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June/July
2002

Counterfeits: A Path to Nowhere

Counterfeit merchandise is an anathema in any prestige merchandise industry, and the very best premium cigars are as tantalizing to counterfeiters as Gucci handbags or Rolex watches. The harm it causes to the cigar trade is well documented: as a consumable product, a cigar is only as good as the last one you smoked, and cigars that don't live up to their promise leave the consumer disenchanted. The smoker suffers, the retailer may loose future sales, the brand suffers, and ultimately so does the manufacturer. But while lost business and lost profits can ripple through this supply chain, some manufacturers stress that it's not really about the money.

Wayne Suarez, an executive with Tabacalera A. Fuente y Cia., whose limited-production Fuente Fuente Opus X cigars are a perennial favorite in the black market, says the dollar value of lost sales to counterfeiters is irrelevant to the Fuente family - it's the harm to their reputation that frustrates them, the knowledge that an unsuspecting smoker could be disappointed in their product, who may not even know they were smoking a fake.

The farther back one goes in the supply chain, the less reason there is to be duped: retailers offered fantastic deals on expensive merchandise from less-than-prominent distributors really have no justification to cry "foul" - let's get real, cigars rarely fall of the back of a truck, and if all of the reasons cited in Bob Ashley feature story on counterfeit cigars doesn't drive the point home (Counterfeits, Fakes, & Infringers, pg. 38), then maybe a deeper secret about counterfeit merchandise should: the folks behind it probably aren't looking for a creative way to put bread on the family table. For counterfeiters, it's all about the money. They're criminals, and whenever one is tempted by the chance to make a quick buck in life, there's also the burden of contemplating all of the consequences. In the world of tobacco, the black market trade in cigars in nothing compared to cigarettes, and the truth can be astonishing (attention tax-crazed legislators).

Consider the guilty plea of a Lebanon-born naturalized U.S. citizen in February on charges of conspiracy to provide material support to the Lebanese militant group Hezbollah.

"The object of the conspiracy was to provide currency, financial services, training, false documentation and identification, communications equipment, explosives, and other physical assets to Hezbollah and its operatives, in order to facilitate its violent attacks," the indictment read.

What's the connection? The charges stemmed from an investigation into a group that was accused of smuggling millions of dollars worth of cheap cigarettes out of North Carolina to resell in states where higher taxes push the price up, then funneling the profits to Hezbollah. Charges were levied against two more men, in addition to three previous charges last year. An attorney in the case said there's only been eight people nationwide who have been charged with providing material support to a militant organization, and six of them were part of this investigation.

In a post 9/11 America, we've all been challenged to be more diligent, more discerning, more observant. With an annual RTDA trade show overflowing with above-board merchandise, there's no reason to waste one's time with fringe items, and every reason to keep the motives of any criminal machine in mind.

E. Edward "Ted" Hoyt III
Editor