Distributors License. A hearing in this matter is scheduled for February 14, 2006.

In February of 2005, the Division of Taxation notified each licensee at all levels of the cigarette industry in New Jersey that the illegal practice of rebating in connection with the sale of cigarettes will not be tolerated.

"Rebating provides an unfair advantage to those offering such rebates and harms those businesses that comply with the law," said Treasurer McCormac.

Director Thompson said the legal action announced today is part of the State's comprehensive enforcement program. "The Division takes this matter very seriously and we will not hesitate to suspend or revoke a license of any licensee who violates the law," Thompson said.

Anyone with information regarding violations of the Unfair Cigarette Sales Act or the Cigarette Tax Act are encouraged to call the Division of Taxation, Office of Criminal Investigation's Tobacco Interdiction Program (TIP) Hotline at (609) 984-291-7153.

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