Operation by the Tax Agency and the Civil Guard

• Six people arrested in the 'Picado II' operation, a continuation of the one carried out in November, which resulted in the arrest of 11 people and the seizure of 41 tons of tobacco
• The organization manufactured tobacco in three warehouses in Almería and distributed it to mainly Andalusian companies and to individuals throughout Spain by courier service.
• They had a large customer base that they attracted through their website, whose server was located in France, and they had tutorials on the web to show how to roll cigarettes.
• A large quantity of untubered cigarettes, 20 cutting, tube-forming and weighing machines, containers of flavouring products to simulate the taste of certain brands, vehicles and numerous documents and invoices have been seized.

March 11, 2016.- A joint investigation carried out by the Tax Agency and the Civil Guard, within the framework of the so-called operation 'Picado II', has led to the dismantling of the storage and distribution infrastructure of a tobacco smuggling organization, leading to the arrest of six people and the seizure of 88,074 kilos of tobacco valued at 14 million euros, which is the largest seizure of rolling tobacco to date in Spain, doubling the intervention carried out in November last year when 41,500 kilos of rolling tobacco were seized.

Both the investigations that led to that arrest and the current ones have been carried out in a coordinated manner by the Customs Surveillance Unit of the Tax Agency in Granada and the Judicial Police Unit of the Civil Guard in Baeza (Jaén), and present similar patterns, with a link between both networks existing, prior to the dismantling of the first.

As on that occasion, the actions were initiated after the Tobacco Shops Association of Jaén became aware of the unjustified decline in tobacco sales.

Investigators confirmed the illegal circulation and sale of bags of tubed cigarettes sold without complying with the mandatory health requirements, and found that these cigarettes were distributed using a scheme identical to that of the network dismantled in November, through their publication on certain websites that offer this type of tobacco for smoking.

Hidden manufacturing activity

The scheme detected was based on a company that acquired and transformed tobacco leaves, facilitating the cut tobacco for other companies and individuals, pretending to be a mere wholesale marketer of unpackaged leaves intended for consumption other than being smoked as tobacco products.

Since this mere distribution did not involve manufacturing or evidence of its destination for the tobacco products market, the company managed to avoid the control of the competent health, tax and product regulatory authorities, who would have intervened in its activity if they had known that the purpose of the product was to be consumed as tobacco, as was revealed after the proceedings.

The researchers found that this company, in a short period of time, significantly increased its purchases of unmanufactured tobacco products from domestic producers, as well as from other countries such as Poland, Estonia and Bulgaria.

The network had a large and growing customer base that was acquired through its website, whose server was located in France. They even posted several tutorials online showing how to roll cigarettes.

Ships in Almeria

Following numerous surveillance and follow-ups of suspicious targets, investigators from the Tax Agency and the Civil Guard detected three warehouses, one in Benahadux (Almería) and two in Huércal de Almería (Almería) where tobacco manufacturing work was being carried out to convert it into a product suitable for smoking.

The goods were subsequently distributed to other companies, mainly in Andalusia, all of them recently created, and to individuals throughout Spain through courier companies.

This fraudulent conversion of tobacco leaves into a product that, without the need for sophisticated industrial manipulation, is transformed into tobacco suitable for consumption, was carried out in violation of the legal and health requirements established by law, thereby incurring the organization in alleged crimes of Smuggling, against Public Health and against the Public Treasury.

Tobacco valued at 14 million euros

Following the appropriate checks, on the 2nd of last month, searches were carried out in two premises in Linares and one in Santiago de Pontones (Jaén) with the seizure of 580 and 1,490 kilos of tobacco products, respectively, resulting in the arrest of four people.

The next day, the warehouses in Almería were searched, resulting in the seizure of 86,000 kilos of tobacco products and the arrest of two other people. In the first warehouse, where there was various processing machinery, there were several people working, from whom statements have been taken.

In addition to the tobacco, the searches also seized a large quantity of untubered cigarettes, 11 cutting machines, five tube-cutting machines, four weighing machines and packaging bags of different weights, as well as several containers of flavouring products to simulate the flavour of certain brands of tobacco without health registration, two vans and a vehicle belonging to the organisation, numerous documents and invoices.

This is the largest seizure of this type of tobacco work carried out so far in Spain and it has dismantled the structure that had attempted to replace the one dismantled in November. The quantity seized is equivalent to approximately more than eight million packets of cigarettes.

Both the detainees and the seized goods have been placed at the disposal of the Court of Instruction No. 1 of Almería. The investigation is still ongoing, so further arrests cannot be ruled out.

This operation was carried out within the framework of collaboration that the Tax Agency and the Civil Guard have maintained for the suppression of tobacco smuggling and in the fight against fraud in electronic commerce.

As a result of this collaboration between the Civil Guard and the Tax Agency, throughout the last fiscal year 2015, the positive effects on the evolution of the market for these products in Andalusia have been observed, as reflected in the increases in sales in tobacconists recorded by the Tobacco Market Commissioner in the Andalusian provinces.

Thus, in the period January-December 2015, tobacco shop sales have grown compared to the previous year by 1.49% in Huelva, 5.6% in Cadiz, 7.16% in Malaga, 2.96% in Seville, 1.66% in Granada and 0.25% in Almeria, compared to the decline in Jaen (-5.11%) and Cordoba (-0.91%), the latter two provinces where the area of influence of the organisation dismantled last November was concentrated and the one now dismantled in 'Picado II'.