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US: State sues tobacco company that 'cheated' Florida out of $17 million

by Missy StoddardSouth Florida Sun-Sentinel
May 17th, 2006

One of the country's largest tobacco companies has cheated the state of Florida out of $17 million, according to Attorney General Charlie Crist, and on Wednesday the state filed a lawsuit seeking to get what it's owed.

In 1997, the tobacco industry reached a $13 billion settlement with the state of Florida, which sued to recover tax dollars spent on medical care for poor people for smoking-related illnesses, such as emphysema. To date, Florida has received more than $4 billion from the settlement. But the state is accusing Brown & Williamson Holding, Inc. of manufacturing cigarettes for Star Tobacco and Pharmaceuticals and not reporting the cigarettes sales to the state, allegedly depriving Florida of $17 million.

According to the lawsuit, the tobacco giant failed to report the sale and shipment of more than 7 billion cigarettes sold under the brand names Gunsmoke and Vegas. Wednesday's filing also asks the court to hold the company in contempt and to order an accounting of Brown & Williamson.

Brown & Williamson, known for its Kool and Lucky Strike brands, merged with Winston Salem, N.C. based RJ Reynolds in 2004. Brown & Williamson contracted with Star Tobacco and Pharmaceuticals, but Star sold and distributed the cigarettes, according to David Howard, spokesman for RJ Reynolds.

"Therefore, the decision was made that Brown & Williamson didn't have to report that as volume of its own," Howard said. "All they did was make the product."

The state of Texas filed a similar suit and a judge ruled in the tobacco company's favor at the June 2004 trial, Howard said. An appeal is pending and oral arguments are scheduled in the next three weeks. The language in both the Florida and Texas settlements is identical, Howard said, so he feels confident the tobacco company will prevail in the Florida suit as well.

Crist, who personally filed the suit Wednesday in Palm Beach County Circuit Court, has a different take.

"Those that are culpable should pay and do the right thing," he said.

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