OTTAWA, Ontario, Dec. 21 /PRNewswire/ -- The Government of Canada filed a lawsuit today in the United States Federal Court against RJR-Macdonald Inc., RJ Reynolds Tobacco Holdings Inc., several related companies, and the Canadian Tobacco Manufacturers Cou

The case involves an alleged conspiracy, beginning in 1991, to defraud Canada in violation of the laws of the United States and Canada. Lawyers for the Canadian government filed papers today at the U.S. Federal Court in Syracuse, New York. Details of the court action were announced today in Ottawa by Hon. Anne McLellan, Minister of Justice and Attorney General, Hon. Martin Cauchon, Minister of National Revenue and Secretary of State (Economic Development Agency of Canada for the Regions of Quebec), and Allan Rock, Minister of Health. The Government of Canada is claiming that the RJ Reynolds companies defrauded the Canadian people by conspiring with known distributors and smugglers to illegally smuggle their tobacco products into Canada. Furthermore, the Government of Canada claims that the Canadian Tobacco Manufacturers Council acted as an agent for RJ Reynolds in this scheme. The lawsuit is being launched in the United States under the statute known as the Federal Racketeer Influenced and Corrupt Organisations Act (RICO). Many of the defendants involved are based in that country, much of the alleged illegal activity took place there, and many of the witnesses and documents relating to the case are in the U.S. The lawsuit alleges that high level executives were involved in encouraging and authorizing the smuggling conspiracy. The government's filing outlines how the defendants made hundreds of millions of dollars from smuggled tobacco products. At the same time, Canadian governments incurred significant damages including massive enforcement costs incurred while combating this smuggling operation. The government of Canada is seeking at least $1 billion in damages and it may be more once they gain access to the defendants' records during the discovery process. Underlying the government action is the damage this conspiracy inflicted on Canada's national strategy to reduce tobacco consumption, especially among young people, through doubling taxes and duties on tobacco products. Massive cross-border smuggling frustrated these efforts and in 1994 forced the government to significantly reduce excise taxes. As a result, the lives of many Canadians were once again put at risk by this dangerous substance. The lawsuit also names the Canadian Tobacco Manufacturers Council. The lawsuit alleges that the CTMC was used to throw the Government of Canada off the smuggling trail. The government alleges RJR-Macdonald used the Council to blame organized crime while pretending it was trying to stop smuggling. At the same time it is alleged that RJR-Macdonald was setting up a shell company in the United States to deceive investigators. Mr. Fred H. Bartlit, Jr., of the Chicago law firm Bartlit Beck has been hired by the Government of Canada to represent its interests in this lawsuit. Mr. Bartlit has extensive litigation experience involving major cases throughout the United States. Through this court action, the Government of Canada intends to stop the companies and their co-conspirators from engaging in fraud and other unlawful conduct in the future. In addition, the government is seeking to compel the companies to surrender the profits of their unlawful conduct and to pay damages.

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