Industry leaders meet in Miami to tackle $2.2T illegal trade, human trafficking problem
Image via Reuters.

The problem is massive, global and growing, and it poses significant threats to Florida.

Florida industry leaders and elected officials are joining law enforcement agencies and economic policy wonks to fight illegal trade, which finances criminal networks, aids terrorism and puts a $2.2 trillion hole in the global economy every year.

Last week, Florida TaxWatch hosted a roundtable discussion at World Trade Center Miami, the first of four planned meetings aimed at developing new approaches to combating the issue, which encompasses the illicit exchange of stolen and counterfeit goods, human trafficking, drug smuggling and the illegal wildlife trade.

All are multibillion-dollar criminal industries. All have serious bearings on the Sunshine State, whose long coastline, 14 major deep-water ports and proximity to drug-producing and transshipment countries make it an “ideal gateway” for illegal goods moving into and through the United States.

Florida ranks third nationwide in human trafficking, with nearly 5,400 recorded cases as of July, according to the National Human Trafficking Hotline.

In 2019, Florida was No. 1 among all U.S. states and territories for cocaine seizures by weight, according to the U.S. Department of Justice, which cites the state’s “maze of roadways” and links to the Caribbean as major contributing factors.

Kicking off the roundtable series in Miami was a natural choice, Florida TaxWatch Executive Vice President Tony Carvajal said, because it is renown for being a smuggling hotspot among Floridians and non-Floridians alike.

“With the crossroads of trade, traffic, the population and all the mobility of good and bad things that go on in a community like this, you’ve got the backdrop that talks about what the real opportunities are — and what some of the failures are,” said Carvajal, who emceed the talk.

The battle against illegal trade has gained momentum in recent months thanks to expanded efforts by USA-IT, an anti-counterfeiting and illegal trade-fighting coalition of brand enforcement experts, law enforcement agencies and business organizations.

Among USA-IT’s partners are the U.S. Chamber of Commerce, pharmaceutical giant Merck, Levi Strauss & Co., Crime Stoppers U.S.A., Tommy Hilfiger, Michigan State University, the National Association of Manufacturers, Florida Retail Federation and the Florida Restaurant and Lodging Association.

The group, now active in 12 U.S. states with more to be added next year, is led by tobacco mammoth Philip Morris International.

According to Hernan Albamonte, a founding USA-IT member who leads illicit trade prevention at Philip Morris, cigarette smuggling is a favorite among criminals and provides quick capital for terrorist networks to grow from one illegal undertaking to another, as well as more dangerous endeavors, including arms dealing, sex trafficking and drugs. It also allows criminals to relatively safely test smuggling routes for other, more valuable or potentially harmful cargo.

One in five cigarettes smoked in the United States is purchased illegally — a $6.9 billion loss in uncollected taxes, he said. In Florida, which ranks fourth in smuggled tobacco, the yearly tax shortfall is $173 million.

That lost money doesn’t disappear, he said. It goes into the hands of criminal organizations to fund seedier misdoings.

“Why is it so popular, the illicit trade of tobacco products? Because it’s a low-risk, high-reward business opportunity for criminals,” he said. “You can buy a 40-foot container of cigarettes that will cost you around $100,000 in China. You bring it to the U.S. and put it in New York and Florida, in some high-tax jurisdiction, and you will probably get $2.3 million. And the risk of going to jail because of illicitly trading tobacco is minimal.”

Cause and effect

People incorrectly think trading counterfeit and illegal goods is a victimless crime, but it’s anything but that, Albamonte said, offering a few examples.

In the early 2000s, ATF agents and other local, state and federal law enforcement officers disrupted a cigarette smuggling network spread between North Carolina and Michigan whose profits funded the Lebanese-based terrorist group, Hezbollah.

By the time 25 arrests were made, some $8 million had reached terrorists in Lebanon.

Around 15 years later, a pair of terrorists murdered 12 people and injured 11 others in an attack on French satirical newspaper Charlie Hebdo. Authorities later confirmed the two men financed their weapons partly through the sale of fake Nike sneakers.

This year, the U.S. Department of Homeland Security investigated attempts by dark-web organizations that were trying to buy empty vials of the Pfizer COVID-19 vaccine. Phony versions of the vaccine later turned up in Mexico and Poland.

“It’s not about the illicit trade of certain products,” Albamonte said. “It’s the entire ecosystem of illicit activities, which includes corruption, money laundering, cybercrime, environmental crimes, human trafficking and exploitation as well. It’s a combination of many factors, and I would like not to create a perception that these are isolated cases or isolated crimes; they are all together, converge and are managed by the same organizations.”

He added: “If you would know that by buying a counterfeit sneaker you would be financing people who are bringing drugs into your community, I’m sure most people would say, ‘You know what? You’re not selling that here.’”

Many of the illegally traded products that reach American shores flow through foreign free trade zones (FTZs), which technically exist outside the custom territory of their host country while, paradoxically, physically existing within them.

The democratization of trade and rapid rise of e-commerce through online mega-retailers and marketplaces like Amazon and eBay have only ramped the use of FTZs, particularly with small parcels whose constant flow has overwhelmed U.S. Customs and Border Protection personnel.


Illegal trade is also an interstate activity, and sometimes the methods by which criminals smuggle goods over state lines are perilous.

Many people now are aware of the scam in which criminals attach credit card skimmers to readers at gas pumps, said Ned Bowman, executive director of the Florida Petroleum Marketers Association. But fewer people, he said, know criminals have since switched to stealing the gas below those pumps, siphoning the highly combustible fuel into a “bladder” in a truck or van for transport and sale elsewhere.

“It’s a constant. Criminals find another way to get around,” he said. “We were able to convince law enforcement that this is a bomb going down the highway … It’s inside the car, and that van is going down the road, tilted up because it has so much fuel.”

(L-R) Ned Bowman, executive director of the Florida Petroleum Marketers Association; USA-IT founding member Hernan Albamonte, who leads illicit trade prevention at Philip Morris International; and Tony Carvajal, executive vice president of Florida TaxWatch. (Photo by Jesse Scheckner.)

Smugglers and thieves constantly retool their operations in response to law enforcement resistance and market changes, said Sal Nuzzo, director of the Center for Economic Prosperity and vice president of policy at the James Madison Institute.

“It’s an ongoing, kind of almost ‘whack-a-mole’ situation, where we’ll constantly have to be vigilant,” he said. “This is not a static thing, like we’ve won the war on terror and now we can all go home.”

Florida has redoubled its efforts to counter the problem, according to Lorena Holley, general counsel for the Florida Retail Federation, who noted a few recent developments that could pay dividends down the line.

Last year, Attorney General Ashley Moody funded a statewide prosecutor position focused solely on prosecuting retail crime. More recently, Holley said, Moody’s office and the Florida Retail Federation launched the Florida Organized Retail Crime Exchange (FORCE), a group of law enforcement and retail personnel tasked with allocating resources and information to build cases and bring retail crime circles down.

The FORCE initiative also includes the creation of a statewide intel-sharing platform that enables the tracking of suspects across counties, retailers and agencies. Retailers issue alerts and share information — photos, videos, vehicle license information, descriptions and other data — in a standardized fashion that’s searchable across Florida.

“We just launched it, and so far 379 retail law enforcement members have been trained and are actively sharing information on it,” Holley said. “One-hundred-forty-six alerts have been created, and over 100 suspects have been identified, vehicles also. The combined case value is approaching $1 million, so it’s something we’re really excited about and will continue to work on.”

Also in the works to stymie the spread of counterfeit goods is the Integirty, Notification, Fairness and Online Retail Marketplace (INFORM) Consumers Act, a bipartisan bill Democratic U.S. Sen. Dick Durbin filed with support from Republican U.S. Sen. Marco Rubio, among others.

The bill, which has yet to pass in Congress, would create a verification requirement for third-party sellers in retail marketplaces and mandate that online platforms must authenticate the identity of high-volume, third-party sellers.

State analogues of the bill have also been filed, including in Arkansas, which in March became the first state to pass it.

“Criminals are capitalizing on the anonymity of the internet,” Holley said. “You just do searches and you can find all kinds of either counterfeit or stolen goods, so it’s really a consumer protection act, but ultimately it will go to stop the sale of all these online, illicit products.”

“Treacherous evil”

More than 800,000 victims of human trafficking are enslaved each year, according to the nonprofit group, Human Rights First, which estimates the industry generates some $150 billion yearly — nearly two-thirds of which comes from sexual exploitation.

The hospitality industry — hotels, motels, short-term vacation rentals and other such business — is the “boots on the ground” to curtail and ultimately prevent that nefarious activity, said Fort Hospitality President Keith Space, who serves as vice chairman of the Florida Restaurant and Lodging Association’s Miami chapter.

The association now is “actively involved” in the American Hotel and Lodging Association’s No Room for Trafficking program and the 5-Star Promise initiative, a voluntary program meant to enhance policies, training and resources for strengthening the safety and security of hotel employees and guests.

But much more must be done, Space said, especially during big-draw events like the Super Bowl and the Formula 1 racing event coming to Miami Gardens in May that frequently coincide with sharp rises in human trafficking.

“As an industry, we can really help complement any of the programs that take place at the state level, but that whack-a-mole strategy of it constantly moving — just because we close one door doesn’t mean it goes away,” he said. “We want those big events, those big concerts and sporting events, (but) if we want to enjoy the benefits of those things, then we have to be vigilant about managing those illicit activities that come as a result.”

Human trafficking is a major focus of Lt. Gov. Jeanette Nuñez, a member of the 15-member Statewide Council on Human Trafficking. Nuñez did not attend the Miami roundtable, but sent a short video expressing her support.

“Human trafficking is the second-largest illicit industry and the world’s fastest-growing criminal enterprise … and tragically, the public is often unaware of its existence, allowing it to thrive and creep into our communities,” Nuñez said in the video, listing some state-level programs now running under Gov. Ron DeSantis, including a child trafficking prevention education curriculum for K-12 students. “We’ve increased awareness, and each day, more and more victims of trafficking have broken free from the bonds of this treacherous evil.”

It’s a cause behind which Sen. Ileana Garcia of Miami also stands, as evidenced by a pair of bills she sponsored now moving through committees in Tallahassee. One, SB 606, would address illegal vessel charter operations to reduce the practice of transporting human cargo by boat, among other things.

The other, SB 294, would “increase the effectiveness of the work performed by the Florida Alliance to End Human Trafficking and protect the identity of individuals that support efforts to end human trafficking.”

Mary Carmen Davila, a legislative assistant from Garcia’s office, attended the roundtable.

Next steps

For two days beginning Dec. 1, USA-IT and a coalition of private and public experts held an inaugural policy summit in Washington to advocate that Congress create new policies to fight illegal trade.

The summit resulted in a passel of recommendations, broad and specific, attendees believed Congress should take steps to realize. Among them:

— Establishing a national framework against illegal trade and organized crime.

— Addressing challenges posed by e-commerce.

— Confronting abuses of small parcels in contraband trade.

— Disabling foreign FTZs from promoting illegal trade.

— Disincentivizing illicit activities through stronger sanctions and penalties.

— Designating the Department of Homeland Security’s Intellectual Property Rights Center as having the primary responsibility for U.S. efforts to counter illegal trade.

— Under supervision of the IPRC, directing U.S. agencies to reduce barriers preventing sharing between the government and industries of information usable in countering illegal trade.

— Enacting legislation to require e-commerce platforms to improve up-front screening of potential sellers, share information relevant to consumers so they understand the risk of purchasing counterfeit goods, remove counterfeit sellers and products from their platforms immediately upon detection and notify shoppers about actual or potential purchases of counterfeit goods.

(L-R) Mary Carmen Davila, legislative assistant to Sen. Ileana Garcia; Sal Nuzzo, vice president of policy and director of the Center for Economic Policy at the James Madison Institute; Lorena Holley, general counsel for the Florida Retail Federation; Hernan Albamonte, USA-IT founding member and head of illicit trade prevention at Philip Morris International; Fort Hospitality President Keith Space, vice chair of the Florida Restaurant and Lodging Association’s Miami chapter; and Tony Carvajal, vice president of Florida TaxWatch. (Photo by Jesse Scheckner.)

Those and other ideas are a good start and could lead to solving many problems, Carvajal said, but none will be effective unless industries and government agencies open more lines of communication and collaboration.

“Illegal trade is the lifeblood of criminal enterprise, and criminal enterprise — even if there is not a violent point at the start — ends up funding things like terrorism and other criminal activities, and that’s not hyperbole,” he said. “So, we’re going to move beyond silos. I’m not just talking about law enforcement, (non-governmental organizations) and businesses. I’m talking about beyond the silos of information. There are things retailers know about counterfeit merchandise. There are things the lodging industry knows about the sex trade. If we don’t talk to each other and make those connection points, we are missing opportunities in this process.”

The next roundtable is tentatively scheduled for May 10 in Tampa.

Jesse Scheckner

Jesse Scheckner has covered South Florida with a focus on Miami-Dade County since 2012. His work has been recognized by the Hearst Foundation, Society of Professional Journalists, Florida Society of News Editors, Florida MMA Awards and Miami New Times. Email him at [email protected] and follow him on Twitter @JesseScheckner.


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