ILLEGAL CIGARETTE TRAFFICKING TARGET OF PLANNED CRACKDOWN.

Byline: Steve Geissinger Sacramento Bureau

SACRAMENTO - California and nine other states joined forces Friday with a U.S. anti-terrorism agency and major credit card firms to crack down on illegal Internet cigarette trafficking and smuggling.

Michael Bouchard, assistant field-operations director for the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, said he welcomed the aid because the agency's investigations show millions of dollars each year in illegal sales of cigarettes are diverted to fund terrorists and criminal organizations.

Federal officials fear that a plan by Democrats to raise the tobacco tax to benefit the environment and health care would spur cigarette smuggling and on-line sales from overseas and low-tax states - activities they say fund terrorists, supply minors with tobacco and cost states millions of dollars in revenue.

Conservatives and anti-tax groups are calling on Republican Gov. Arnold Schwarzenegger to veto the bills if they're passed, while the sponsoring environmental and health care groups are asking him to sign them. He has not taken a position but opposes tax hikes in general.

California Attorney General Bill Lockyer announced the crackdown after meeting in Washington, D.C., with federal officials, other states' attorneys general, and representatives of Visa, Master Card, American Express and other credit-card companies.

Illegal Internet cigarette sales and smuggling are ``a growing problem and it will take cooperation between government and the private sector to fight it effectively,'' said Lockyer, a former Democratic state senator from San Francisco's East Bay who is eyeing a run for governor next year.

Participants in the pact include New York, Oregon, Colorado, Pennsylvania, Idaho, Louisiana, Maryland, Wisconsin and Vermont.

``We are taking a multifaceted, multijurisdictional approach to halting illegal cigarette sales,'' said Vermont Attorney General William Sorrell, president of the National Association of Attorneys General. ``We believe this is the most effective and efficient strategy to enforce state and federal laws.''

While federal officials said local law enforcement agencies are agreeing to cooperate their stepped-up efforts against smuggling, private firms said they are working on preventive policies that would thwart illegal online sales via credit card through shadowy Internet dealers.

Virtually all online sales of cigarettes are illegal because the sellers violate state and federal laws, including statutes that require sellers to verify the age of buyers to prevent sales to minors; require sales to be reported to state and federal tax authorities; and prohibit direct sales of cigarettes to consumers.

Other laws Internet cigarette sales violate include federal mail and wire fraud statutes, as well as the federal Racketeer Influenced and Corrupt Organizations Act and federal smuggling, contraband, money laundering and cigarette labeling laws.

Experts expect online cigarette sales will comprise about 15 percent of total sales nationwide - or about $5 billion annually - by the end of the year. The number of online retailers operating in the nation has climbed to nearly 1,000.

Steve Geissinger, [phone]

sgeissinger(at)angnewspapers.com