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December 19, 2004
        Exchanging Cigarettes For Bagels
        By Gina Kolata

OBESITY is considered a major public health problem today, but a number of scientists are coming to see it as a comparative blessing, given the alternative. These public heath experts believe, in effect, that America may have traded smoking - a truly lethal habit - for the lesser deadliness of eating too much.

The story of this trade-off can be seen in the data. From 1973 until 1983, Americans were actually growing thinner. During that period, the average weight of middle-aged men fell about two pounds, while that of middle-aged women fell nearly three pounds.

Then the trend reversed: from 1980 to 2000, the average weight of Americans rose by nearly 20 pounds. Everyone got heavier, said Dr. David Williamson, a statistician at the Centers for Disease Control and Prevention. "Competitive cyclists weigh more than they did 20, 30 years ago; HIV patients weigh more."

Yet the nation also is healthier. Life expectancy has gone up by more than six years over the past three decades, and heart disease, long the major killer, is on the wane.

A big reason Americans are fatter and healthier, Dr. Williamson believes, may be the steep decline in cigarette smoking.

If he is right, the rise in obesity is a classic case of unintended consequences - one of a long list of medical and public health interventions whose full effects could not be foreseen.

For example, Americans once died in great numbers in infancy, or childhood, and women died in childbirth from infectious diseases. Now they don't - a triumph of public health. But as a consequence, the population is growing ever older, which is in turn creating a host of profound new public health challenges.

"We're just now trying to deal with the medical consequences" of an aging nation, Dr. Williamson said.

The connection between smoking and obesity is not yet proven, but the statistical correlations are there. From 1980 to 2000 - as body weight was rising - smoking rates fell by 27 percent in the nation as a whole and by 38 percent among middle-aged Americans. (Today, smoking rates have leveled off, Dr. Williamson notes, and there are signs that the obesity rates are leveling off, too.)

"There is no question that smoking affects the epidemic" of obesity, said Dr. Neil Grunberg, a psychologist and neuroscientist at the Uniformed Services University in Bethesda, Md.

Smokers who quit, he noted, gain about 10 to 12 pounds on average, in part because they crave sweet foods and carbohydrates. In addition, Dr. Grunberg said, smokers' metabolism slows down after they quit.

Dr. Michael Grossman, an economist, and his colleagues at the Graduate Center of the City University of New York have analyzed the economic causes of obesity. They have calculated, based on cigarette tax receipts, that for every 10 percent increase in the price of cigarettes, the number of obese people rises 2 percent. Smoking cessation, they estimate, accounted for 20 percent of the obesity increase in this country.

Dr. Katherine Flegal, a statistician at the National Center for Health Statistics, said the effect may be even bigger, once scientists add the upward effect on average weight of the growth in the number of Americans who, because of the success of the antismoking movement, never smoked in the first place.

One possible explanation, Dr. Williamson said, is that as the number of smokers started to plummet, the demand for calories went up and the food industry began offering and advertising larger portions and more snack foods. "The food industry in general subconsciously picked up on this and went to town," he said. Soon overeating more became the norm, for everyone, even children.

Over the same period, said Dr. David Musto, a historian of science at Yale, America's preoccupation with healthy foods - oat bran, broccoli, fish, etc. - also resulted in what he called a "barrage" of pro-eating commercial messages.

In the 1960's, Dr. Musto said, it was socially imperative to smoke. "A man had to know his brand" of cigarettes, he said. In much the same way, he said, it became socially imperative to eat the right foods - those supposed to be good for you.

"The process of becoming obese is greatly facilitated by a search for health and healthy foods," Dr. Musto said. "You've read that something fights Alzheimer's or lowers your blood pressure, so why shouldn't you have a healthy portion?"

It all makes for an odd and not entirely satisfactory coda to the antismoking crusade. But on balance, Dr. Williamson points out, a nation with an expanding waistline is in far better shape than one with a cigarette in its mouth. Obesity may be bad, he said, but the health effects of smoking are far worse.

"I sure would like for people not to be obese," Dr. Williamson said. But, he added, if they got that way because they don't smoke, then "maybe the sky isn't falling quite as much as we think it is."

November 30, 2004
        Review Finds Weaknesses in Program to Curb Smoking
        By Marc Santora

An independent review of the New York State Department of Health's $50 million program to reduce smoking found that it has repeatedly failed to spend all of the money available and has been unable to devise an advertising strategy to encourage people not to smoke.

The review, conducted by a research company hired by the Health Department and released on the department's Web site last Wednesday (www.health.state.ny.us), is three years overdue. While praising the strategic goals of the tobacco program and noting the success of higher taxes and tougher smoking laws in getting people to quit, the report states bluntly, "Funding may be insufficient to get the job done."

The report does note, however, that roughly 188,000 fewer New Yorkers are smoking today than there were in 2000, largely because of cigarette tax increases. It also finds that the number of New Yorkers supporting the state law banning smoking in most indoor spaces jumped from to 74 percent from 64 percent from 2003 to 2004. Even support among smokers for the law has grown to 37 percent from 26 percent.

New York formed the current Tobacco Review Program in 2000 as a requirement of the state's Health Care Reform Act. The law came on the heels of a legal victory by a group of states against the tobacco companies. New York's share of that settlement, in addition to revenues from increased taxes on cigarettes, was used to reshape how health care was financed in 2000. In 2003-4, money from taxes and the settlement added $5.7 billion to the state's coffers.

In rewriting the health care law, lawmakers required that New York follow the model of states like Florida and California and set up a tobacco control board. Although the Centers for Disease Control and Prevention in Atlanta recommends that New York spend $98 million annually on the effort, the program has had roughly $50 million a year available.

But the state spent $31 million in 2003, and $39 million the year before. In the four years since the program started, New York's average spending per capita ranked 28th nationally, according to data from the Campaign for Tobacco-Free Kids cited in the report. State health officials responded that in overall dollars, they spend more than any other state.

The goals of the program are to get people to quit smoking, decrease the social acceptability of smoking, keep young people from getting hooked and eliminate the exposure of nonsmokers to secondhand smoke.

While progress has been made in those areas, the report says that tougher smoking laws and higher taxes are the principal reasons, not the state's program.

William C. Van Slyke, a spokesman for the Health Department, said that the reasons for both the delay in the report and the shortfall in spending have to do with the complexity of such a large-scale program.

"Building a comprehensive program takes time, as does developing the best method for truly, independently evaluating that program," Mr. Van Slyke said.

He responded to the problems cited in the report by saying: "We don't embrace every criticism. However, it does provide us with suggestions that we think will make the program even better."

The report, 286 pages long, was completed by RTI International, an independent nonprofit research company with headquarters in North Carolina.

Russell Sciandra, the director for the Center for a Tobacco Free New York, said that the general underfinancing of the program was troublesome, but the fact that the state had failed to even spend the money allocated to it was unacceptable.

"The program, on par, is well designed," Mr. Sciandra said. "It is on execution that it is falling down."

The report is especially critical of the program's advertising efforts, citing two key weaknesses: "an ineffective countermarketing program and 'political interference' in program activities, especially countermarketing," referring to efforts to counter cigarette advertising.

Given that the tobacco industry spent $12.5 billion on domestic cigarette advertising and marketing in 2002, the report does not suggest the state compete dollar for dollar. Rather, it suggests that limited resources should be used more effectively.

Antismoking advocates can take heart from data in the report showing that 58 percent of smokers want to quit in the next six months. But the report also finds that many will not have the assistance they need.

In a statewide survey cited in the report, 58 percent of smokers reported buying tax-free cigarettes at least once in the past year. One major source of tax-free cigarettes has been Indian reservations. Gov. George E. Pataki has staunchly resisted taxing Indian sales, recently vetoing a bill that would have mandated that the state do so.

October 28, 2004
        Big Tobacco Draws a Small but Dedicated Crowd to Trial
        By Michael Janofsky

WASHINGTON - "I'd now like to show you United States Exhibit 85,518," the Justice Department lawyer said Wednesday as the witness took a deep breath and waited for more questions.

And so it goes in the government's $280 billion racketeering trial against the tobacco industry: another witness, another exhibit. Lawyers from the Justice Department and the nation's leading cigarette companies have been at it six weeks now. They have examined 16 witnesses, and the government has put on barely a quarter of its case.

Judge Gladys Kessler of Federal District Court has given each side six months to convince her that the companies either have or have not conspired over 50 years to keep America smoking cigarettes and addicted.

So far Judge Kessler has shown remarkable endurance and attentiveness, which cannot be said for everybody in the courtroom. While a witness on Tuesday discussed the intricacies of secondhand smoke, a defense lawyer dozed off briefly. Otherwise, the trial has been notable for its steady if lumbering pace, with dozens of lawyers, volumes of exhibits and the occasional admonition from Judge Kessler, the sole finder of fact, to keep things moving along.

At this early juncture, the legal equivalent of the second inning, it is much too soon to gauge which side is winning. Nor does Judge Kessler betray her thoughts.

"It goes back and forth, depending on the witness and the attorney who is questioning the witness," said Mary Aronson, a litigation and public policy analyst who feeds her expertise in tobacco-related issues by attending court on most days.

Early in the trial, the courtroom was packed with spectators, most of them reporters and lawyers. Once the opening arguments ended, and the parade of witnesses began, the audience shrank to a smaller handful of lawyers, a reporter or two, Ms. Aronson and an Internet writer named Gene Borio, whose daily blog is available on www.tobaccoontrial .com.

As part of the case, an appeals court is expected to rule next month on whether the government has the right to "disgorge" money from the companies that the government says is the ill-gotten profit from the conspiracy. If the appeals court rules for the companies and the $280 billion is no longer an issue, it is doubtful even Mr. Borio will stick around.

For now, though, the sparse crowd is due, in part, to the unusual way the lawyers are building the record. Judge Kessler has asked that all direct testimony be submitted in writing before the witness appears. That means when a government witness finally takes the stand, a defense lawyer rises for cross-examination.

But it does not always work out that way, as the examination of John P. Rupp, an industry lawyer called by the government as an averse witness, showed after he took the stand on Wednesday. Sharon Eubanks, an assistant United States attorney, resumed the direct examination because Mr. Rupp had amended many of his original answers.

Ms. Eubanks used him to try to show how industry officials wanted to counteract growing concern in the 1980's that secondhand smoke caused illness.

She presented him with a series of industry documents, many of them bearing on efforts to seek out scientific analyses that would refute claims that secondhand smoke was harmful. One document was a memorandum from a 1987 conference that Mr. Rupp attended where somebody suggested that the industry "create a bigger monster - AIDS" to turn attention away from public alarm over secondhand smoke.

Nonsense, Mr. Rupp replied sharply, saying: "I cannot believe it was discussed at all. I can't believe anyone responded to that or took it seriously."

He described the discussion that produced such a notion as "a nutty exercise."

The line of questioning was part of the government's promise in opening arguments to build "seven pillars of fraud" that prove the conspiracy. The questioning of Mr. Rupp touched on two of them: trying to prove that the industry hid the adverse effects of secondhand smoke and trying to prove that the industry promoted "independent research" that the government contends was anything but.

For the government to prevail in a conspiracy case, it must prove that bad acts in the past presage bad acts in the future. For the companies to win, their lawyers have to convince Judge Kessler that the companies are model citizens, incapable of committing bad acts.

It is an enormous challenge for one arbiter to absorb so much material, but Judge Kessler seems game. She presides over court from an elevated desk, with two computer monitors, one for the instant transcription of testimony and the other for exhibits as they are displayed on a giant screen for everyone else. Behind her is a row of spiral binders with trial-related documents.

She cracks wise every now and again and never seems to get so immersed in trial minutiae to lose sight of larger issues. About an hour after Donald K. Hoel, a former tobacco industry lawyer, took the stand a week ago, Judge Kessler noticed that he looked ill.

"Are you all right?" she asked. When Mr. Hoel said no, she walked to his side, signaled for a court officer to summon help and cleared the courtroom. A few hours later, Mr. Hoel, who was 72, died at a local hospital of an aortic aneurysm.

The next day, Judge Kessler opened the proceedings by calling Mr. Hoel's death "sad, very sad" and offered condolences to his family through members of the defense team who knew them.

They acknowledged her sentiments, and the next witness was called to the stand.

September 26, 2004
        Indian Sales of Tobacco Face New Pressure
        By Eduardo Porter

IRVING, N.Y. - Many people would love to put Larry Ballagh out of business. All antismoking groups, for instance. The National Association of Convenience Stores, too.

New York lawmakers would happily close him down. So would the attorneys general of most states.

The reason for all this animosity is that Mr. Ballagh, a hefty 65-year-old of half-Irish, half-Seneca American Indian stock, sells cigarettes nationwide over the Internet, free of state excise and sales taxes that can add as much $3 a pack to the cost of smoking.

The bustle in his offices on the Cattaraugus territory of the Seneca reservation here attests to the brisk growth of his business. There's the new extension to the warehouse, the high stacks of cigarette cartons, the huge piles of empty "Priority Mail" boxes waiting to be loaded and dispatched.

But as his venture has grown, so has the opposition to his trade. Fast-growing online sales of untaxed cigarettes - available for less than $25 a carton over the Internet compared with about $65 in New York City - are provoking a stampede of protests from a disparate collection of antitobacco groups, cash-strapped state governments and local retailers. These groups are hard at work in the courts, legislatures and in Washington to try to end the practice.

Earlier this year, the New York state legislature passed a law intended to force collection of excise taxes on tobacco and fuel sold by Native Americans to non-Indians. New York City, which estimates it loses hundreds of millions of dollars a year from untaxed cigarettes, is cobbling together a legal strategy that it could use against Indian tribes by characterizing the Internet sales as mail fraud. The revenue department of Washington State - which has successfully sued nontribal online vendors - is mulling lawsuits against Indian retailers.

The campaign has marshaled forces on Capitol Hill as well. Last December, the Senate passed a bill to stamp out untaxed cigarette sales over the Internet, and the organization representing state attorneys general is urging the House to do the same.

The trade group for convenience stores, meanwhile, has been lobbying intently for a different House bill that would take a harsher stance, explicitly allowing states to take Indian nations to court.

The widespread government hostility, however, has not dented the Ballagh family business. "We are adding about 80 to 100 new customers a month," said Charles Ballagh, Larry Ballagh's son and partner. At that rate, their venture would double in size in about two years.

Larry Ballagh's business remains hard to crack because it operates behind tribal sovereignty. States are generally barred by treaties from taxing Indian tribes or enforcing other laws against their activities. Businesses operated by American Indians have long taken advantage of this protection to sell tax-free tobacco products in reservation shops to non-Indians.

But the Internet has allowed the Seneca entrepreneurs to take their business to a new level. That has intensified the debate over the legality of such commerce, which has taken off in recent years as many states have sharply increased taxes on cigarettes.

Today, Mr. Ballagh regularly advertises in "Pennysaver" shopping sheets in states with high excise taxes. From Web sites like Mr. Ballaghs's travelingsmoke.com, and others like Senecahawk.com and Senecatabacco.com, smokers can buy cartons of Marlboro and Camel for as little as $24.25, compared to about $58 in a Hoboken, N.J., convenience store and $49 at a supermarket in Seattle.

At least a decade worth of rulings, ranging up to the Supreme Court, have determined that while states cannot tax Indian commerce, they can collect taxes on purchases by non-Indians from Native American businesses. States have limited power to enforce these decisions, however. Some tribes in other parts of the country defused the issue by negotiating deals with state governments to collect tribal taxes and eliminate their retailers' competitive advantage.

By contrast, the 7,500 Seneca, most of them living on the Allegany and Cattaraugus reservations in western New York, have dug in their heels. "Cigarettes have raised our standard of living," said Rickey Armstrong Sr., the president of the Seneca nation.

Even armed with a favorable court decision, Gov. George E. Pataki pulled back from a New York State plan in 1997 to tax Indian sales of cigarettes and gas after Seneca tribal members blocked traffic on the main state highway near their reservation. "We were out there, nose to nose, with state troopers," Mr. Ballagh said.

The Seneca are prepared for a long fight. Besides their official legal status, they also claim to have a unique exemption from taxes written into their treaty with the United States in 1842. They have recently launched marketing campaigns and hired lobbyists in Washington and Albany to defend their position.

"Break a treaty, break a law," reads a billboard on State Highway 86 on the Allegany reservation.

There are no precise figures on the size of the online tobacco market, but it is clearly growing rapidly. A report by Robert Campagnino, an analyst for Prudential Securities, estimated that about 2 percent of the 20 billion packs of cigarettes sold in 2002 were purchased over the Internet; Mr. Campagnino said that the figure today is probably around 3 percent.

Six percent of New York City smokers buy their cigarettes online, according to a 2003 survey by the city's health department. Eric Proshansky, a lawyer for the city who has been pursuing online cigarette retailers, said that one large Internet operation sold 41 million cartons of cigarettes nationwide in a little over four years. Somewhat under 10 percent of those, he estimated, were sold in New York City, costing the city and state over $160 million in lost tax revenues.

Not all of these cigarettes come from Indian reservations. Non-Indian entrepreneurs in low-tax states like Virginia, where the excise tax on cigarettes is 20 cents a pack, have made a hefty profit selling cigarettes to smokers in high-tax states.

Foreign suppliers have also jumped into the business, shipping duty-free cigarettes to American customers. Officials in New York suspect that some non-Indian online retailers operate under the guise of Indian outfits. And illegal sales of untaxed cigarettes, run by criminal gangs, are not uncommon.

Yet sales from Indian reservations, particularly from the Seneca lands, clearly account for a big portion of the growing business. A study commissioned by the Seneca tribal government found that Seneca cigarette sales totaled $347 million last year. About 95 percent were sold via the Internet or phone; the balance was accounted for by sales from the smoke shops that dot Seneca lands.

And they are much harder to curb than non-Indian businesses. Washington State's attorney general has taken nontribal online cigarette retailers to court, but he has so far avoided suing Indian operations. "With tribal sellers, we have in the first instance taken a diplomatic, government-to-government approach," said David Horn, an assistant attorney general for the state.

Philip Morris has sued foreign and nontribal Internet tobacco retailers, but no Indian ones.

A project led by Kurt M. Ribisl of the University of North Carolina's School of Public Health found 725 English-language Web sites selling cigarettes last January. He tracked 403 to specific locations: 42 percent were American Indian sites, 33 percent nontribal sites in the United States and 25 percent foreign-based. Of the 168 Web sites operating from tribal lands, New York Seneca entrepreneurs ran at least 126.

Among the most vociferous opponents of the online retailers are the nation's 130,000 or so convenience stores; cigarettes account for about 40 percent of nongasoline sales. Stores along the borders of reservations have complained of the Indians' tax advantage for years. The Internet spread the pain.

"It changed the dynamic," said Lyle Beckwith, senior vice president for government relations at the National Association of Convenience Stores. "Now it affects retailers all over the country, not just in some states."

The amount of commerce bypassing state taxes is growing fast. Since 2002, 35 states have sharply increased their excise taxes to shore up their budgets and as a public health measure to encourage more smokers to quit.

Connecticut, for instance, increased its tobacco excise tax twice, from 61 cents to $1.51 a pack. In July, Michigan increased its tax from $1.25 to $2.

When taxes were raised in the past, most smokers would pay the increased price and keep smoking. Some quit. But today, according to a forthcoming research paper by Austan Goolsbee, an economist at the University of Chicago, and Joel Slemrod, a professor at the University of Michigan, many more smokers, rather than pay up or give up smoking, buy untaxed cigarettes online instead.

In 2002, New Jersey raised its tobacco excise tax from 80 cents to $1.50 a pack, one of the highest rates in the country at the time. The share of smokers who said they had bought cigarettes online jumped to 6.7 percent from 1.1 percent two years earlier, according to a survey by researchers at the University of Medicine and Dentistry of New Jersey.

In the end, though, the online tobacco business may be stamped out - or put under tighter control - by the combined weight of its opponents.

There is already a law on the books that could curtail the practice. The Jenkins Act requires retailers who ship cigarettes to smokers in other states to provide state governments with a list of their customers so they can collect excise taxes directly. Properly enforced, it would eliminate incentives to buy cigarettes online.

The law is mostly ignored by retailers, though, and rarely enforced by the federal government.

Last December, the Senate unanimously passed a bill to strengthen it by barring cigarettes from being mailed, along with other provisions. To obtain the support of Native American tribes, the bill explicitly said it would not affect Indian nations' sovereign status.

"We think it's a pretty good bill," said John Dossett, general counsel of the National Congress of American Indians. "There are sections in there that protect our interests."

But the legislation's future is uncertain. The House has failed to act on it. Carriers like U.P.S. oppose a provision requiring them to check whether a package includes tobacco. And the association of convenience stores, hoping to win support for a tougher bill, objects to the clause protecting Indian sovereignty.

"If you don't deal with the Indians,'' Mr. Beckwith said, "you don't solve the Internet tobacco problem."

September 14, 2004
        U.S. Court Considers a Once-and-for-All Tobacco Lawsuit
        By William Glaberson

The federal appeals court in New York is considering a case that could radically reshape the national legal battle over the health effects of cigarettes and could set the stage for the largest verdict ever against the tobacco industry.

A three-judge panel of the United States Court of Appeals for the Second Circuit is reviewing a novel and sharply controversial decision by a federal judge in Brooklyn, who ruled two years ago in a class-action suit that he would subject tobacco companies to a single national trial that would determine once and for all whether the companies should be assessed punitive damages for concealing the health hazards of smoking.

The judge, Jack B. Weinstein of United States District Court, said he would preside over a huge trial that would not evaluate individual claims for compensation, but would decide only whether the country's tobacco companies should be assessed punitive damages because of the harm done to millions of smokers and their survivors.

Saying "the time for bringing a close to tobacco litigation is nigh," Judge Weinstein said in court that his trial could bring a resolution of the tobacco legal wars that have inched along in the courts for decades. The trial he proposes, he said, "would be the end of punitive damages in Tobaccoland."

Verdicts assessing millions and sometimes billions of dollars in punitive damages, which are meant to punish and deter wrongdoing, have been the focus of furious complaints by industries in recent years and several critical rulings by the United States Supreme Court.

But lawyers with experience in tobacco cases say a national trial to determine punitive damages involving the claims of millions of smokers could invite jurors to hand down a verdict of unprecedented size. In a case involving claims by smokers in Florida alone, a jury in 2000 awarded $145 billion in punitive damages to the plaintiffs. The award was overturned by an intermediate appeals court, and the appeal process is continuing.

Though the Brooklyn case has attracted little public notice, it has drawn wide attention among corporations nationwide because of the impact it may have on damage suits against many other industries. Many groups, including the Chamber of Commerce and the National Association of Manufacturers, have submitted written arguments opposing the trial.

The case has spawned articles and debate among legal experts because of its central suggestion that in some cases where mass injuries are involved, the legal system's reliance on individual suits is inadequate. Judge Weinstein said fairness required that no plaintiff wins a huge award that bankrupts a company and leaves little for thousands of other injured people.

Punitive damages recovered from the companies, Judge Weinstein said in his ruling, could be distributed to ailing smokers and deceased smokers' families and used for treatment, research and antismoking activities.

Judge Weinstein's proposal "is a very novel idea that is untested in the law," said Catherine M. Sharkey, a Columbia University law professor who is a specialist in punitive-damage issues.

The case began in 1999 as a more traditional class-action suit, filed by lung cancer victims seeking compensation from tobacco companies. But after Judge Weinstein suggested in court that the case could be restructured to deal with tobacco issues in a much broader way, the plaintiffs' lawyers filed a new suit in 2000, asking for the once-and-for-all determination of punitive damages.

Under his order, individual smokers and their survivors could still sue for compensation for lost income or health care costs. But the trial would foreclose claims for punitive damages by all smokers who received a diagnosis of any of 16 smoking-related diseases, including cancer and heart disease, between 1993 and the start of the trial.

The appeals court heard oral arguments last November. In filings to the appeals court, the tobacco companies labeled the ruling a breathtaking, arbitrary, baseless analysis that ignored Supreme Court rulings. Theodore M. Grossman, the lawyer who argued the appeal for the tobacco industry, said in an interview last week that Judge Weinstein was trying to undo a centuries-old adversary system of case-by-case justice.

"He is a very bright man," Mr. Grossman said, "who has a very clearly stated agenda that is inconsistent with what appellate courts and courts across the country have said is required by the Constitution."

But Samuel Issacharoff, a visiting professor at New York University Law School who is working with the plaintiffs' lawyers in the tobacco case, called the judge's approach a bold and creative effort to deal with issues that have troubled American courts in mass-liability cases for decades.

Defective products can have widespread effects that the legal system has difficulty handling, said Professor Issacharoff, an expert on mass-injury cases. Among the most difficult questions for courts, he said, are those Judge Weinstein is grappling with, like how to calculate ways of punishing corporate misconduct that has affected millions of people.

"It's hard to think of a more important issue in civil litigation today," Professor Issacharoff said.

Whatever the Manhattan appeals court decides, lawyers say, it seems likely that the United States Supreme Court will be asked to review the case before any trial begins.

The appeal of Judge Weinstein's decision has exposed alliances often unseen in large liability battles. The trade group for plaintiffs' lawyers, the Association of Trial Lawyers of America, filed a brief backing the position of the tobacco companies, as did the American Cancer Society.

An association lawyer, Robert S. Peck, said the trial lawyers were concerned that no smoker could seek punitive damages individually. He said his group viewed that as an unfair limitation on victims' rights, and could recall no other case in which the association had sided with an industry against plaintiffs seeking damages.

Richard A. Daynard, chairman of the Tobacco Products Liability Project at Northeastern University, which works to foster lawsuits against the industry, also signed onto a friend-of-the-court brief urging the appeals court to reject Judge Weinstein's approach.

Professor Daynard, a harsh critic of the tobacco industry, said in an interview that one concern with Judge Weinstein's proposal was the enormous risk to tobacco critics.

Tobacco lawyers are known for fighting cases relentlessly. One case in Brooklyn, no matter how big, he said, might not end with the gargantuan punitive-damage award for which critics of the industry have long been hoping.

"The problem with it," Professor Daynard said, "is it's putting all the eggs in terms of possible litigation against the industry in one basket. Everything would be one litigation, one jury verdict."

August 21, 2004
        Mayor's New Olympic Pitch: The City That Never Smokes
        By Winnie Hu

Nobody smokes in New York City anymore. At least that is the perception of Mayor Michael R. Bloomberg, who cited that information yesterday as another reason the Olympics should be held in New York,

The mayor made the comments in Athens, where he has been trying to bolster New York City's bid for the 2012 Summer Olympics.

"The benefits of stopping smoking are demonstrable, and I think that one of the great things about New York is that nobody smokes anymore," Mayor Bloomberg said to reporters at a news conference.

"Very few people smoke in New York City - the number of people that are smoking is declining precipitously and, for the first time since, I think, World War II, life expectancy in New York City is higher than it is on average in the United States."

Mayor Bloomberg has been at odds with the city's smokers since he pushed through an indoor smoking ban more than a year ago that is one of the toughest in the country. The ban, which took effect in March 2003, all but banished smokers from bars and nightclubs. State officials later passed a similar smoking ban.

This spring, New York City health officials reported that the number of New Yorkers who smoke had dropped to 1.1 million in 2003, from 1.3 million the year before. City health officials called it "the fastest drop in smoking rates ever recorded nationally.''

Mayor Bloomberg said yesterday that people have accepted smoking bans in places as far away as Ireland. "We didn't ban smoking in New York," he said. "We just banned you from forcing somebody else to smoke. So you can smoke when you are out by yourself."

But critics immediately accused the mayor of being out of touch with reality with regard to no one at all smoking.

Bob Zuckerman, executive director of the New York Nightlife Association, which represents about 200 bars, clubs and lounges, invited the mayor to join him on a stroll down Avenue A in the East Village on a weekend night. "Let's see if he would still make the same comment," he said.

Sandee Wright, a co-owner of the Whiskey Ward on the Lower East Side, said that most of her customers were smokers who have not accepted the smoking ban. "He's a P.R. machine," she said of the mayor. "I think he's just trying to make people believe what he believes, and it's unrealistic."

August 14, 2004
        Sometimes a Cigar Is Just Illegal, G.O.P. Is Told
        By Jennifer Steinhauer

In the 1920's, New York was dotted with speakeasies, where revelers could sip illegal cocktails in clandestine sites. During the Republican National Convention of 2004, there may be a number of smoke-easies, places where cigarettes and cigars will be puffed below the radar screen of the law.

Under state and city laws, smoking is banned in bars and restaurants. The rare exceptions include cigar or cigarette bars that receive at least 10 percent of annual gross income from the sale of tobacco products.

But sometimes, when an exemption is not granted, bars allow their revelers to light up anyway, hoping that no one will notice.

The McPherson Group, a lobbying firm in Washington, has cordially invited guests to "imbibe and enjoy the pleasures of a good cigar" during its party at the Carnegie Club in Midtown on Aug. 31, in the middle of the convention.

The return address on the envelope has a design featuring a large apple figure chomping on a stogie, with the tagline, "Smokin' in the big apple."

But unlike many cigar clubs that will be holding parties that week, the Carnegie Club has not won the exemption needed to permit such a party.

According to city Health Department records, the club applied for an exemption in June but was denied one because of incomplete documentation. It then resubmitted its application on Aug. 5, and the answer is pending.

The application takes one to two months to be processed. Further, the club has been inspected by City Health Department workers and has been cited for smoking violations many times, said Sandra Mullin, a spokeswoman for the department.

At the Carnegie Club's parent company, Hospitality Holdings, a woman who identified herself as Dawn seemed perplexed by a reporter's inquiry, saying at first that no smoking was allowed at the club, then saying that it was allowed, before finally adding that the McPherson Group party was "a private affair."

She then hung up the phone. Calls to three principals at the McPherson Group went unreturned; a receptionist said many people there were out of town or on vacation.

Mayor Michael R. Bloomberg is under pressure to ensure that well-heeled cigar lovers are held to the same standards as those who prefer skinnier forms of tobacco. The mayor drew fire in January for attending a black-tie dinner at the St. Regis Hotel where Wall Street tycoons smoked cigars openly.

"We are not granting any special favors to any establishments," Ms. Mullin said.

August 13, 2004
        Secret Galas, Shrouded in Smoke
        By Jennifer Steinhauer

Political conventions bring to mind smoke-filled rooms where deals of great import are made. But no longer in New York, where smoking is banned - except in a few exclusive places.

A handful of cigar bars around the city will hold private parties during the Republican National Convention. They include the Grand Havana Room, a private club that rests luxuriously on the 39th floor of 666 Fifth Avenue, where former Mayor Rudolph W. Giuliani will be the guest of honor at a party that week.

Under state and city laws, smoking is banned in bars and restaurants, with few exceptions. Among them are bars that get at least 10 percent of annual gross income from the sale of tobacco products. That includes the Grand Havana Room, where smokers can puff away among the "mahogany paneling, blue velvet curtains and thick leather armchairs."

The description comes from the bar's Web site; as the woman who answered the phone at the bar pointed out, it is a private club. Membership is by invitation only.

Before hanging up, the receptionist at the bar said that she could not confirm what she had just confirmed, that Mr. Giuliani's party will be one of several during the convention. She cited "security concerns" in refusing to divulge details.

As it turns out, people who run cigar bars are not terribly interested in bragging about their guest lists.

Bob Moylan, the vice president of Club Macanudo on the Upper East Side, said his place would be closed the week of the convention in order to accommodate private parties. For whom he would not say. "That's all the information available at this time," he said. If I were invited would I see interesting people there? "I'm sure you would," said Mr. Moylan, who then added that it was time to end the conversation.

At Circa Tabac, on Watts Street in SoHo, there are two private parties booked, said the owner, Lee Ringelheim, who added, "I have a feeling we'll be booked every night."

The secrecy over guest lists may be about creating an aura of exclusivity. However, convention officials have asked establishments to avoid providing the news media with details, in an effort to avoid both terrorist attacks and protesters.

Mayor Michael R. Bloomberg, who is vehemently anti-smoking, would not automatically disdain an invitation to Mr. Giuliani's party, said his press secretary, Edward Skyler. "He wouldn't not go on account of where it is being held."

July 16, 2004
        Senate Approves Tobacco Buyout and New Curbs
        By Carl Hulse

WASHINGTON - After years of resistance by lawmakers from tobacco states and the cigarette industry, the Senate overwhelmingly approved new federal regulation of tobacco products and advertising on Thursday as part of a deal to buy out the nation's tobacco growers and end price supports that date from the Depression.

Until now lawmakers from the tobacco belt have opposed allowing the Food and Drug Administration to regulate tobacco. But they signed off on the new oversight in exchange for a $12 billion, 10-year program to aid tobacco growers struggling for survival in light of lower prices resulting from less smoking and increased imports.

Senator Mitch McConnell of Kentucky, a chief author of the measure adopted on a 78-to-15 vote , called it a "marriage of convenience."

Senator Jim Bunning, Republican of Kentucky, said: "I think F.D.A. regulation is a bad idea. But my growers are in dire straits and they need help."

The tobacco proposals were added to a tax bill intended to help American corporations escape new European tariffs. That measure was sent for negotiations with the House, which has adopted its own $9.6 billion tobacco buyout without any new federal regulation of tobacco products. House members said they would resist giving the F.D.A. the new power, but some privately acknowledged that it might be the price of grower relief.

Under the legislation, the agency would gain the authority for the first time to regulate the sale, distribution and advertising of cigarettes and smokeless tobacco. It would have the power to require manufacturers to better disclose the contents and consequences of their products in new, stronger warning labels on packages.

Cigarette companies would not be able to label their brands as reduced risk "lite" or "ultra-lite" products unless certified by the government. Magazine advertisements could be printed only in black and white. The authors of the legislation said that the agency would not, however, have the ability to ban cigarettes without Congressional approval.

Some senators, praising the agreement as long overdue, said it would help cut smoking among the young by taking some of the appeal out of tobacco ads while giving smokers more information about what is contained in tobacco products.

"A lot of lives will be saved by this bill," said Senator Mike DeWine, Republican of Ohio, a chief sponsor along with Senator Edward M. Kennedy, Democrat of Massachusetts. "This is the right thing to do. The time for this bill is now."

Critics said the bargain struck to get the legislation through the Senate was a bad one, funneling billions of dollars to some who own the rights to grow tobacco, but are no longer engaged in farming it while adding new federal regulatory powers in legislation that had received little scrutiny.

"That is ludicrous," said Senator Don Nickles, Republican of Oklahoma. "What a waste of money."

A federal program was created in the 1930's to control the quantity of tobacco grown and guarantee a minimum price. Producers were given an allotment, known as a quota, that they could grow and market. But as demand for tobacco has decreased, the value of the quotas has declined, prompting some producers to call on the federal government purchase the quotas from them.

The authors of the tobacco deal warned that it could still fall apart, but said that this was the farthest such a proposal had ever gone.

"A change is coming," said Mr. McConnell, who described the legislation as historic as far as his home state was concerned and as a turning point for a crop that has been intertwined in America's heritage.

The tobacco buyout was thrust into the presidential campaign recently when President Bush said he backed the current system, leading Republican members of Congress to step up their pursuit of aid to growers across the Southeast to offset political damage from the White House stance.

Lawmakers said they were confident they could win White House endorsement of any final tobacco plan negotiated between the House and Senate. Senator John Edwards, the North Carolinian running alongside Senator John Kerry on the Democratic presidential ticket, welcomed the Senate action and used the vote to remind growers of the president's earlier statement.

"I hope President Bush, who recently said he thought the system was just fine, will see the light and help us pass this legislation," Mr. Edwards said.

The F.D.A. sought to assert regulatory jurisdiction over tobacco on its own in the 1990's but was rebuffed by the Supreme Court. The Senate rejected F.D.A. control in 1998.

Mr. Kennedy said, "This is the most important step we can take for public health short of curing cancer itself."

The legislation was the product of careful negotiations between lawmakers representing the tobacco-producing states, Senate advocates of the new federal regulatory authority, growers, and representatives of Altria Group Inc., the parent company of Philip Morris USA, the nation's largest tobacco company.

"As with all legislative compromises, this legislation reflects a lot of difficult choices by everyone involved," said Mark Berlind, legislative counsel for Altria, who said that tinkering with the bill in conference could scuttle the deal.

His company's chief competitors have opposed the plan, saying the advertising rules would give Philip Morris a marketing advantage by making it harder for smaller companies to win new customers. Tommy Payne, an official at R.J. Reynolds Tobacco Company, said the measure "fails to make U.S. tobacco farmers more competitive and would be financially disastrous for tobacco manufacturers, their employees, their business partners and adult smokers, many of whom are lower- and middle-income wage earners."

Under the Senate buyout portion of the plan, more than 400,000 quota o would receive payments based on poundage. The Senate would generate the money through an assessment on manufacturers and importers; the House would use a portion of federal cigarette taxes.

The buyout has been criticized as a boon for the rich since a recent analysis of the House plan by the Environmental Working Group found that more than 400 large quota holders would receive $1 million or more and that 10 percent of those eligible would receive 67 percent of the money. Senators said that they expected that thousands of struggling growers would use the buyout to pay off their debts and quit the tobacco business. And they warned that many faced financial ruin without help this year.

"Status quo is simply not an option," said Senator Elizabeth Dole, Republican of North Carolina.

Some senators said they were far from happy with the bailout, but considered it acceptable to win federal health authority.

"If that is the only way that we can get F.D.A. regulation of tobacco products, all right I will buy that compromise," said Senator Richard Durbin, Democrat of Illinois and a longtime anti-smoking advocate.

July 1, 2004
        Offbeat Marketing for Cigarettes
        By Melinda Ligos

Three years ago, after leaving a marketing job at the Brown & Williamson Tobacco Corporation, the maker of brands like Kool and Viceroy, Patrick Carroll embarked on a quest to create a boutique alternative to Big Tobacco's mass-produced cigarettes.

"I had $100,000 in my pocket and some marketing know-how, and I figured, 'How hard could it be to start your own tobacco company?' " said Mr. Carroll, who is 33. "In retrospect, I was an idiot."

Certainly, his timing could have been better. Mr. Carroll, now the chief executive of Freedom Tobacco International Inc. in New York, rolled out a line of cigarettes in March 2003 called Legal. Days later, New York City banned smoking in bars, and a few months after that, New York became the first state in the country to outlaw the online purchase of cigarettes by its residents. (Freedom's main distribution mode is through online Web sites like dirtcheapcigs.com.)

As if those restrictions were not enough, New York recently required cigarette makers to make their products self-extinguishable by the end of this year. More daunting still, other states are considering bans on online cigarette sales, Mr. Carroll says, and most require new tobacco companies to put aside money in escrow accounts to guard against future lawsuits. "As far as regulations go, we've hit our share of roadblocks," he said.

Mr. Carroll and his business partner, Thomas Burg, a fellow graduate of the business school at Indiana University, say they have no moral qualms about selling a product that causes cancer, despite all the hate mail and denunciations from antismoking activists that are directed at them.

And they have responded to the legal and regulatory constraints on their product with entrepreneurial flair, elbowing their way into niche outlets like Manhattan bodegas, negotiating with overseas distributors and pulling off publicity stunts to grab attention for their cigarettes, which they promote as the "honest alternative to Big Tobacco."

First, they planted models outside of Manhattan bars to talk up the cigarettes. Then, last August, they offered a lifetime supply of cigarettes to celebrity smokers. Though no one immediately came forward to accept, the offer got a lot of press (and drew the wrath of tobacco foes). On the morning after Mr. Carroll talked about the offer on a local news program, Mr. Burg recalls the pandemonium in their tiny Manhattan office. "We already had 250 e-mails, and the phone was ringing off the hook," he said. "As soon as Pat walked in I said, 'You'd better get in here. We've just hit the big time.' "

Just a few weeks later, Freedom attracted more attention when it paid more than $20,000 to sponsor a fashion show in Manhattan put on by the design team As Four. During the show's finale, the designers pranced down the runway smoking Legal cigarettes, and audience members were given packs of Legals as parting gifts. "There's no question that being part of pop culture in this way boosts our profile as a company," Mr. Carroll said.

More recently, Mr. Carroll pledged to give free cigarettes to the United Nations and foreign consulates in New York, which are exempt from the city's smoking ban, if they opened their doors to New York smokers. He said he dreamed up the idea for that when he learned that Greek nationals were meeting at the Greek consulate to smoke.

"I figured if they were willing to share their diplomatic status with us, I'd be more than happy to share my cigarettes with them," Mr. Carroll said. So far, there have been no takers.

In another marketing coup, Mr. Carroll enlisted the friend of a friend to persuade one of the characters in "The Sopranos," the popular HBO series, to smoke Legal cigarettes during the taping of an episode.

Such antics offend some critics. Paul Bloom, a marketing professor at the University of North Carolina at Chapel Hill, worries that offering free cigarettes to celebrities will encourage more minors to smoke. "In my opinion, it's a very irresponsible tactic," said Mr. Bloom, who studies how to reduce tobacco consumption by young people.

Mr. Carroll has set the ambitious goal of increasing sales to $3 million this year from $500,000 in 2003. To reach it, he says, he and Mr. Burg and the company's four sales representatives will have to find more vendors for the product, which is made in North Carolina from imported Colombian tobacco and comes in regular and menthol varieties.

While the company has not been able to penetrate large retailers like 7-Eleven, it has made inroads with mom-and-pop shops, especially in Manhattan.

"As a little company, we can't write big checks for shelf space like the major brands sometimes do," Mr. Burg says. Instead, he said, he and his team have wooed the owners of small stores and bars.

"We can't write a check, but will be on time for appointments, and we will kill 'em with kindness," he said. "We've been told we aren't as arrogant as some of the salespeople from the bigger companies."

One online retailer, Scott Maybee, owner of Smokesignals.com, which sells Legal cigarettes, said he was getting repeat orders from consumers who like the cigarettes' taste. "People like the idea of a small, microbrewed cigarette," Mr. Maybee said. Legal cigarettes sell for about $6.50 a pack in New York City but are listed for as little as $24 for a carton of 10 packs on some online sites.

Right now, Mr. Carroll and Mr. Burg are concentrating on signing up a major vendor and on moving into the overseas market. And they say that a company based in Dubai has shown interest in buying 1.5 million cartons of Legal cigarettes a month to distribute throughout the Middle East.

Mr. Carroll said he was negotiating to buy his own tobacco factory in North Carolina to help speed the manufacturing time.

With antismoking regulations multiplying in the United States and with public sentiment turning increasingly hostile toward tobacco sellers, how do Freedom's founders cope with the reams of hate mail that they say floods their office - or, for that matter, with their own consciences?

Reasonably well, they say. Mr. Carroll, who considers himself a "social smoker," indulging mainly when he is having a beer, refrains from talking about his business with his uncle, whose father died of emphysema. A graduate school professor whose mother died of smoking-related cancer expressed his disapproval of the venture. "It was a real sticking point," he said.

And just a few weeks ago, he received a letter from an 8-year-old saying that it was the fault of tobacco companies like his that his father had cancer.

Another writer was more blunt, telling Mr. Carroll that he deserved to get AIDS because of his line of business. His own mother is reluctant to tell her friends what he does for a living, he says.

But Mr. Carroll is fiercely unapologetic. And Mr. Burg, a nonsmoker who was initially reluctant to enter the business, now matches his partner's resolve. "I had to sort of play out the moral standpoint before I went into business with Pat," Mr. Burg said.

"But after I talked to a bunch of enthusiastic smokers, I said to myself, 'This industry has been a staple of American business for over 200 years, and a lot of people enjoy it.' " he said. "When I thought about it that way, I realized that I didn't have a problem with it at all."
 
 
 
 

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December 27, 2004
        PUSH ON FOR SMOKE-FREE FLICKS
        Page Six

Not content with trampling smokers' rights, the New York State Dept. of Health has launched an insidious campaign to erase all traces of tobacco from the movies.

The department's tobacco control program was behind the formation of Reality Check, a well-funded group supposedly started by and for teens against smoking. One of R.C.'s missions is to eradicate smoking from the movies, and their methods have put some noses out of joint.

In fact, it's causing conflict between state agencies, since R.C.'s programs are clashing with the artistic freedom espoused by the New York State Council on the Arts. In particular, R.C.'s operation to sponsor independent film festivals and then demand that no smoking be shown has caused some hard feelings.

The Arts Council helps fund the Woodstock Film Festival, based in the arty upstate burg bearing its name. Reality Check sponsored this year's festival as well, which was attended by the likes of Peter Gabriel, Laura Linney, Sam Rockwell, Fisher Stevens and Matt Dillon.

A couple of months ago, filmmaker Ford Crull was planning to make a promotional trailer for this year's Woodstock festival, done as a spoof on film noir and naturally containing a smoking scene. But he was told to scrap it because of R.C., which demanded an on-screen smoking ban.

Crull informed Karen Helmerson, director of electronic media and film at the state arts council, of the censorship. Helmerson has now blasted R.C.'s "subversive repres- sion of creative interpretation and creative speech."

"I will certainly bring this to the attention of our chairman to learn what, if anything, we can do as a state agency and arts funder," Helmerson wrote to Crull. "This is atrocious, of course. Made worse by the bogus claim that this is a youth-initiated movement."

Insiders say Reality Check plans an even more outrageous campaign, however. In addition to pressuring studios to keep smoking and cigarettes out of new movies — beginning with all films rated G, PG and PG-13 — the group actually wants the smoking scenes removed from classics like "Casablanca," "Rebel Without a Cause" and "Breakfast at Tiffany's."

Dept. of Health spokesperson Claire Pospisil promised to look into the issue.

December 12, 2004
        CIG-NIFICANT REWARDS FOR KID BUTT PUSHERS
        By Lindsay Powers and Angela Montefinise

Some of the city's best and brightest students are using their brains to sell butts — and earn $200 a week.

A small group of students at Stuyvesant HS have made names for themselves hawking illegal foreign cigarettes to fellow students, most of whom are underage.

The baby-faced entrepreneurs, who didn't want to be named, said they purchase 10-pack cartons of cigarettes for less than $20 from Manhattan "suppliers" or from Web sites.

They then sell the packs for $4 a pop — a more than 100 percent markup.

One kid selling smokes from his backpack said his parents not only know about his black-market business — they condone it.

"This way, they don't have to give me an allowance," he said.

It is unlawful to sell cigarettes without a license, to sell unstamped cigarettes, or to sell to minors.

Another baby-faced cigarette-seller said he usually blows his $200 weekly profit gambling.

The dealers stock what the students like — Parliament Lights, Camel and Marlboro. They mix the packs up in one carton, which they conceal in their black messenger bags.

The packs don't look like the smokes sold in stores — the writing is usually not in English. One pack of Parliament Lights sported a Romanian label.

A 14-year-old Stuyvesant freshman, dressed like most of his classmates in designer jeans and a puffy coat, said he buys three packs a week from the teens.

"They're the best," said another student. "I buy from them all the time. Everyone in the school knows to go to them."

Perhaps as disturbing as the illegal activity itself is the admiration it seems to elicit among the business-savvy student body.

"These kids are geniuses," said a classmate. "They make a ton of money."

The dealers — who "float between cliques" according to students — operate less than a block away from Stuyvesant every day, slyly exchanging money for goods after school.

But don't expect to see the dealers — described as good students — lighting up.

"The dealers never smoke," said one Stuyvesant student. "They're not involved in anything bad."

December 6, 2004
        CIGARETTE BURN
        By Nicole Gelinas

A FEDERAL judge could soon burn billion-dol lar cigarette holes right through the tattered fabric of New York state's finances. But don't blame her — the blame belongs to Gov. Pataki, Assembly Speaker Sheldon Silver and Senate Majority Leader Joe Bruno.

For several years running now, the state government's regular expenses have outpaced its normal income by the billions. But each year, Albany's Big Three have masked that structural gap with one-shot revenues — that is, by whatever they could beg or borrow.

A big chunk of last year's smoke-and-mirrors came from real smoke: New York's share of a $206 billion payout from Philip Morris, R.J. Reynolds and two smaller tobacco companies to settle a massive lawsuit with 46 states. Problem is: that money wasn't guaranteed, and it's now at risk — but New York's leaders have already spent our share.

The cigarette sellers agreed in 1998 to pay the $206 billion over 25 years — with one big catch: The funds would come only out of future profits.

But New York's pols didn't feel like waiting. Last year, the state issued $4.5 billion in cigarette-backed bonds — 10 percent of New York's $47 billion debt — to help close a two-year, $12 billion budget gap. Big Tobacco still pays money each year to New York over 25 years — but the state now uses that money to repay the bonds.

Lots of states did the same thing — but Bruno, Silver & Co. went a step further: To get the most cash on the barrel, they bestowed a taxpayer guarantee on New York's tobacco bonds. If Philip Morris et. al. can't make good on their promise, taxpayers are on the hook.

And now Washington is looking to milk the tobacco cow — to death.

In 1999, then-Attorney-General Janet Reno filed suit in federal court against the same Big Tobacco firms — Reno wanted to replicate the states' windfall. John Ashcroft has doggedly pursued the case — and it has finally come to trial before U.S. District Court Judge Gladys Kessler.

The suit alleges that tobacco execs convened in New York's Plaza Hotel in 1953 to hatch "an extensive scheme to deceive and defraud the public and consumers of cigarettes, in violation of RICO" — the federal Racketeer Influenced and Corrupt Organizations Act, passed to prosecute mobsters.

The central claim is that the tobacco execs were just mobsters with better tailors, conspiring over five decades to lie about the perils of smoking. So the feds are suing for the "disgorgement" of all 50 years of profits — $280 billion in total.

Kessler already ruled before the trial began that this "disgorgement" penalty will remain on the table if the government wins the case. A federal appeals court has paused Kessler's trial to appeal that ruling. But if it stands, the tobacco companies will likely settle the entire case before Kessler reaches a verdict. Otherwise, they'd risk bankruptcy.

The feds will likely settle up with Big Tobacco sometime next year, JPMorgan Chase analyst Martin Steinik thinks. New financial penalties would be paid by smokers through ever-higher prices: JPMorgan estimates that Big Tobacco would hike pack prices by 17 percent to settle up.

That settlement would cut into New York's take of the tobacco industry's future profits.

Smokers, after shouldering price hikes for years, have mounted a sullen strike. (Legal) cigarette shipments were down 5 percent last year — startling executives and tax collectors, who thought that the smoker would always keep smoking without regard for damage to lungs or wallet.

But the state Health Department said last week that 188,000 New Yorkers have quit smoking since 2000 — mostly due to tax hikes. If the feds force Big Tobacco to hike prices again, Silver, Bruno and Pataki may find that they've built their budget on the wrong end of a tipping point — consumers may be unwilling to pay $8 a pack, and tobacco payments to New York would shrink.

And what if Big Tobacco won't settle — and opts for a game of chicken with the governors' lobby?

This possibility illustrates the real danger of the states' collusion with cigarette salesmen: States are now major creditors — and thus agents — of Big Tobacco. Tobacco execs know that states — led by Pataki and California Gov. Arnold Schwarzenegger, whose two states get more than a quarter of the tobacco-settlement proceeds — would have to fight the Bush administration to avoid an industry loss at trial, to save the tobacco companies and themselves.

Thus, the states' fiduciary relationship with Public Health Enemy No. 1 — one of intimate and consummate hypocrisy — will seep upwards to the federal level. The feds, with their own federal deficit and mushrooming health-care costs, could become just as dependent on a regular tobacco take.

Because Pataki and other big-state governors across the country have utterly failed to manage their state budgets, Big Tobacco has finally become too big to fail — and a federal settlement of the RICO case will ensure that it never will.

November 17, 2004
        CROOKS TRAVEL 'LIGHT'
        By Erika Martinez

A cargo plane coughed up 150,000 cartons of illegal cigarettes at JFK Airport yesterday — the largest federal seizure of contraband smokes from overseas in state history, officials said.

Authorities swooped down on the plane in the morning and immediately began carting off what they said was evidence of a huge Internet smuggling ring designed to avert millions of dollars in city, state and federal cigarette taxes.

The cigarettes were destined for distribution throughout the country, officials said. The cargo airline was not identified.

It is believed that the cigarettes were manufactured in the United States, then shipped to countries such as Switzerland, where they were diverted for smuggling them back into the United States for illegal sale, sans hefty taxes.

Would-be buyers placed their orders over the Internet and by phone, which is illegal in New York because such transactions skirt tax laws, officials said.

How much is at stake in taxes?

In the Big Apple, for example, a carton of cigs runs about $70 — including $33.30 in excise and sales taxes — while the illegal smokes could cost as little as $15 a carton.

That translates into tens of millions of dollars a year that the city would lose overall in taxes, said Eric Proshansky, the chief City Hall lawyer probing the illicit 'Net sales.

The city has already successfully sued one Switzerland-based Internet cigarette retailer, landing a $17 million judgment against it.

In October, Manhattan federal Judge Naomi Recie Buchwald slapped the staggering penalty on the company Yespeedy/Otamedia for allegedly peddling the cigarettes without paying taxes.

The charges against the company included mail and wire fraud.

Proshansky said there are four other suits pending against 20 Internet firms suspected of similar shady dealings.

Authorities said yesterday's seizure came after a probe over several months that involved the federal Bureau of Alcohol, Tobacco, Firearms and Explosives; postal inspectors; and city and state tax and finance officials.

The smokes were being held yesterday at ATF's hangar at JFK.

The agency said it plans to notify other states where the cigarettes were headed to warn them of the scam.

But authorities acknowledged that the battle against the scammers is difficult, particularly if they are incorporated in foreign countries.

November 17, 2004
        BOUNCER'S KILLER CONVICTED
        By Dareh Gregorian

A Queens martial-arts expert was convicted yesterday of killing an East Village bouncer in a melee that began when the victim ordered a clubgoer to stop smoking.

A Manhattan Supreme Court jury found Isaias Umali guilty of manslaughter in the April 2003 stabbing death of Dana Blake.

"I saw justice today," Blake's brother, the Rev. Tony Blake, said afterward. "My brother's soul can rest in peace."

Dana Blake, a 6-foot-6, 360-pound giant, was working at Club Guernica when he tossed one of Umali's friends, Jonathan Chan, for smoking inside, soon after the city implemented its ban.

Umali jumped into the ensuing fight and stabbed Blake in the groin, causing the 32-year-old to bleed to death.

"The hardest thing was to find out what was in [Umali's] mind," said one juror. "We could not know if his intent was to kill Dana Blake, but we do know he intended to do him harm."

Umali's father, Isaias Sr., comforted his son — who faces up to 25 years in prison — saying, "You're still young."

November 14, 2004
        MARLBORO MARINE FIRES UP TROOP MORALE
        By Patrick Gallahue

The young Marine dubbed the "Marlboro Man" after his front-page appearance in The Post has become a celebrity poster boy for the U.S. effort in Fallujah and a hero in his hometown.

But there's one drawback to being the Marlboro Man — everyone keeps bumming your smokes. "If you want to write something," Marine Lance Cpl. James Miller, 20, told a reporter this week, "tell Marlboro I'm down to four packs, and I'm here in Fallujah till who knows when. Maybe they can send some. And they can bring down the price a bit."

Marlboro declined comment.

A portrait of the rugged and muddied Miller — snapped after 12 hours of bloody combat with guerrillas — became a powerful symbol for the American forces' gritty effort to retake Fallujah. Marine brass were thrilled with the poignancy of the shot, and Lt. Gen. John Sattler visited Miller's company to applaud them for the feature. News agencies that ran the shot were besieged with calls and e-mails asking for a way to contact the young man.

And back home, in his Appalachian hometown of Jonancy, Ky., his mother reveled at seeing his picture on television just to know her oldest of three sons was OK.

November 13, 2004
        L.I. BARS WIN BIG IN LEGAL ASH FRAY
        By Perry Chiaramonte

Despite the state smoking ban, smokers are being allowed to light up with abandon in a trio of Suffolk County taverns as long as they're willing to pay the fine if they get busted.

Puffers at Jack McCarthy's Pub in Centereach, Tobin's II Pub in Ronkonkoma and the Dunton Inn in East Patchogue are happily indulging their habit, thanks to a new Supreme Court ruling that the state smoking ban doesn't require bar owners to make customers stub out their smokes.

The responsibility is placed upon the smoker if caught in the act by state inspectors.

"The way I see it, it's my prerogative to smoke, and I'd rather pay the fine than the bar," said Richard Long, 47, a regular at Tobin's II.

The smoke-in was sparked by the ruling in a class-action suit filed by owners of the three pubs against the state Department of Health, which had leveled hefty smoke-ban violations fines against them.

The owners claimed they obeyed the Clean Indoor Air Act to the letter by posting no-smoking signs and telling customers that smoking in the bar violates state law.

"We knew we had an airtight case going in," said Jack McCarthy, owner of McCarthy's Pub.

"We knew if we behaved ourselves, followed the law and did what we were supposed to do, we were okay."

Supreme Court Justice Paul Baisley Jr., ruled for the taverns on Oct. 13. Tossing out $650 in fines, the judge noted that while bar owners must inform patrons of the law, they are not required to refuse service, toss them from the establishment or make the smokers extinguish their cigarettes.

This week, a Post reporter went to all three establishments to see if management was complying with the Clean Air Act. At all three bars, he was greeted with the same caveat after asking if he could light up — smoke if you want to, but it's against the law.

"I have to let you know that smoking is still against the law," said one bartender when asked if it was OK to puff away. ". . . If you get caught, you'll have to pay the fine."

In addition, all three bars had no-smoking signs clearly posted, and smokers used plastic cups filled with water as ashtrays.

In explaining his landmark ruling, Baisley noted that when a health inspector visited the pubs, "No smoking" signs were posted.

And while the inspector claimed bar employees did nothing as customers puffed away and flicked ashes into plastic cups, the judge noted the inspector didn't interview any of those employees.

The inspector's failure to talk to employees, Baisley said, was fatal to the DOH argument — the presence of smoking customers doesn't prove the tavern's failure to comply with the law.

The DOH is appealing the ruling.

October 31, 2004
        CIG-NIFICANT DROP IN SMOKING FINES
        By Stephanie Gaskell and Sam Smith

The city's take from smoking-ban tickets is plummeting — at the same time, officials are wrestling with new problems in enforcing the law.

Fines against bar and restaurant owners peaked last March, when the city's Health Department pulled in $60,400.

That number dropped to $37,870 in August, the last month for which figures are available. Health Department officials said the decline was a result of more compliance.

"As we predicted, the Smoke-Free Air Act has been largely self-enforcing, and compliance rates are already above 95 percent," said spokesman Sid Dinsay.

But that doesn't account for another trend: violations being thrown out.

Robert Bookman, lawyer for the New York Nightlife Association, said six of his clients have had violations thrown out in recent months because they were ticketed for not removing smokers.

The law, he said, requires owners to tell smoking patrons to go outside. But if the person doesn't leave, it's the smoker who's in violation, not the owner, he said.

"The trend is to overturn these violations," he said.

Lawyer Marty Mehler has had about six violations against city bar owners tossed for similar reasons.

October 21, 2004
        PRO - CIG BIZ IN 'QUICK' NEW SLAM
        By Kenneth Lovett

Albany -- A group of bar, restaurant and bowling alley owners from around the state is planning a new "Quick Draw" lottery boycott to protest the statewide smoking ban and other "anti-small-business measures."

Boycott organizers, which include several upstate bar owners and New York City smoking activist Audrey Silk, are asking participating businesses to turn off their Quick Draw machines beginning Saturday through Oct. 29.

"We will not sit back and let the government of New York state destroy any more businesses in New York state," said boycott organizer and upstate tavern owner Brenda Perks.

"The only thing left to do is to make them feel the same kind of pinch they've imposed on us."

Silk, founder of New York City Citizens Lobbying Against Smoker Harassment (NYC-CLASH), sent letters of the planned protest to the nearly 3,200 establishments licensed to offer Quick Draw.

Timed to coincide with the upcoming state elections, Silk branded the action "a display of collective power -- a power that must be taken into consideration before legislators decide to propose and enact business-busting regulations."

Silk and Scott Wexler, executive director of the Empire State Restaurant and Tavern Association, couldn't predict how many establishments will participate, although they said many have expressed interest.

Hundreds of bar owners participated in two similar protests last year before the state smoking ban took effect -- costing the state more than $1 million in Quick Draw sales.

October 17, 2004
        MEGA KICK HURTS LOTTO ; LURE OF BIGGER JACKPOTS
        By Kenneth Lovett

ALBANY — The Mega Millions lottery game and its promise of mega-jackpots has left the more established Lotto in the dust, new statistics obtained by The Post show.

New York state sales so far this year for the multi-state Mega Millions game — which offers minimum jackpots of $10 million that have sometimes gone into the nine-digit range — are at $411 million, a 20 percent increase over the same period last year, according to state Lottery statistics.

At the same time, Lotto with its $3 million minimum jackpot has generated just $260 million in sales so far this year — a 14 percent drop from the same period last year and a 31 percent decline since 2001, the year before Mega Millions came to New York.

"Players play more when there are higher jackpots," said state Lottery spokeswoman Jennifer Mauer.

Meanwhile, the statewide smoking ban may have begun taking a toll on Quick Draw, the electronic keno-like game offered at bars, restaurants and bowling alleys.

Quick Draw sales dropped 4 percent this year, the first full year of the smoking ban.

Bar owners predicted a drop in customers when the smoking ban went into effect that it would result in lower Quick Draw sales. Sales for the game are down $14 million this year.

"They said the smoking ban wouldn't hurt anyone, well apparently it's hurting the New York state treasury, and it's going to be made up on the backs of the already overtaxed taxpayers of New York state," said Scott Wexler, executive director of the Empire State Restaurant and Tavern Association.

Wexler said he expects that the Quick Draw losses are even more substantial at bars, taverns and bowling alleys, which he argues are suffering more than restaurants from the smoking ban.

The lottery cash cow continues to be the instant scratch-off games, which combined have generated $2.26 billion in sales so far this year — an 11 percent increase over last year.

All told, total lottery sales through Oct. 6 of this year have totaled $4.71 billion — a 6 percent increase over last year.

October 14, 2004
        FEDS SMOKE OUT FAKE-CIG RACKET STINKING UP B'KLYN
        By Kati Cornell Smith

The feds snuffed out an alleged counterfeit-cigarette ring accused of flooding the streets of Brooklyn with millions of phony Marlboros imported from China by an L.A. gang, officials said yesterday.

Reputed ringleader Azat "Ozzy" Oganessian, a 33-year-old illegal immigrant from Armenia, and 13 crew members raked in more than a million dollars selling bogus smokes over the past two years, according to court papers filed by Assistant U.S. Attorney Scott Morvillo.

"This criminal enterprise cheated the state of New York and, indirectly, New York taxpayers out of more than a million dollars in tax revenue," said Pasquale D'Amuro, FBI assistant director-in-charge.

At least 40,000 cartons of cigarettes manufactured in China -- and packaged to look like Marlboros -- were shipped to Chinese gang members in Los Angeles, law-enforcement sources said.

Oganessian's Brooklyn-based gang -- comprising Polish and Armenian members -- bought the smokes at $10 a carton, or the equivalent of $1 per pac, and trucked them across the country for resale, sources said.

They affixed New York State tax stamps to the cigarettes and then tripled the price to between $22 and $32 per carton for sale in delis and Polish restaurants in Greenpoint and Brighton Beach.

They were purchased by smokers who otherwise would have purchased approximately $5 million in Marlboros -- and generated $1 million in taxes for the state, the feds estimated.

October 13, 2004
        LAWSUIT $MOKES CIG FIRM
        By Carl Campanile

A federal judge slapped a Switzerland-based Internet cigarette retailer with a $17 million fine for allegedly running a scam that stiffed the city out of tobacco taxes, The Post has learned.

Manhattan federal Judge Naomi Recie Buchwald issued the staggering penalty after Yespeedy/Otamedia repeatedly failed to answer court papers or show up in court.

The Bloomberg administration sued Otamedia and a number of other Internet retailers as part of a sweeping crackdown against the sale of illicit cigarettes, which officials said conservatively cost the Big Apple treasury "tens of millions of dollars a year."

Buchwald said Otamedia was compelled to respond to the charges as a foreign entity under the international Hague Convention law.

City lawyers investigating "contraband cigarette" scams via the Internet said the $17,382,121 judgment is the largest penalty issued to date. They said they would do all they can to collect.

New York imposes combined excise and sales taxes of $33.30 on every carton of cigarettes sold by stores located in the Big Apple.

In other words, a carton of taxed cigarettes in the city costs about $70, while "duty-free" cigarettes run as low as $15.

"We're losing tens of millions of dollars a year. It's a very big number," said Eric Proshansky, City Hall's chief lawyer probing illicit sales of cigarettes on the 'Net.

He said it's a challenge tracking down Internet retailers, particularly those incorporated in foreign countries. Otamedia was incorporated in Belize.

"It's an elusive company. They didn't even show up in court," Proshansky said.

"We'll find out where they are and collect the judgment."

It's not the first time that Otamedia has been charged with running afoul of the law.

Another federal judge found that Otamedia illegally sold Philip Morris USA cigarettes on the Internet after issuing an injunction ordering it to stop.

In that case, Manhattan federal Judge Gerard Lynch ordered the transfer of Otamedia's "yessmoke.com" domain name to Philip Morris.

The city accused the company of mail and wire fraud.

September 27, 2004
        BARS' SNEAKY BID TO BEAT CIG LAW
        By Rich Calder

Upstate bar owners think they may have found a way around the anti-smoking law — and legal experts say it could hold up in court.

Several Buffalo bar owners are trying to circumvent the law by having patrons sign a waiver saying they are aware of the stringent regulations before lighting up.

And some New York City tavern-lobbying groups say the plan could work.

"Sounds like a good case to me," said Robert Bookman, a lawyer for the New York Nightlife Association. "If a bar owner makes a good-faith effort to get customers to comply with the law, it would be hard for the government to justify giving that bar a ticket."

Desmond O'Brien, president of United Restaurant & Tavern Owners of New York, agreed that such a case could become a significant challenge to the law.

Both Bookman and O'Brien said they were unaware of any New York City bars or clubs following Buffalo's lead.

Rick Naylon, owner of Jimmy Mac's bar in Buffalo, started the trend in April by having customers who smoke sign a slip reading, "Unfortunately, smoking tobacco indoors in NYS is illegal. By law, we have to inform you of this law. If you decide to break the law, there is no fine or penalty for the smoker. Please sign below to indicate that we have informed you of this law."

Kevin Montgomery, an Erie County Health Department spokesman, said that the waiver-slip system still violates the anti-smoking law and that his department will "prosecute" anyone who tries it.

"By allowing people to smoke after signing a waiver, it still puts the public and employees at risk, and we consider it illegal," he said.

The department — which oversees the smoking ban in Buffalo — already fined Naylon $2,000 for trying this method. Naylon said he "would rather go to jail than pay the fine" and is "seriously considering" suing the county so that a judge could determine whether the waiver slips are a legal remedy.

August 27, 2004
        Judge kicks flesh club in the butts
        Dareh Gregorian

The dancers are smokin' at the famed strip club Scores -- but the customers may not be for much longer.

A Manhattan judge has denied the East Side epidermis emporium's request for an automatic renewal of its "tobacco bar" permit, and the city Health Department has indicated it might stop the club from allowing its customers to light up as they get turned on.

"Smoking is not currently allowed at this establishment," said a Health Department source.

But it's unclear what action the city will take and when.

So for now, customers will continue to be able to buy and smoke cigars in the club's luxurious tobacco area, said club lawyer Marvin Mitzner.

The judge who issued the ruling against Scores, Ronald Zweibel, urged the city to "maintain the status quo" until it decides on whether to grant the jiggle joint a new permit.

Earlier in the day, Scores spokesman Lonnie Hanover said that means "the Republicans will be happy" when they come to paint the town red during next week's GOP convention.

"They like cigars," he said.  "Successful men tend to gravitate towards them."
The legal catfight over the club's permit came after the city discovered Scores had changed owners last year but hadn't applied for a new tobacco bar permit as required by the city Smoke-Free Air Act.

The club filed suit after the Health Department started slapping it with violations.

August 24, 2004
        PUFF & BUFF
        By Danico Lo

MOST people go to spas to undo the damage caused by too much partying. Now a handful of new spas are luring new clients with skin's worst enemies: booze and cigarettes.

On a private patio overlooking Madison Avenue, aestheticians at the Julien Farel salon perform manicures and pedicures while customers enjoy a catered lunch, a glass of wine or champagne and a cigarette.

"Being pampered is a luxury," says client Lauren Plasky, a marketing executive. "But being able to do so while having a cigarette is a true indulgence."

At the 7-month-old Studio One 2 One, patrons can recline in the English garden - which offers wireless web service and catered lunches. They, too, invite their clientele to light up and knock back a few.

"We have no problem popping open a bottle of champagne for our clients on Friday and Saturday nights," says co-owner Mallory Rutledge. "People definitely linger. Women will stay long after their treatments and work or just relax in the garden."

And the brand new Pashah, located in the penthouse above the Emporio Armani store on Madison Avenue, offers 30-foot-high bamboo hedges, an "aromatherapy garden" and even beds on a 1,000-square-foot terrace - but the main attraction is the freedom to sip and puff.

"Actually, I think women prefer going to the salon over going to bars," says co-owner Sam Arasteh. "We even tell our clients to stop by if they're shopping on Madison and they want a cigarette break or a glass of wine."

But not everyone thinks that catering to a client's every whim is a good idea - especially when those whims are counterintuitive.

"First of all, if you're going to get something done on your face and then you smoke - it's 10 times worse for your skin, because your pores are already open," says Cindy Barshop, owner of the Completely Bare chain of beauty salons.

Barshop - who is appalled by spas and salons who make it possible for their clientele to smoke - thinks that offering customers booze and cigarettes in outdoor gardens is nothing more than a cheap gimmick.

"I think they're doing it just to be different," she says.

In fact, these new spas are taking advantage of the city's smoking ban, which outlaws smoking in all workplaces - even restaurants with outdoor seating can only permit smoking in 25 percent of seating that is not located under a canopy or awning.

While these new smoking spas aren't breaking any laws, according to a Department of Health spokesperson, Barshop thinks they're a disservice.

"I would be more inventive and do something that works with the sun and the air. I wouldn't allow smoking. It ruins your skin - it's the antithesis of what a spa should do."

Still, some beauty addicts claim smoking and drinking are as therapeutic as an $80 paraffin pedicure.

"It's just so relaxing," says Pashah fan Alyson Corbin. "Being able to go to the salon and smoke a cigarette and drink - it just makes me happy."

August 18, 2004
        IT HARDLY PAYS TO FINE CITY'S CIG VIOLATORS
        By Stephanie Gaskell

The city has collected just $433,185 from businesses that have been caught violating the smoking ban during the past year, The Post has learned.

The money raked in from smoking-ban fines is the result of about 4,000 tickets issued since the Health Department began enforcing the ban last May.

"The measure of the law's success is not in the amount of fines collected, but rather in its high compliance rate — over 95 percent," said Elliott Marcus, assistant commissioner for the Bureau of Food Safety and Community Sanitation.

"The Smoke Free Air Act was meant to be self-enforcing. The less we have to fine, the more it means that the SFAA is protecting the health of employees in businesses across the city," he said.

There are about 100 health inspectors visiting businesses during the day.

Smoking fines are $200 to $400 for the first offense. A second offense is $500 to $1,000 and a third offense is $1,000 to $2,000.

All notices of violations are brought before an administrative judge, who has the authority to set the fine.

There's also a "three strikes and you're out" provision — three offenses in 12 months and the establishment's license can be revoked.

But so far, no establishment has been shut down. And that's because — as the low amount of fines collected also shows — most bars and restaurants are complying with the law, according to city officials.

"You have to wonder if this is even offsetting the cost of enforcement," said Audrey Silk, founder of founder of Citizens Lobbying Against Smoker Harassment.

"They're not overly enforcing it because they don't want the bad press," said one bar owner who didn't want to be identified for fear that it would result in stepped-up enforcement.

"Enforcement is virtually nonexistent in the outer boroughs. Also, many places are not enforcing late at night because they just can't afford the loss of business and they don't want to be put in a position of forcing their customers out into the street, so they're running the risk."

The revenue collected is not a lot when compared to other quality-of-life violations.

In the same time period, a whopping $24 million was raked in for sanitation violations, such as littering.

The city also collected $866,667 for noise-code violations — and some people say that's due in part to the smoking ban.

"The reason people can't sleep at night is because the city is forcing owners to put smokers into the street all night long — and then cops fine the owners for outside noise," said David Rabin, president of the New York Nightlife Association.

July 29, 2004
        Ticket Blitz
        Page Six

AFTER nearly three years in business, Michael Ault's Lafayette Street lounge Pangaea will close its doors this weekend as its lease expires. And not a moment too soon. After we quoted Ault's partner Frank Ferraro complaining about Mayor Bloomberg's nightlife crackdown — he called him "Doomberg" — the mayor's task force showed up Saturday and issued four summonses for noise and smoke violations.

July 23, 2004
        SILVER: NO-SMOKE HERE TO STAY
        Page Six

SMOKERS shouldn't expect any relief from State Assembly Speaker Sheldon Silver, who is pro-choice except when it comes to cigarettes. At a meeting last week with 35 angry owners of bars and nightclubs, the Manhattan Democrat "told them they'd have to work on the media and get public support," his press secretary Charles Carrier told PAGE SIX. "He said the only thing that might change is a provision for separate smoking rooms," said Frank Ferraro, a co-owner of Pangaea. "All 35 of us were unanimous. This law is killing us. One bar owner told Silver, 'Business is down so much, we're paying our sales tax with credit cards.' " The meeting at Silver's office on lower Broadway became heated when he brushed off the bar owners with a promise of more meetings and "dialogue." But the nightlife impresarios reserve their highest disdain for Mayor Bloomberg. Ferraro said: "If Doomberg — that's what we call him — gets in again, it'll be a 2 a.m. closing time, and that will kill nightlife completely."

July 12, 2004
        FED-UP CONSERVATIVE BOSS WARNS STATE GOP
        By Fredric U. Dicker

NEW YORK Conservative Party Chairman Michael Long has issued an unprecedented ultimatum to the Republican-controlled state Senate: Take an immediate stand on controversial issues, or risk losing Conservative support.

The ultimatum — contained in a July 2 letter to Senate Majority Leader Joseph Bruno (R-Rensselaer) — demands that Bruno say no later than tomorrow what, if any, action he'll take when the Senate returns to the Capitol next week on such issues as hiking the minimum wage and relaxing the ban on smoking in restaurants.

Long fears the increasingly liberal Senate GOP is planning to wait until after next Monday — the last day Conservatives can allow Republicans to run on their party line in the November election — to approve the minimum-wage hike, which has already passed the Democrat-controlled Assembly, and take other actions opposed by his party.

"We can't continue to go on the route we've been traveling and have any respect left for our party," Long told The Post yesterday.

"We need to fire a shot over their bow — so that some of these people understand that this could be the end of their relationship with the Conservative Party."

Long said he has yet to receive an answer to his letter.

Bruno spokesman John McArdle said a response would be sent to Long.

Long and other Conservative leaders will decide Thursday which Republican senators to endorse.

The loss of Conservative support could cost some of those GOP senators re-election in November, especially in the suburbs.

At the same time, however, the Senate GOP is known to fear that a failure to increase the minimum wage could cost them races in Manhattan and The Bronx.

Among those threatened with the loss of Conservative Party backing are Sens. Dean Skelos and Carl Marcellino, both Nassau County Republicans who last year voted for the biggest tax increase in New York history.
 
 
 
 

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November 17, 2004
        Feds stub out big cig racket
        By Adam Lisberg

Federal agents have seized tons of bootleg cigarettes at Kennedy Airport that were sent to New York from Switzerland as part of an illegal scheme to sell tax-free smokes, authorities said yesterday.

Agents from the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives began confiscating the shipments of cigarettes bought over the Internet in the last few days, authorities said.

A law enforcement source said the scheme has cost the feds roughly $90million in taxes over the last three years.

The feds are sorting the cigarette shipments by their address labels - and smokers who hoped to get a deal instead could get a visit from the taxman, authorities said.

The probe, launched after a DHL shipping company employee tipped off Port Authority cops, was expected to go on for weeks, a law enforcement source said.

But the feds were so overwhelmed by the quantity of illegal cigarettes coming in that they called the Swiss shipper behind the scam, Otamedia, and told it to stop sending the smokes, the source said.

Customs agents and postal inspectors worked with ATF agents and PA cops to stockpile the cigarettes in a hangar.

"In three days, we filled half a warehouse," the source said.

Otamedia sold Marlboros for as little as $13.95 a carton - allowing buyers to evade as much as $50 in city, state and federal taxes.

"Individuals that ordered these cigarettes are liable to pay those taxes, and the state and the city are entitled to collect their taxes," said ATF spokesman Joe Green.

City and state authorities are involved in the probe, and some sealed criminal complaints have been filed, Green said.

The city of New York won a $17.4million judgment against Otamedia last month for not paying city taxes.

Otamedia did not respond to requests for comment.

November 16, 2004
        Gov prefers to smoke peace pipe
        By Joe Mahoney

ALBANY - Gov. Pataki vetoed yesterday a measure that would have required the state to collect sales tax from shippers who send cigarettes and gasoline to Indian-run retail outlets.

Pataki, in rejecting a tax collection scheme that lawmakers say would net the state as much as $1 billion a year, said he would rather negotiate with the Indian tribes that sell large quantities of untaxed cigarettes over the Internet and from toll-free telephone lines.

With the state sales tax on cigarettes amounting to $1.50 a pack, smokers can save themselves big bucks by getting their cigarettes from Indian vendors.

But Pataki said he was concerned the legislation would have violated a treaty signed in 1842. He added that a fair deal could be made without imposing a law.

"I believe we can do this through consent, where we can reach agreements with tribal nations," he said.

The veto was blasted by the author of the legislation, upstate Assemblyman Bill Magee. Magee, a Democrat, said Indian retailers hurt merchants who sell taxed cigarettes.

It was not immediately clear if lawmakers will seek to override the veto. The planned sales tax had overwhelming support in the Legislature, with the Senate passing it 56 to 1 and the Assembly supporting it 139 to 8.

November 15, 2004
        Gov may snuff out Indian & Web cigs
        By Joe Mahoney

The days of buying cheap smokes via the Internet or on an Indian reservation may be numbered in New York.

Gov. Pataki has until today to sign a bill requiring him to collect taxes on cigarettes from distributors - before they're shipped to Indian land.

The bill, passed by the Republican-led Senate and the Democratic-run Assembly, follows years of wrangling over whether to tax items sold by Native American retailers, who argue that reservations are sovereign nations not subject to taxation.

The Republican governor has refused to enforce his own regulations requiring tax collection on reservations, saying the practice could incite violence.

Assembly Health Committee Chairman Richard Gottfried (D-Manhattan) called Pataki's explanation for ignoring the law a "disturbing" copout.

"If a Democrat said that, the governor would be all over him for condoning lawbreaking," Gottfried said.

The bill has widespread support among health groups, including the American Heart Association, the American Lung Association and the state's largest doctor lobby.

The advocates argue the state's inaction only benefits the cigarette manufacturers and retailers selling tax-free smokes.

"Aside from depriving the state of needed revenue, untaxed cigarette sales contribute to excessive health care costs caused by tobacco use, and increase youth use of tobacco products," the health coalition wrote in a letter to Pataki.

The state tax on a pack of cigarettes has climbed to $1.50, from $1.11, over the past three years. Meanwhile, cigarette sales at retail outlets have dipped - a decline business leaders blame on the increasingly common practice of buying butts from Indian-run Web sites.

A Pataki spokesman would not reveal whether the governor plans to sign the bill, saying only that it was under review.

October 18, 2004
        Many nix health survey
        By Bill Farrell and Lisa L. Colangelo

"Nunnahyah business!"

That was the response from residents in several Brooklyn communities who've been asked to answer a confidential Health Department survey.

Lots of Brooklynites have answered the telephone survey questions designed to measure how healthy city residents are - even the delicate ones about sexual activity, mental health, and drug and alcohol use. But not the good people of Bensonhurst, Gravesend, Bath Beach, Dyker Heights, Bay Ridge, Park Slope and Brooklyn Heights, among other neighborhoods.

With just a few weeks to go, nearly 70 of the 131 families contacted in southern Brooklyn, for instance, have yet to respond. In those neighborhoods, privacy was the common watchword.

"What happens inside these homes stays inside these homes," said Annette Connolly of Bay Ridge.

"People just don't want to provide that kind of information," she said. "That's why we now have privacy laws."

Connolly's brother-in-law Ben Ginchiano couldn't imagine why anyone would be willing to discuss such things, let alone with a stranger, for a city survey.

"Why would you want to provide this information," he said.

A Bensonhurst man who guarded his privacy so carefully he wouldn't give his name said, "Medical records are the only privacy we have left."

Then he had this thought: "How can anyone really be sure if you provide this information to the city it won't somehow get out?"

JoAnn Femia said she never answers telephone surveys - but added she found the lack of response "strange."

"Maybe people are a bit sensitive to the questions," said Femia. "People are concerned about their privacy."

Vincent Formica had another complaint about the survey. "Look, people just don't have time," said Formica, 73, of Dyker Heights. "Who wants to be bothered?"

Health Commissioner Thomas Frieden insisted the survey was "the most important thing the Health Department will do this year."

Maybe. But that didn't seem to be swaying anybody.

State Sen. Martin Golden (R-Bay Ridge), who represents some of the nonparticipating neighborhoods, even wrote letters to his constituents urging cooperation.

"I'm a little disappointed," Golden said. "I don't think people are taking this survey seriously. A lot of times people see a survey, they just toss it away."

Based on an unscientific Daily News survey, it's going to be an uphill fight all the way.

"They're not getting people to respond to what?" said one man in a Yankee cap as he raced to his car. "Well, you're not getting an answer from me either."

October 12, 2004
        Cigarette prices seen rising after new tax bill
        By Chris Burritt

Cigarette makers including Philip Morris may raise prices to cover a $9.7 billion buyout of tobacco farmers the Senate approved as part of a $145 billion corporate tax package.

Makers of premium and discount brands may boost prices 3 cents to 4 cents a pack, according to Goldman Sachs analyst Judy Hong, to finance payments to growers as the government ends a 66-year-old quota system.

"As prices move higher, more consumers are going to switch to off-price brands," said Joe Lieber at Washington Analysis, which tracks regulatory issues.

The average price of Philip Morris's top-selling Marlboro was $3.08 a pack in August.  The average price of Commonwealth Brands discount USA Gold was $2.34 a pack.

President Bush is expected to sign the measure, which passed as part of a bill providing sweeping corporate tax breaks.

September 9, 2004
        Mayor's making Olympian error
        By Sidney Zion

Mayor Bloomberg cons from the heart.

This sets him apart from virtually all politicians in the world. They want the public to believe the baloney they serve night and day, but they'd fear for their sanity if they believed it.

Bloomberg believes everything he says as the mayor of New York. He can deliver a whopper that would make a rabbit hug a hound and walk off the stage convinced that he told the truth, the only truth, never imagining that anyone with any sense could contest it.

Just the other day, he announced that the Republican convention netted the city $255 million. Netted means after costs. Before the convention, he said we'd make $265 million. It was understood that the number meant gross, not net. But gross turns into net when Mayor Mike says so.

Controller William Thompson released an analysis showing that we probably lost about $50 million for the convention.

All you had to do was look and listen to know that Thompson was right. With few exceptions - Elaine's, '21,' Four Seasons - the restaurants were empty, the theaters on life support, the night clubs running on customers who didn't leave town.

New York's big spenders packed the Hamptons or Saratoga - so where's that $255 million clear profit?

John Sabini, a state senator out of Queens, put it just right. "The Republicans came to town with the Ten Commandments in one hand and a $100 bill in the other, and they didn't break either."

Bloomberg says we cleaned up. Says it shows that New York should be awarded the Olympics in 2012.

To promote this, he shows up in Athens and says there's no place like New York for the Summer Games. Because nobody smokes anymore in New York.

In Greece, a guy or doll who doesn't smoke is suspected as maybe Al Qaeda, certainly a probable felon. Yet Bloomberg uses his anti-smoking law, the most prohibitive in the world, to promote the Olympics.

The only thing missing is a slogan: "Sixteen Days in a Smoke-Free City." That would clinch it for the Chinese, the Israelis, the French, the British, the Spanish, the Mexicans - fuhgeddaboudit.

I said something like this to Daniel Doctoroff, Bloomberg's point man for the Summer Games. "Why are you failing to go with that slogan? That's your best hit."

He half-smiled, half-grimaced and said thanks for the help. Known as understanding satire.

In Athens, Bloomberg actually took it seriously and said so. He invites everyone to New York because he believes the world wants to be smoke-free. It's a matter of life and death to him, so how could anyone argue?

In Vanity Fair magazine last year, Bloomberg said that more people die each year in New York from second-hand smoke than perished at the World Trade Center on 9/11.

Isn't there a place called Bellevue for people who talk like that?

But he's the mayor of New York, and he believes every word he says. I knew him long before he thought of running for public office. And always liked him personally.

So it's not easy for me to say that he's maybe the scariest guy I've ever seen in politics. Mike Bloomberg cons from the heart.

August 27, 2004
        Strip club loses cig bar fight
        Helen Peterson

The city's move to ban butts - cigarette butts, anyway - at Scores got a boost from a judge yesterday.

A Manhattan judge nixed a bid yesterday by the strip club to force the city's Health Department to automatically renew its license to operate a tobacco bar.

The ruling could force Scores to stop selling cigarettes and its namesake cigars - and toss out humidors rented by wealthy celebs like actor Colin Farrell and retired hoop star Dennis Rodman.

Customers were allowed to continue to light up even after the city's tough smoke-free policies went into effect because Scores already had been licensed as a tobacco bar.

The legal battle centers on the strip club's apparent failure to apply for a new tobacco bar registration last year after changing ownership. The city Health Department argued in court papers that the smoking status is not transferable.

Manhattan Supreme Court Justice Ronald Zweibel said he won't force the Health Department to declare that Scores is entitled to keep its tobacco bar. But he said the club could refile its lawsuit if the department turns down the club's application.

August 22, 2004
        NYC to GOP: butts out!
        By Maggie Haberman

Republicans, watch your butts!

City health inspectors will be patrolling Madison Square Garden and the media center at the James A. Farley Post Office during the GOP convention next week.

The teams of food inspectors are there to monitor the meals being catered in a bid to protect the tummies of the visiting journalists, delegates and dignitaries. But officials said they won't turn a blind eye if other laws are broken - including the smoking ban.

That means out-of-towners who want to sneak a cigarette or celebratory stogie should watch their backs.

Officials with the city's Host Committee and the Committee on Arrangements, which is in charge of making the Garden convention-ready, couldn't say late last week whether puffers would be able to slip in and out without having to go through strict security again.

"I would be curious to see if they're going to have a designated spot right outside the door at Madison Square Garden to smoke," said Chad Lawton, the coordinator of the GOP's Kansas delegation and one of many out-of-town officials who said Mayor Bloomberg's anti-smoking reputation is well-known.

Several Republicans from tobacco-growing states said they didn't think people within their ranks would light up inside the convention hall, either because they aren't smokers or because they'll try to play by the rules.

"I don't think many do [smoke], if any do at all," said DeVan Barbour of the North Carolina delegation.

Even those who do light up know they're heading to the opposite of Marlboro Country, Lawton said.

"They're going there knowing what they're getting themselves into," he said.

Elliott Marcus, the Department of Health and Mental Hygiene's assistant commissioner for Food Safety and Community Sanitation, said the inspectors will work in 12-hour shifts, with eight on duty at all times.

July 19, 2004
        City giving smokers fresh air
        Hundreds of blocks opened up for restaurants' outdoor cafes
        By David Saltonstall

The city is quietly opening scores of Manhattan blocks to small outdoor cafes - offering an airy new crack in the city's strict smoking ban.

The new zoning rules allow a single row of chairs outside restaurants in previously excluded areas - with a quarter of new seats allowed to go to smokers.

That's in line with current regulations governing outdoor dining areas under Mayor Bloomberg's smoking ban.

But by opening up the bustling heart of midtown Manhattan and other areas to alfresco seating for the first time in decades, the number of eateries able to accommodate smokers is expected to rise dramatically.

"It's up to the restaurateur," said city Planning Department chief Amanda Burden. "He or she can allow 25%."

The new, cafe-friendly zone includes a 100-block section of midtown and much of Madison and parts of Park and Lexington Aves. north of 59th St. - areas where outdoor seats have been banned since 1979.

Other blocks to be opened include 23rd St. from the East River to Eighth Ave. and 14th St. between Second and Eighth Aves.; First Ave. between 48th and 54th Sts., and Orchard and Delancey Sts. on the lower East Side.

Josephine Farinella, 72, said she can't wait. "I'll be in each one of 'em," she vowed, as she sat outside a Seventh Ave. restaurant yesterday, a cigarette in one hand and a beer in the other.

Still off limits will be a wide swath around Grand Central and Times Square, where pedestrian traffic was deemed too heavy to absorb sidewalk clutter.

Some 15 restaurants already have applied for permits under rules quietly approved in May by the City Council. The first permit likely will be issued by the end of this month, with scores more to follow.

The move comes as the city's Department of Consumer Affairs has dramatically streamlined the permitting process - cutting the time it takes to get a cafe permit from 15 months to less than two.

City officials emphasized the new zoning rules were aimed not at smoking but at livening up the city's restaurant scene.

"They are fun for the people who sit at them, and they are fun for the people who walk by," said Burden. "You just get a sense that New York is a great place to be."

Kelli Crosby, 42, agreed that outdoor dining adds to the city's character, even if it chews up some sidewalk space.

"I like the energy of the sidewalk cafes," she said. "In Europe, they're on every corner."

Restaurateurs said the new seats will add style to their decor and money to their bottom lines. But many also see a rare chance to offer smoking patrons a seat.

"It certainly beats their customers having to stand outside," said Chuck Hunt, executive director of the New York State Restaurant Association, which represents some 2,500 city eateries.

Some who have applied for permits say they are looking forward to the new tables - but also worry about the competition that may arise for coveted smoking spots.

"A lot of our customers are from South America and are used to smoking, so they'll probably all be fighting for one table," said Aymeric Clement, manager at Le Bilboquet on E. 63rd St. "But it will bring a little more charm to the upper East Side."

The rules will be strict: Tables must take up no more than 4-1/2 feet of sidewalk, and restaurants will not be allowed to erect barriers or umbrellas around tables.

"We wanted to make the process easier," Department of Consumer Affair