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U.S. Pursues Racketeering Claims Against Tobacco Industry

posted on September 24, 2004


Hello, I'm Mark Pearson.

The economic news this week was a mixed bag tinged with political colors.

*For starters, the Federal Reserve Board boosted a key short-term interest rate one-quarter percentage point. It's the third increase of the year and maintains the Fed's plan to wean the country off historic low interest rates.

*In addition, the Index of Leading Economic Indicators fell in August for the third consecutive month. *And in Washington, Congress approved a $146 billion package of tax relief that will extend three popular middle-class tax cuts. The pre-election package won easy approval at a time of soaring budget deficits.

Though the two issues are NOT related, one way to offset the tax breaks would be for the government to win its latest case against the tobacco industry. And while previous government lawsuits have focused on the health care costs associated with smoking, the latest litigation alleges something more sinister.

U.S. Pursues Racketeering Claims Against Tobacco Industry In the largest civil racketeering case in U.S. history, the government this week began prosecuting the nation's cigarette makers in federal court. The Justice Department's $280 billion lawsuit alleges the tobacco industry schemed for decades to deceive the public about the dangers of smoking and the addictive nature of nicotine. The industry denies acting fraudulently and claims that changes in how cigarettes are sold now make fraud impossible.

The nation's cigarette makers are accustomed to massive anti-smoking lawsuits. The industry in 1998 settled with 46 states for $206 billion on matters related to health care costs associated with smoking. That settlement precludes future lawsuits based on health claims.

The current case not only is the largest ever filed, but marks the first time the industry has faced racketeering charges. Under ground rules set by the court, the government can pursue its racketeering claims ... but cannot recover costs incurred from treating sick smokers.

The government also is seeking new restrictions on the tobacco industry. Those include limits on in-store advertising ... and a ban on descriptions the government considers misleading, like "light" and "low-tar."

The defendants include six of the world's largest cigarette makers, including Philip Morris USA and its parent company, Altria Group. Also named in the lawsuit are the Council for Tobacco Research and the Tobacco Institute.

With the names of nearly 300 witnesses on file, experts say the trial could last up to six months.


Tags: Congress industry news smoking tobacco