MARLBORO - WINSTON - L&M - CAMEL - PARLIAMENT - KENT - CLASSIC

NEWARK, N.J. — Authorities on Thursday said they cracked a ring that sold millions of untaxed cigarettes at Chinese restaurants and other locations throughout New Jersey.

Federal charges were brought against five people, while state and local law officers searched Chinese restaurants in Newark, Paterson, Jersey City and other towns suspected of receiving and reselling the cigarettes.

The cigarettes brought significant profits to the ring and others because they were sold without anyone paying the required taxes to New Jersey, according to charges brought by the U.S. Postal Inspection Service, one of several federal agencies involved.

The complaint lodged in U.S. District court charged that the group purchased, tax-free, at least 150,000 cartons, or 30 million cigarettes, for $4.5 million, and defrauded the state of at least $3 million in cigarette sales taxes.

"This ring operated in a lucrative underground market for contraband cigarettes," U.S. Attorney Christopher J. Christie said in a statement. "Our investigation is continuing."

The suspects are accused of purchasing tax-free cigarettes from companies claiming to be affiliated with American Indian tribes in New York State.

Such companies can purchase cigarettes tax free from distributors, as long as the cigarettes are sold on a reservation to tribe members for personal consumption. Cigarette packs sold in New Jersey must have official state stamps showing that they were taxed, Christie's office said.

State records revealed no such taxes were paid by the suspects, the office said.

Charged were Xiao Z. Qi, who used two birth dates, one in 1972, the other in 1975, and Zhi H. Lin, 31, who lived together in West New York; Rong Chen, 30, and Song D. Xu, 33, both of Newark and owners of a Chinese restaurant in Newark; and Yu Wang, 37, of Passaic, owner of a Chinese restaurant in Newark.

Prosecutors did not immediately have the names of any lawyers for the suspects.