New York officials Wednesday charged shipping giant UPS with delivering millions of contraband cigarettes that evaded tens of millions of dollars in state taxes.
Between 2010 and 2014, UPS is accused of making more than 78,500 cigarette shipments on behalf of illegal cigarette vendors.
The suit charges UPS of running afoul of New York's tightly-regulated cigarette sales, which are limited to licensed wholesale dealers.
Dealers must affix a stamp on each package attesting they have paid state excise taxes before they are allowed into the New York market.
The state tax is set high to discourage consumption, but that makes it lucrative for people to smuggle in cigarettes from other low-tax states.
A New York investigation found UPS "knowingly" shipped thousands of cartons of unstamped cigarettes to unlicensed wholesalers or retailers, the complaint said.
New York officials said the company engaged in a "pattern of racketeering activity with various cigarette dealers to traffic contraband cigarettes."
That also included delivering cigarettes from the unlicensed retailers to New York residents, the complaint said.
The shipments resulted in a direct tax loss of $29.7 million to New York state and $4.7 million to New York City.
The suit seeks damages of $180 million, said New York Attorney General Eric Schneiderman and Zachary Carter, who heads New York City's law department.
"UPS has deliberately turned a blind eye to the fact that millions of dollars' worth of untaxed cigarettes are shipped each year through its facilities," Carter said.
"Today's action is intended to take the profit out of this enterprise for UPS and to seek penalties sufficient to discourage other common carriers from facilitating the illegal sale and delivery of untaxed cigarettes."
The case is similar to a $70 million New York suit filed against FedEx in 2014.
In a statement to AFP, UPS said it "denies allegations... that we have knowingly shipped cigarettes to consumers."
"Since 2005, UPS has continued to work with regulators on this issue. In fact, UPS agreed to stop delivering cigarettes to consumers nationwide at that time -- a policy that went beyond the requirements of federal and state law."