FedEx is being accused by New York City of illegally delivering millions of contraband cigarettes to homes and is being sued for $52 million in fines and unpaid taxes, according to Reuters.
The city said FedEx delivered about 55,000 cartons of cigarettes from Shinnecock Smoke Shop in Southampton, New York, to residents in 9,900 shipments from 2005 to 2012, and deprived the city of a $15 tax on each carton, according to the news agency. A typical carton contains 200 cigarettes.
"Through its contracts with customers, FedEx prohibits the shipment of tobacco direct to consumers and believes the claims made by the city are overstated and not founded in law," the company stated. "FedEx intends to defend this case while continuing to work with authorities to stop prohibited tobacco shipments."
The city is saying FedEx's activity violated federal and state laws, including an anti-racketeering statute, and wants FedEx to pay a $49.5 million fine plus $2.48 million, which represents triple the lost tax revenue.
The lawsuit came two days before New York Mayor-elect Bill de Blasio takes office, ending Mayor Michael Bloomberg's 12-year term.