Mr. Qarmout and the Case of the Bogus Smokes

Among the business interests owned by Bader Qarmout and his brother Lewis are the G&S and Q&S Convenience Food Stores – both deli/markets located in Bader’s hometown of Newton. Ever since Apu’s Kwik-E-Mart made its appearance on the Simpsons, these little convenience stores have often been the target of considerable ridicule and yet, how thankful folks are to have one nearby when they discover they need more milk, find themselves jonesing for a bag of Doritos – or suffering a nicotine fit and fresh out of cigarettes.

Like many other small businesses, convenience stores depend upon their vendors to supply them with reasonably-priced merchandise in a timely and efficient manner. This includes tobacco products such as cigars, cigarillos, snuff – and cigarettes.

From the earliest colonial days – when aboriginal Americans introduced Europeans to the joys of tobacco – this particular item of commerce has always been a juicy target for the predations of the Tax Man, who realized long ago that the addictive power of nicotine is such that centuries later, cigarette smokers nationwide willingly render $1.00 unto Uncle Sam for every pack of smokes they purchase, while nicotine addicts in every state fork over an additional amount (in NJ the tobacco tax on cigarettes is around $2.60) – all of which means that if a convenience store in New Jersey charges $5.80 (not counting state sales tax) for a pack of  cigarettes, the actual (and hidden) market price of that pack is only $2.20.

Needless to say, the temptation to purchase and sell “bootleg” cigarettes (which sideskirt federal and state taxes)  is a powerful one – but fraught with legal peril: every legitimate pack of smokes has a special tax sticker stuck to the bottom by the distributor before the carton is sealed up; bootleg smokes either lack this stamp or feature a counterfeit stamp. Any business owner in the Garden State who knowingly purchases bootleg cigarettes in the hope of a quick and easy profit risks the wrath of both Uncle Sam and Governor Zeppelin if he or she is discovered.

It follows that the key in all of this is the tax sticker: if it is an authentic, state-issued sticker applied to each pack of cigarettes by the distributor, then the convenience store owner has every reason to believe the cigarettes he receives from his distributor are legitimate, merchandise.

Now go back in time nearly a decade to the year 2003: our buddies in China (who smoke more cigarettes per capita than any other nation on earth by a margin of 7 to 1) realized they could extend their shoddy copycat reach into the tobacco industry and created a knockoff line of Newport cigarettes for sale in the U.S. While they managed to duplicate with near perfection the outward appearance of the each cigarette pack, the ingredients of each cigarette were a different matter and all manner of nastiness found its way into a cheap tobacco mixture, resulting in a cigarette that not only tasted awful but, in some cases, made the smoker physically ill. Nevertheless, the potential for profit more than outweighed any legal sanctions that might ensue and the market was soon flooded with millions of packs of counterfeit Newport cigarettes.

So it came to pass that the G&S and Q&S stores received shipments of Newport cigarettes from Pine-Lesser Distributors that were subsequently sold to the general public – but it wasn’t long before a customer who purchased a pack of Newport cigarettes at one of the stores returned there and demanded a refund, complaining that the cigarettes tasted awful.

Like they say in the military: a bullet whizzing past you is a random shot; a second bullet is coincidence; a third is enemy fire: after the third complaint in a matter of days, the folks who ran these stores realized that something was terribly wrong but were baffled as to the cause, insofar as each of the packs bore an authentic New Jersey tax stamp placed there by Pine-Lesser, the distributor from whom both stores exclusively obtained their tobacco products. Both G&S and Q&S contacted Angelo Silvesti, a factory representative for Lorillard Tobacco, (the manufacturer of Newport cigarettes) to alert him about the shoddy quality of the merchandise delivered by Pine-Lesser.

Despite the fact that the counterfeit merchandise bore a valid tax stamp issued to Pine-Lesser by the state of New Jersey, Lorillard commenced a raid of sorts on both convenience stores, where federal marshals served ex parte warrants authorizing the manufacturer to seize the questionable merchandise and serve the stores with notice of a pending civil lawsuit for …get ready now…trademark infringement.

Mind you, no criminal charges – either on the part of the federal government or the state of New Jersey – were ever made against the stores or those who were named as co-defendants in a suit alleging that they knowingly sold counterfeit Newport cigarettes as the real thing.

Lorillard’s case was as lame as FDR’s legs: the authenticity of the NJ tax stamp was beyond dispute and prima facie evidence that the store owners couldn’t possibly have known the cigarettes were counterfeit – for that matter, neither could Pine-Lesser, which explains why they were never named as a defendant in the lawsuit. The case was so weak, in fact, that it was the plaintiff, not the defendants, who suggested a settlement of $20,000 to $30,000 as soon as the suit was filed in court.

Confident of their innocence and suspicious that Lorillard was attempting to shake them down (in many of these cases, convenience store owners have neither the time nor the resources to fight the lawsuit in court and simply settle out of court), Qarmout and his co-defendants promptly counter-sued and mounted a vigorous defense. Lorillard ultimately backed off and in December of 2004, Judge William G. Bassler signed an order dismissing the case without costs or prejudice in return for the defendants’ assurance they would drop their counter-suit.

After the dust cleared, Qarmout had spent about as much money on his defense – roughly $30,000 – as Lorillard was demanding to settle the case. I asked Qarmout why he didn’t settle with Lorillard, sparing himself the hassle and grief of protracted litigation.

That’s easy,” he replied, “we didn’t do anything wrong. A settlement with Lorillard would be like an admission of guilt. I’d sooner spend all that money proving I’m innocent than hand it over and live with a cloud of doubt over my head. Lorillard never had a case. We’re innocent and the suit was dismissed. Period. End of story.”

These are the facts. Now that you know them, I urge you to review the screeds published against Mr. Qarmout on this issue (here is the opening shot) by GOP State Committee Member Rob Eichmann on a website that claims to be the megaphone of “common sense conservatism” in New Jersey and ask yourself: are these idiots for real and are they truly the face of Movement Conservatism in New Jersey?

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2 Responses to Mr. Qarmout and the Case of the Bogus Smokes

  1. TP109 says:

    These idiots and the website are not Conservatives and their stories are more like third rate snitch papers. The usual shabby opposition research by the Winky Dink is the reason, as told by those close to the political scene, that the Dink doesn’t get much opposition work anymore. Of course the UGHHHmann is likely to continue to vomit up the Dink’s BS, and the DICK will publish it on the website.

  2. Kenny Lee says:

    Until those guys at CNJ understand the simple concept of – “the Truth, the Whole Truth and Nothing but the Truth” – they will spew propaganda, instead of – news.