• Alcohol smuggling is a lucrative illicit business in Ontario.

• Major crime groups in the Province - including outlaw motorcycle clubs, Asian gangs and La Cosa Nostra families - are feasting on the fat profits of evading the high taxes on distilled spirits. Provincial and federal taxes and markups account for 82 per cent of the retail price.

• About one of every four drinks of distilled spirits consumed in Ontario is contraband, according to the Liquor Control Board of Ontario. It estimates that this represents a revenue loss of about $249 million to the Provincial Government and about $97 million to the Federal Government. The $346 million also represents the potential profits for organized crime.

• Alcohol smuggling has dramatically increased the power and influence of organized crime. It has also provided an unprecedented means for many crime groups to connect and co-operate.

• Organized crime groups have set up sophisticated systems to smuggle and distribute illegal alcohol in Ontario, Quebec and elsewhere in Canada.

• Most illicit liquor comes from small U.S. distilleries. They sell it legally either to Indian reservations, which have a tax-exempt status, or to fill overseas export orders. The shipments are then diverted into Canada.

• Up to 90 per cent of all illicit liquor entering Ontario passes through the Akwesasne Indian Reservation, which straddles the Canada-U.S. border. Organized criminals take advantage of Akwesasne's tax- exempt status and its geographical location.

• The organized criminals who use Akwesasne as a base of operation also smuggle a variety of other illicit commodities including narcotics, arms and illegal immigrants.

• A variety of means are used to smuggle alcohol from Akwesasne into Canada. Some shipments are moved at night across the St. Lawrence in boats during the summer or by snowmobile during the winter. Others are hidden in trucks and other vehicles.

• Once in Ontario, organized crime groups take delivery of the illegal alcohol and funnel it through their own, extensive distribution networks that also reach into other provinces.

• Taverns and restaurants are routinely approached by organized crime groups to sell untaxed alcohol. Of nine Toronto/Niagara Peninsula- area licensed establishments visited by investigators for this report, all admitted having bought one or more orders of rye, vodka and gin.

• Taverns and restaurants that refuse organized crime's enticements to sell smuggled alcohol may face potential retributions.

• Alcohol smuggling creates unfair competition for establishments that refuse to break the law. They have difficulty competing with others selling cut-rate, smuggled products.

• Even diplomatic channels in Ottawa are being used to acquire tax-free alcohol and move it into the black market.

• Alcohol smuggling puts ordinary citizens in contact with organized crime, breaks down respect for the law, and brings more crime to Ontario neighborhoods.

• At the retail level, illicit liquor is also being sold from vans in parking lots, by order form in offices, and through specialized vendors that supply weddings and other functions.

• Alcohol smuggling is placing an added burden on the already stretched resources of law enforcement. Organized crime groups deploy extensive counter-intelligence resources against anti- smuggling law enforcement units.

• The profits from alcohol smuggling are so substantial that it represents a potentially corruptive influence for law enforcement and elected officials. There have been documented instances of smugglers bribing law enforcement officials. In one Ontario city, a notorious smuggler supported a mayoralty candidate.

Copyright © 1999 Association of Canadian Distillers