U.S. Government Seeks 280 Billion Dollars From Tobacco Firms

WASHINGTON (AFP) - The US government begins a major court battle to win 280 billion dollars that it says major tobacco companies earned from the public by covering up the dangers of smoking.
The tobacco industry manipulated nicotine levels to increase addiction, targeted teens with multibillion-dollar campaigns, falsely claimed low-tar cigarettes were healthier, and lied about smoking hazards and manipulated or hid research to the contrary, government lawyers will argue.
The defendants include Philip Morris USA -- which controls about half of the US tobacco market -- RJ Reynolds Tobacco, Loews Corp's Lorillard Tobacco, Brown and Williamson, which is part of British American Tobacco PLC, and the Vector Group's Liggett Group.
All are being charged under the Racketeer Influenced and Corrupt Organizations (RICO) act, which was intended to counter Mafia infiltration of business.
Cigarette companies carried out "a massive 50-year scheme to defraud the public," according to the government's court filing, which brought "extraordinary profits for the past half-century but has had devastating consequences for the public's health."
In 1953, bosses of the five leading US cigarette manufacturers met at the Plaza Hotel in New York to agree "a long-term public relations campaign to counter the growing evidence linking smoking as a cause of serious diseases," the documents said.
The industry questioned mounting evidence against smoking and sponsored its own "independent" research, all aimed at reassuring the public and denying the harm of smoking, the documents said.
Government lawyers also want tough controls on cigarette manufacturing, marketing, labeling and sales.
The use of the RICO act "should be your first indication of how big a stretch the government's claim is here," said William Ohlemeyer, the in-house attorney for Altria, the parent company of Philip Morris.
The tobacco companies "sell a dangerous and addictive product, but it is sold with a health warning," he said. Much of what the Department of Justice attorneys will claim is fraud "are actually constitutionally protected activities that are not unlawful, let alone fraudulent."
Ohlemeyer insisted the industry has already met many of the government demands in a landmark 1998 lawsuit with 46 state governments over ballooning state health care costs.
At the time, the four top tobacco companies agreed to pay 206 billion dollars over 25 years, funded largely by a cigarette price hike.
They also agreed to strict advertisement limits, including a ban on television ads, billboards and sponsorship of sporting events, as well as paying for anti-smoking ads.
To win under the RICO act the government must prove there will be future malicious intent -- and industry officials say that is impossible since practices have changed dramatically since the 1988 agreement.
Many observers believed the government lawsuit, filed in 1999, would be dropped by President George W. Bush. The tobacco industry is known to contribute heavily to the Republican Party. Bush's political advisor, Karl Rove, served as a Philip Morris consultant in the 1990s.
But the case survived both Judge Gladys Kessler's dismissal of a government claim for medical cost recovery in 2000 and attempts to reach a negotiated agreement in mid-2001.
Kessler also let the case go forward even though the government's right to seek the 280 billion dollars under the RICO act is under appeal.
Chances of a settlement are slim. "As long as the government insists this is a case about money, there is no possible settlement," Ohlemeyer said.
Government attorneys said earlier they had no intention of seeking a settlement.
The trial will run four days a week with some 73,000 trial exhibits 300 witnesses from both sides to be heard. Each side will have 12 weeks to present its case, officials said.
The government has 35 attorneys and 16 assistants working on the case led by Sharon Eubanks. The government team has spent more than 135 million dollars on the case since 1999.
Defense attorney Dan Webb will represent Philip Morris and coordinate with an army of defense lawyers. Industry officials declined to specify how many lawyers were on the case or how much it cost.
Webb, 58, is the country's top white-collar criminal defense attorney, according to a survey of lawyers by the Corporate Crime Reporter newsletter.