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Tobacco Companies Face Charges Of Racketeering Judge Lets Florida Try To Recover Billions Under Rico Statutes

Sat., Dec. 14, 1996

Comparing tobacco companies to the cocaine cartel, a Florida judge ruled Friday that the nation’s largest cigarette manufacturers must face charges commonly associated with organized crime: racketeering.

Although 16 other states also are suing tobacco firms, this is the first time in the nation a judge authorized charges of racketeering. If Florida proves those charges, it could be awarded tripled damages - $7.2 billion.

Circuit Judge Harold Cohen of Palm Beach County said Florida, seeking to recover billions of dollars it spent on people made ill by tobacco, can attempt to prove that the industry violated so-called RICO statutes against organized and ongoing illegitimate enterprises.

“The case at bar is certainly not one alleging ‘garden variety’ business fraud,” Cohen said. “The state alleges a parade of horribles that would seem to make a case for the ‘mother of all RICO actions’ …

“No cocaine cartel, gambling empire or white collar scheme has even approached the damage allegedly done to the state as alleged in the plaintiffs’ case.”

Philip Morris USA, one of the defendants in the case, issued a statement that called the RICO allegations “an act of desperation” by the state.

“These claims are not true, and that will become evident as the case progresses,” said Gregory Little, the company’s senior assistant general counsel.

He declined to comment further. Tobacco industry lawyers Stephen Krigbaum in West Palm Beach and Alan Sundberg in Tallahassee, Fla., did not return phone calls.

In the suit, scheduled for jury trial in August, Florida is suing 21 major tobacco companies to retrieve $2.4 billion in Medicaid and other taxpayer funds spent to treat sick smokers since July 1994.

The judge noted the “stigma an alleged RICO violation carries with it,” and he cautioned that “allegations made and clear and convincing proof are two very different things.”

Nevertheless, the state’s lawyers were delighted.

“This is mindboggling,” said Tim Howard, a Tallahassee lawyer who is coordinating the state’s case. “This ruling will make the earth shake.

“It will shake the bedrock of the American tobacco industry, which will soon have to face a penalty for addicting and killing our citizens.”

Anti-tobacco activists also hailed the ruling. The charges involve civil rather than criminal allegations and penalties, but many activists brushed aside any distinction.

“In our view, it is criminal to be getting away with murder, which is exactly what these tobacco people have been doing for so many years,” said Carol Ruggeri, assistant executive director of the American Lung Association in Fort Lauderdale, Fla. “Now, somebody is holding their feet to the fire.”

The laws in question prohibit activity by “racketeer influenced and corrupt organizations,” thus the term “RICO.” At federal and state levels and in criminal or civil court, RICO statutes are virtually always employed to battle and punish alleged organized crime.

Florida, in its case, asserts that the term “organized crime” fits the tobacco industry, which it calls “the Tobacco Racketeering Enterprise.”

State officials claim that the industry knowingly deceived the public about the addictive and hazardous nature of tobacco, illegally marketed its products to children, and lied to federal officials.

“It is difficult to imagine a more appropriate use of RICO than to remedy the avaricious abuses of the Tobacco Racketeering Enterprise,” the state says in a legal brief.

“It addicts millions and kills hundreds of thousands every year with its product while reaping profits in the billions. Surely no traditional organized crime family can boast of a more ambitious or lucrative scheme, or of a better organized enterprise, or of a smooth(er) political machine.”

Cohen, the judge, also warned lawyers that he was determined to begin the trial on schedule in August. Each side has at least 10 lawyers, and many more are monitoring the case.

“The number of lawyers working on this one case for the defense (and for the state) is mindboggling,” he said. “To claim a lack of ability to prepare between now and August 1997 strains this court’s credulity.”

Two other tobacco cases gaining national prominence - class actions focusing on the hazards of secondhand smoke and addiction - also are moving toward trial next year in Florida. Both will be heard in Miami and both were filed by attorney Stanley Rosenblatt.

Tags: ethics

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