Illegal vaping sales ring dismantled, with 150 million yuan involved

In recent years, e-cigarettes have become hugely popular in the market, leading some people to see a “business opportunity” in personal shopping and selling e-cigarette products. However, these e-cigarettes containing tobacco leaf fall under national tobacco regulation, and sales without a license are prohibited.

Recently, the Economic Crime Investigation Brigade of the Chengbei Branch of the Xining Public Security Bureau cracked a case centered on the illegal sale of non-compliant e-cigarettes, involving 150 million yuan and resulting in the arrest of 10 suspects on suspicion of illegal business operations.

Discovery of clues

“A man was posting e-cigarette products on WeChat and selling them online.” One day in early February this year, the Economic Crime Investigation Brigade of the Chengbei Branch discovered this lead during routine work. Based on the clue, police quickly identified the target and, after extensive visits and investigation, found that suspect Li Yun was hiding in a residential community in Chengbei District, Xining. The brigade immediately organized officers to rush to the scene. “You are suspected of violating the law. Please cooperate with the investigation.” The cramped rental apartment had been used as a warehouse. Inside, officers found more than 1.2 million yuan worth of goods, including over 1,200 boxes of atomizers, e-pods, and other products scattered throughout. Suspect Li Yun was brought under control on the spot.

Police interrogated him overnight and sorted through the leads. They found that Li Yun had originally been the owner of several offline e-cigarette retail stores in Xining. After the official implementation of the Measures for the Administration of E-Cigarettes on May 1, 2022, Li Yun’s retail stores could no longer continue operating because they had not obtained tobacco sales qualifications. Seeing that he still had a large amount of inventory on hand, Li Yun decided to take the risk and shift his sales channels from offline to online.

After some time, he discovered that online e-cigarette sales were highly profitable, and his appetite gradually grew. He stockpiled more and more goods until police came to his door and shattered his dream of getting rich. “After the state introduced the relevant control measures, I switched to online sales. I would usually confirm the quantity, flavors, and delivery address with customers online. I knew I was operating illegally, but I didn’t think it would be this serious. I just wanted to make a little more money before stopping,” Li Yun said with deep regret in the interrogation room.

Following the trail

Where did Li Yun source his e-cigarettes? Police conducted a detailed investigation into the supply channels and, by peeling back the layers, discovered that Li Yun was only one link in the outward sales chain. Behind him was a criminal group engaged in the illegal sale of non-compliant e-cigarettes. Following the trail, police carried out an in-depth investigation and gradually uncovered a criminal network centered on 10 people including Li Yun, Xiaolong, Wang Qiang, and Ling Tao. Operating out of Shenzhen, Guangdong Province, the group sold non-compliant e-cigarettes online to more than 20 provinces and cities across the country.

Given the case’s large amount of money involved, numerous suspects, wide geographic scope, and difficulty of collecting evidence, police quickly reported the matter to higher authorities. Under the overall coordination and command of the provincial public security department and the Xining Public Security Bureau, and with strong support from provincial and municipal tobacco authorities, the Chengbei Branch established a task force led by its business divisions, with participation from the Inspection Corps of the Qinghai Tobacco Monopoly Bureau and the Xining Tobacco Monopoly Bureau. The Chengbei District People’s Procuratorate of Xining intervened early, and task force officers traveled to other provinces to begin a comprehensive pursuit of the suspects.

In the Guangxi Zhuang Autonomous Region and Hebei Province, task force officers located Li Yun’s upstream suppliers, Xiaolong and Wang Qiang. The investigation showed that both sourced their goods from Shenzhen, Guangdong Province, then sold them through online transactions and shipped them by courier to multiple provinces nationwide. Li Yun served as the sales representative in Qinghai Province. Based on statements from Xiaolong and Wang Qiang, investigators discovered that the criminal chain ultimately pointed to a man in Shenzhen named Ling Tao. The task force then launched an investigation into Ling Tao.

Ling Tao had originally been an overseas distributor for a certain e-cigarette brand. After losing his distributor qualification in 2021, he decided to cut out the official supply channel and go into business on his own, relying on the customer resources he had built up over the years. Driven by huge profits, Ling Tao continued to contact and coordinate with other tobacco traffickers such as Xiaolong and Wang Qiang through online means, and supplied downstream sellers in various places through courier logistics, forming a complete illegal e-cigarette distribution profit chain.

Arrests made

After cutting off the downstream network, task force officers set out immediately. Despite the many inconveniences of operating in cities outside the province, they carried out days of meticulous investigation and extensive evidence collection, basically clarifying the core facts of the gang led by Zhang Sheng in supplying and selling illegal e-cigarettes, as well as the patterns of movement of the people involved. At the same time, task force officers conducted round-the-clock investigation into offline leads they received and finally determined the gang’s movement patterns, fund flows, and logistics warehouse locations. After locking onto the targets, the task force quickly split into two teams: one continued to monitor Zhang Sheng and his distribution gang in order to cut off the distribution network, while the other rushed to a logistics warehouse in Shenzhen to identify the upstream suppliers and the warehouse location, blocking the source of the illegal e-cigarette products and waiting for the right moment to make arrests. #p#Page Title#e#

On March 8, the task force determined that the time was ripe to close the net. Officers traveled through Hebei, Guangxi, and other provinces and regions, covering more than 1,000 kilometers in a concentrated operation. Over nearly 20 days, they successively arrested the other nine suspects one by one, including Xiaolong, Wang Qiang, and Ling Tao; froze two bank accounts involved in the case, totaling more than 13 million yuan; dismantled eight warehouses; and seized more than 372,000 non-compliant e-cigarette pods and devices. The case involved a total amount of 150 million yuan.

On March 26, the nine suspects were escorted back to Xining. “At that time, all we could think about was catching the suspects as quickly as possible. Everyone rushed forward, unafraid of danger,” recalled Bao Haijun, deputy head of the Economic Crime Investigation Brigade of the Chengbei Branch and a member of the task force, after the operation. From the discovery of the clue to the completion of the arrests, task force officers traveled through seven cities over more than 50 days, covering nearly 10,000 kilometers. With that, this criminal chain of illegal e-cigarette operations was successfully dismantled. The case is currently under further investigation.

(All names in the article are pseudonyms.)