(Bloomberg) -- FedEx Ground Package System Inc. agreed to pay $35 million to resolve a lawsuit over illegal cigarette deliveries to residents in New York, three months after a judge said the company appeared to have knowingly violated a federal trafficking law.
The settlement resolves allegations in three lawsuits that the company, a unit of FedEx Corp., partnered with cigarette trafficking businesses, including “Cigarettes Direct To You,” to illegally ship hundreds of thousands of untaxed cigarettes, New York Attorney General Letitia James said Monday in a statement. The state says cigarette taxes are the most effective means of deterring smoking.
“Not only did FedEx violate laws created to protect the public from the serious health risks associated with cigarettes, but they also swindled New York City and state out of millions of dollars in tax revenue,” James said in the statement.
FedEx’s press office didn’t immediately respond to a request for comment.
Under the agreement, FedEx agreed to halt domestic shipments of tobacco products, including cigarettes, and implement annual training on tobacco shipments. The company also agreed to be advised and monitored by an independent consultant.
To contact the reporter on this story: Erik Larson in New York at elarson4@bloomberg.net
To contact the editors responsible for this story: David Glovin at dglovin@bloomberg.net, Steve Stroth
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