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Tobacco Firms, Government Brace for High-Stakes Trial

WASHINGTON -- In a non-jury trial scheduled to start on Tuesday in Federal District Court, the government is seeking to strip tobacco companies of $280 billion that Justice Department lawyers say was earned through fraud, reported the Associated Press.

As the largest civil case ever prosecuted under the federal Racketeer Influenced and Corruption Organizations (RICO) Act, it has the potential to put the companies out of business.

Five years in preparation, at a cost to the government of $135 million, the trial is scheduled to last at least six months, with 100 witnesses expected to testify in person and 200 others through depositions or testimony in other trials.

The defendant companies -- Philip Morris USA; its parent, the Altria Group; the R.J. Reynolds Tobacco Co.; the Brown & Williamson Tobacco Corp., which merged over the summer with Reynolds; the Lorillard Tobacco Co., a subsidiary of the Loews Corp.; British American Tobacco; and the Liggett Group -- say that the government's case is groundless.

They deny engaging in a conspiracy and accuse the government of distorting history to drive them into bankruptcy. They also say that under the terms of a 1998 settlement with 46 states that sued to recover nearly $250 billion for the health-care costs of smoking, the companies have already complied with orders that the government is seeking in the lawsuit, like public disclosure of company research relating to smoking and bans on marketing to children.

William S. Ohlemeyer, vice president and associate general counsel for Altria, said the judge, Gladys Kessler, could decide for the government only if it could show that a pattern of fraud in the past was evidence of fraud in the present and future.

Ohlemeyer said that past behavior was debatable. He said positions the companies once held -- that smoking does not cause disease, for example -- "can be wrong without being evidence of committing fraud."

As for the present and future, he said, the 1998 Master Settlement Agreement created so much government oversight that continuing fraud would be impossible. "The court is required to review the totality of circumstances," Ohlemeyer said in a conference call with reporters last week. "It's difficult for the government to argue that the past is a reasonable predictor of the future. It ignores a detailed list of how cigarettes are sold today vs. the past."

Filed in 1999, the case originally included charges to recover federal health-care costs due to smoking. Judge Kessler dismissed them, leaving two counts under the racketeering act. The Justice Department has aggressively pursued those charges despite several efforts by Congress to block financing for the case.
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