Lying Murderers

In 2010, the U.S. Supreme Court gave corporations the same status as citizens in their political activities.  Their lobbyists are free to bribe, influence, and persuade lawmakers.  It's not the sort of decision that most consider to be reasonable.  

Corporations have given us little reason to trust them.  Like big tobacco, for example -- they lied to the American people and even in testimony to Congress.  They lied because the truth would affect their profits.

Big tobacco lied to us for decades.  They aggressively promoted lies in advertising, false information in testimony, and they suppressed the science reports that told the truth about how deadly it all is.  They said their products were safe, improved over the years, less nicotine, etc.  All lies.

While they were lying, 1200 people died from smoking every day, and the companies were aware of it.  For decades, they continued lying and selling their deadly products.  They even modified their cigarettes to make them more addictive, knowing that people would die as a result of their corporate actions.

Why should we consider big business as a legitimate voice in anything?  Those whose only ethic is money, why should we let them exist outside of prison?  The executives knowingly and deliberately sent millions to their death.  Their motive was profit, pure and simple; they proved to be unethical beyond any explanation or excuse. 

Top executives of the seven leading American tobacco companies who sat together and lied to Congress: 
Donald S. Johnston, president and chief executive of American Tobacco Company 
Thomas Sandefur Jr., chairman and chief executive of Brown and William Tobacco Corporation
Edward A. Horrigan, chairman and chief executive of Liggett Group Inc.
Andrew H. Tisch, chief executive Lorillard Tobacco Company 
Joseph Taddeo, president of United States Tobacco Company 
James W. Johnston, chief executive of R. J. Reynolds 
William I. Campbell, chief executive of Philip Morris

It’s been called the greatest crime in human history.  Big Tobacco knew cigarettes caused cancer, emphysema, heart disease and other deadly diseases, and they lied to the public about it.  Big Tobacco knew that nicotine in cigarettes was addictive, and they lied about that, too.  And they add things to cigarettes to try increasing the addictive effect of nicotine, all while publicly claiming that smoking is a “choice” that people can simply quit doing when they choose to do so.  Meanwhile, internally within the companies, they recognized that cigarette smoking was an addiction that most smokers cannot give up even if they want to.  Big Tobacco celebrated that, while knowing that nicotine addiction would lead to millions and millions of Americans suffering and dying from very serious diseases.  Big Tobacco didn’t care 30, 40 and 50 years ago, and Big Tobacco doesn’t care today.

Tobacco companies were sued in several states (resulting in large settlements) and were all, after several years, convicted in federal court of racketeering. In a punishing affirmance, the D.C. Circuit Court of Appeals has issued a 92-page per curiam opinion upholding the judgment issued by D.C. District Court Judge Gladys Kessler in August 2006, in which she found eleven of America’s major Tobacco Companies and related entities guilty of nearly 150 counts of mail and wire fraud in a continuing “pattern of racketeering activity” with the “specific intent to defraud” under the Racketeer Influence Corrupt Organizations (RICO) Act.
Big oil has behaved similarly as has Wall Street.  The conscienceless corporations wield more influence than citizens.  This is not government of, for, and by the people; it's government by money.

From the congressional inquiry ...

Tobacco company representatives, acting in their official capacities, are believed to have committed perjury in oral and written testimony before the United States Congress. Each of these commissions satisfied the statutory test of perjury, which requires a finding of a false statement, willfully made as to material fact, under an oath authorized by law and taken before a competent tribunal, officer or person authorized by Federal law to administer such an oath, including the Congress. 18 U.S.C. §1621.

Seven tobacco company chief executives, accompanied by other individuals also appearing on behalf of their companies, testified under oath before the Subcommittee on Health and the Environment of the Committee on Energy and Commerce, U.S. House of Representatives, on April 14, 1994. [Hearing before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, April 14, 1994.] 

The tobacco executives and the individuals accompanying them included the following:

William I. Campbell, President and CEO, accompanied by Dr. Kathy Ellis, Director of Research, and Harold Burnley, Director of Process Development, Philip Morris, U.S.A.

James W. Johnston, Chairman and CEO, accompanied by Andrew J. Schindler, President and Chief Operating Officer U.S.A., and Carl Ehmann, Head of Research and Development, R.J. Reynolds Tobacco Company ("RJR"), and Richard Cooper, outside counsel and partner with Williams & Connolly

Thomas E. Sandefur, Jr., Chairman and CEO, accompanied by T.F. Riehl, Vice President for Research and Development, and John Jewell, Vice President for Manufacturing, Brown & Williamson Tobacco Corporation ("B&W")

Andrew H. Tisch, Chairman and CEO, accompanied by Dr. Alexander Spears, Vice-Chairman and Chief Operating Officer, Lorillard Tobacco Company

Donald S. Johnston, President and CEO, accompanied by Robert Sprinkle, III, Executive Vice-President for Research and Quality Assurance, American Tobacco Company

Edward A. Horrigan, Jr., Chairman and CEO, accompanied by Gregory Sulin, Vice President of Operations, Liggett Group Inc. ("Liggett")

Joseph Taddeo, President, accompanied by Dr. Robert Lawrence, Executive Vice-President, U.S. Tobacco Company ("UST")

The following statements, all of which, because of their apparent falsity are believed to constitute act of perjury pursuant to 18 U.S.C. §1621, were made without qualification, [The fact that on some occasions the tobacco executives in their testimony may have framed statements as beliefs or opinions does not change or negate the fact that they also made the clear, declaratory statements addressed here.] and were willfully made as to material facts by the identified tobacco company representatives in the course of their testimony. Key portions are identified by italics.

a. Perjury by William Campbell (Philip Morris)

Campbell Perjury #1 and #2

#1 "Cigarette smoking is not addictive."

#2 "The presence of nicotine, however, does not make cigarettes a drug or smoking an addiction"

Discussion of Campbell Perjury #1 and #2

The existence of substantial scientific research studies conducted by William Campbell's company demonstrates that Philip Morris scientists and executives have known for decades that nicotine, and therefore cigarette smoking, is addicting.

For example, an 18-page internal report by William L. Dunn, Jr., a senior scientist with the Philip Morris Tobacco Company, [William L. Dunn, Jr., Philip Morris Research Center, "Motives and Incentives in Cigarette Smoking" (describing the conclusions of a 1972 Council for Tobacco Research Council conference in St. Maarten), Plaintiff's Exhibit P-5171 in the case of Cipollone v. Liggett.]which Campbell directs as Chairman and CEO, clearly confirmed in 1972, sixteen years before the publication of the landmark U.S. Surgeon General's report on nicotine addiction, [U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, The Health Consequences of Smoking: Nicotine Addiction. A Report of the Surgeon General, 1988.] the addictive nature of nicotine and its fundamental importance to cigarette smoking. The report states:

"[T]he cigarette is in fact among the most awe-inspiring examples of the ingenuity of man. Let me explain my conviction.

"The cigarette should be conceived not as a product but as a package. The product is nicotine. The cigarette is but one of many package layers. There is the carton, which contains the pack, which contains the cigarette, which contains the smoke. The smoke is the final package. The smoker must strip off all these package layers to get to that which he seeks.

"But consider for a moment what 200 years of trial and error designing has brought in the way of nicotine packaging:

"Think of the cigarette pack as a storage container for a day's supply of nicotine:

"1) It is unobtrusively portable.

"2) Its contents are instantly accessible.

"Think of the cigarette as a dispenser for a dose unit of nicotine:

"1) It is readily prepped for dispensing nicotine.

"2) Its rate of combustion meters the dispensing rate, setting an upper safe limit for a substance that can be toxic in large doses.

"3) Dispensing is unobtrusive to most ongoing behavior.

"Think of a puff of smoke as the vehicle of nicotine:

"1) A convenient 35 cc mouthful contains approximately the right amount of nicotine.

"2) The smoker has wide latitude in further calibration: puff volume, puff interval, depth and duration of inhalation. We have recorded wide variability in intake among smokers. Among a group of pack-a-day smokers, some will take in less than the average half-pack smoker, some will take in more than the average two-pack-a-day smoker.

"3) Highly absorbable: 97% nicotine retention.

"4) Rapid transfer: nicotine delivered to blood stream in 1 to 3 minutes. ["Actually," as noted by addiction medicine expert John Slade, M.D., "delivery is in a matter of a few seconds." Testimony of John Slade, M.D., before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994.]

"5) Non-noxious administration [sic].

"Smoke is beyond question the most optimized vehicle of nicotine and the cigarette the most optimized dispenser of smoke."

Similarly, a confidential "special" report prepared by the Philip Morris U.S.A. Research Center for top Philip Morris executives in March 1978 reaffirms the central pharmacological role played by nicotine in the difficulty experienced by consumers trying to quit smoking. It makes no mention of taste or flavor in this context, and also questions the prudence of introducing low-nicotine products because their availability might make it easier for addicted smokers to quit. The report states:

"We think that most smokers can be considered nicotine seekers, for the pharmacological effect of nicotine is one of the rewards that come from smoking. When the smoker quits, he foregoes his accustomed nicotine. The change is very noticeable, he misses the reward, and so he returns to smoking.

***

"If the industry's introduction of acceptable low-nicotine products does make it easier for dedicated smokers to quit, then the wisdom of the introduction is open to debate." [F.J. Ryan (approved by W.L. Dunn, Jr.), Philip Morris U.S.A. Research Center, "Exit Brand Cigarettes: A Study of Ex-Smokers," March 1978, Plaintiff's Exhibit 671 in the case of Cipollone v. Liggett (underlining in original).]

Other Philip Morris research on nicotine and addiction is discussed infra.

Furthermore, William Campbell contradicted himself, thus admitting Philip Morris' intent to use addictive substances in its cigarettes, in the following exchange:

Mr. Synar: "Mr. Campbell, was [former Philip Morris research scientist] Dr. [Victor] DeNoble's work part of your company's effort to develop a nicotine analog, which are chemicals which would have addicting or reinforcing features without any or some of the nicotine side effects? Yes or no?"

Mr. Campbell: "Yes."

Additional background: Campbell and other tobacco company executives and scientists frequently assert publicly that nicotine is not addictive. It is notable, and relevant to the question of whether perjury has been committed, that a substantial number of documents from within Philip Morris itself, as well as from other tobacco companies' internal files, demonstrate that these companies, their executives and their scientists have reached precisely the opposite conclusion - i.e., that nicotine is a drug and is addictive. Only a small fraction of this evidence is cited in this Discussion and later in this Prosecution Memorandum.

Based on information and belief, the only critics of the concept that nicotine is addictive are those with direct financial ties to tobacco companies or their agents. [See, e.g., John H. Robinson and Walter S. Pritchard (Biobehavioral R&D, R.J. Reynolds Tobacco Company), "The Role of Nicotine in Tobacco Use," 108 Psychopharmacology 397-407, 1992. Inter alia, while identifying nicotine's effect on the body and its ability to reduce anxiety and increase mental alertness, and also acknowledging that "the beneficial effects of smoking on cognitive performance are a function of nicotine absorbed from cigarette smoke," the authors claim that the definition of addiction applied by the U.S. Surgeon General and other leading experts is in error and that nicotine is, therefore, not addictive. Playing a semantic game, the tobacco industry authors claim that to be defined as "addictive," a substance must cause intoxication, a view rejected by independent, mainstream scientists. "It is not that Dr. Robinson and other scientists supported by tobacco companies disagree with main points made by mainstream scientists, but that they define addiction differently," said the New York Times. In fact, the tobacco industry scientists admit that nicotine use does feature the hallmarks of addiction, including compulsive use, withdrawal symptoms and continued use despite knowledge of harm to oneself and others. Philip J. Hilts, "Is Nicotine Addictive? It Depends on Whose Criteria You Use," New York Times, August 2, 1994, p. C3.]

The approach taken by British psychologist David M. Warburton, who frequently is cited by the tobacco companies as the primary -- and often, the only -- support for the claim that nicotine is not addictive, has been rejected by virtually every, if not every, credible and independent expert in the world. [See D.M. Warburton, "Is Nicotine Use an Addiction?," The Psychologist, April 1989, pp. 166-170. While some of Warburton's work has been accepted, his and other tobacco industry supporters' claim that nicotine is non-addictive has been soundly rejected, most recently by the FDA Drug Abuse Advisory Committee on August 2, 1994, which reaffirmed overwhelmingly that nicotine is: 1) addictive; and 2) the substance in tobacco products that causes addiction. See, generally, Philip J. Hilts, "F.D.A. Panel Takes Step Toward Setting Control on Nicotine," New York Times, August 3, 1994, p. A1. Tobacco industry representatives note that Warburton contributed to the 1988 Surgeon General's report on nicotine addiction, but they invariably fail to mention that Warburton's contribution to that report did not address the fundamental issue of whether nicotine is addictive. See Discussion of Taddeo Perjury #1, infra. See also Medical Research Council, The Basis of Drug Dependence (Medical Research Council: London, England, 1994). The MRC report is a leading authoritative reference for the scientific and medical communities in the United Kingdom, Warburton's home. It states: "Tobacco is widely regarded as one of the major environmental causes of illness and death. That most people use tobacco to obtain the effects of nicotine, and that nicotine is an addictive drug that supports dependence processes, is widely accepted. "Rejecting the tobacco industry's frequent comparison of nicotine to caffeine, it states: "Caffeine is almost certainly the most widely used drug of dependence in the world. Despite this, almost no evidence of morbidity other than gastric irritation, insomnia and cardiovascular effects has been found. Studying caffeine is unlikely to tell us very much about the harmful effects of drugs of dependence, but it does illustrate that dependence per se is not a problem." (Emphasis added.)] Even Warburton acknowledges in his own research that the "effects of smoking on cognitive function, when considered together with the rapid absorption and elimination of nicotine, suggest a major role in the motivation for smoking."

The investigation coincident to preparation of this Prosecution Memorandum confirmed, moreover, that Warburton's research has been extensively funded by the tobacco industry at least since 1978, [E.g., by the Tobacco Research Council and Carreras Rothmans Ltd. Warburton also has acknowledged assistance from the British-American Tobacco Company. All of the following research has been so funded: Keith Wesnes and David M. Warburton, "The Effects of Cigarette Smoking and Nicotine Tablets Upon Human Attention," in Smoking Behaviour: Physiological Influences, Raymond E. Thornton, Senior Scientists, Group Research and Development Centre, British-American Tobacco Company Limited, ed. (Churchill Livingstone: Edinburgh, London and New York, 1978); K Wesnes and D.M. Warburton, "Effects of Smoking on Rapid Information Processing Performance," Neuropsychobiology, Vol. 9, 1983, pp. 223-229; K. Wesnes and D.M. Warburton, "The Effects of Cigarettes of Varying Yield on Rapid Information Processing Performance, Psychophar-macology, Vol. 82, 1984, pp. 338-342; K. Wesnes and D.M. Warburton, "Smoking, Nicotine and Human Performance," Pharma. Ther., Vol. 1, 1983, pp. 189-208; K. Wesnes, D.M. Warburton, B. Matz, "Effects of Nicotine on Stimulus Sensitivity and Response Bias in a Visual Vigilance Task," Neuropsychobiology., Vol. 9, 1983, pp. 41-44.] and that he was given honoraria and sent on all-expenses-paid trips by tobacco interests to testify on their behalf against the regulation of tobacco at hearings held in New Zealand.[Telephone interviews with Martin Jarvis, M.Phil., Principal Scientists, Imperial Cancer Research Fund, Health Behaviour Unity, Department of Psychiatry, Institute of Psychiatry, December 1-2, 1994; private communications received from Dr. Murray Laugesen, scientific editor of Toxic Substances Board, Department of Health (Wellington, New Zealand), Health OR Tobacco, May 1989.]

Warburton also is the founder of Associates for Research into the Science of Enjoyment ("ARISE"), a British organization funded by tobacco, distilling and brewing companies which, among other things, advocates for "smokers' rights." Explaining ARISE's mission, Warburton recently claimed that the health benefits of cigarette smoking may outweigh the damage. He said: "It's interesting how few people die from smoking. Most smokers live to a ripe old age. Don't forget, the death rate for smokers and non-smokers is the same in the end - 100 percent." [Quoted in Madeleine Bunting, "Eat, Drink, and Be Very Provocative," The Guardian, November 12, 1994, p.29.] Further placing the position of Warburton's group in perspective, ARISE member James McCormick said that "[t]he addictive properties of cocaine and heroin are overstated. Not everyone becomes dependent. A lot of people are stable addicts." [Id.]

See, generally, this Prosecution Memorandum for a review of significant, additional evidence on the tobacco industry's thorough understanding of the addictive nature of nicotine.

Campbell Perjury #3

#3 "Philip Morris research does not establish that smoking is addictive. At the March 25th hearing, [FDA] Commissioner [David] Kessler made the statement, supported by Dr. [Jack] Henningfield [of the National Institute on Drug Abuse], [Dr. Henningfield is a research psychologist and Chief of the Clinical Pharmacology Branch at the Addiction Research center of the National Institute on Drug Abuse, National Institutes of Health.] that in 1983, a company, later identified as Philip Morris, suppressed research by one of its own scientists who, allegedly, concluded that nicotine was an addictive substance. That is false. In fact, that scientist published two full papers and five abstracts related to the work in question, including one published in 1982, a year prior to the creation of the manuscript in question. The manuscript subsequently provided to the committee by [FDA] Commissioner [David] Kessler presented some evidence that rats will self-administer nicotine, and that nicotine, therefore, is a weak reinforcing agent. The researcher later concluded that nicotine is a reinforcer in the class of non-addictive chemical compounds such as saccharin and water. In addition, and Commissioner Kessler failed to note this, the manuscript itself states, and I quote, 'Termination of prolonged access to nicotine under conditions in which it functions as a positive reinforcer does not result in physiological dependence.' Thus the manuscript did not conclude that nicotine is addictive."

Discussion of Campbell Perjury #3

Campbell's testimony is highly misleading and may rise to the level of perjury, based on the following evidence:

(1) Congressional Testimony of Victor DeNoble: According to the Congressional testimony of chief study author Victor J. DeNoble, Ph.D., the research conducted for Philip Morris by DeNoble and his colleagues led them to the conclusion that nicotine is addicting "on a level comparable to cocaine." [Testimony of Victor John DeNoble, Ph.D., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, April 28, 1994.] The study itself [Victor J. DeNoble, Paul C. Mele and Francis J. Ryan (Philip Morris Research Center), "Nicotine as a Positive Reinforcer for Rats: Effects of Infusion Dose and Fixed Ratio Size," 1983 (withdrawn from publication by Philip Morris).] was co-authored by three Philip Morris scientists five years before publication of the Surgeon General's landmark report on nicotine addiction in 1988. It resulted from the work conducted in the Philip Morris laboratory, directed by Dr. DeNoble, whose explicit charge was to identify the effects of nicotine on the central nervous system and brain.

Philip Morris may attempt to argue that at that time, 11 years ago, the company considered the DeNoble study to be an early, rather than a conclusive, indication of nicotine's addictiveness. That argument cannot be true, first, because of the other extensive scientific information that Philip Morris already possessed showing that nicotine is a highly addictive drug (as discussed elsewhere in this Prosecution Memorandum).

Second, DeNoble testified before Congress that even taken alone, irrespective of the Philip Morris researchers' substantial additional findings on nicotine's addictiveness, the study "demonstrate[s] that both physiological and behavioral tolerance develops to chronic nicotine administration. Following tolerance development, higher doses of nicotine were required to produce effects that were both quantitatively and qualitatively similar to those observed before tolerance had developed." As summarized by the New York Times, "[o]ne important measure of a drug's addictive potential is whether a laboratory animal will work hard pressing a lever to get the drug. Nicotine will get a rat to press a bar steadily, more than 100 times an hour, and Dr. DeNoble found that the animals will do the same for acetaldehyde [see infra, this Discussion], though they will not do so for water or saccarin [sic] or other favored substances." [Philip J. Hilts, "Scientists Say Cigarette Company Suppressed Findings on Nicotine," New York Times, April 29, 1994, p. A1.]

The DeNoble study and other Philip Morris research underscore the company's significant interest in the pharmacology, i.e., the drug effects of nicotine and other substances in tobacco and tobacco smoke. Indeed, DeNoble and his colleagues' extensive research for the company led them to discover an artificial version of nicotine that had few of the toxic effects on the heart that nicotine is known to have. The significance of the identification of the psychoactive and possibly addictive substance acetaldehyde grew greater when the researchers learned that by combining nicotine and acetaldehyde, the addictive effects more than tripled, causing the Philip Morris test rats to press a bar more than 400 times an hour. [Testimony of Victor John DeNoble, Ph.D., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, April 28, 1994. See also Philip J. Hilts, "Scientists Say Cigarette Company Suppressed Findings on Nicotine," New York Times, April 29, 1994, p. A1; Eben Shapiro, "Scientist Says Philip Morris Suppressed His Research on Nicotine Addiction," Wall Street Journal, April 29, 1994, p. B8.]

DeNoble in his testimony also flatly contradicted Campbell's and the other tobacco witnesses' sworn testimony that nicotine was in cigarettes for "taste," noting that nicotine's effect on the brain, not flavor, was the sole focus of Philip Morris' research. [See also Testimony of David A. Kessler, M.D., Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994: "The tobacco industry may tell you that nicotine is important in cigarettes solely for 'flavor.' There is a great deal of information that suggests otherwise. Some of the patents specifically distinguish nicotine from flavorants. [Footnote omitted.] An RJR book on flavoring tobacco, while listing around a thousand flavorants, fails to list nicotine as a flavoring agent. [Citing J.C. Leffingwell and H.J. Yound, Tobacco Flavoring for Smoking Products (R.J. Reynolds Tobacco Company, 1972).]] Even taken alone, these facts strongly support a finding that Philip Morris' scientists clearly confirmed the highly addictive character of nicotine (as well as, possibly, other substances) and the unambiguous understanding by Philip Morris executives of the addictiveness of nicotine.

See also Discussion, infra, regarding the nicotine manipulation process patented by Kimberly-Clark Corporation and LTR Industries, which is believed to have been used, and may be used currently, by Philip Morris, possibly in manufacturing facilities abroad, though this has not been confirmed.

2) Philip Morris' Suppression of Unfavorable Research: Philip Morris acknowledged the seriousness of its nicotine laboratory's findings when it suppressed continuation of the research because of the company's growing concern that the evidence of the drug's addictiveness would cause legal problems in connection with tobacco products liability litigation. According to Dr. DeNoble and fellow Philip Morris scientist Paul C. Mele, Ph.D., also in testimony before Congress, Philip Morris forbade the researchers from discussing their work, even with other company employees, and prohibited them from publishing it. After the complaint in the smoker-death lawsuit of Cipollone v. Liggett was filed in August 1983, Philip Morris forced DeNoble to withdraw his paper on the rat test from the scientific journal Psycho-pharmacology, which already had accepted the report for publication following full peer-review. Then, on April 5, 1984, the scientists were abruptly forced by Philip Morris officials to halt their studies, turn off all their instruments, kill all the laboratory rats and turn in their security badges by morning. According to Drs. DeNoble and Mele, Philip Morris executives threatened legal action if the scientists published or talked about their nicotine research, directly contradicting Campbell's sworn testimony of April 14, 1994. [See Philip J. Hilts, "Scientists Say Cigarette Company Suppressed Findings on Nicotine, " New York Times, April 29, 1994, p. A1; Eben Shapiro, "Scientist Says Philip Morris Suppressed His Research on Nicotine Addiction," Wall Street Journal, April 29, 1994, p. B8; Clifford E. Douglas, Special Report: The Tobacco Industry's Use of Nicotine as a Drug: What do the Recent Revelations Mean for Tobacco Control ? (American Council on Science and Health: New York, NY, May 1994).]

3) Philip Morris Scientists Did Not Conclude Nicotine to be Non-Addictive: By stating in the context of this testimony that "[t]he researcher [Campbell suggests that there was only one researcher. In fact, there were several.] later concluded that nicotine is a reinforcer in the class of non-addictive chemical compounds such as saccharin and water," Campbell adroitly implied, falsely, that the Philip Morris scientists thereby found that nicotine is itself non-addictive, a conclusion they specifically did not reach (see this Discussion, supra).

See also Discussion, supra, of the internal reports produced by Philip Morris Tobacco Company scientists William L. Dunn, Jr., in 1972 and F.J. Ryan in 1978, describing in clear detail the addictive effects of nicotine on smokers.

Campbell Perjury #4

#4 "Consumers are not misled by the published nicotine deliveries as measured by the FTC method."

Discussion of Campbell Perjury #4

There simply is no dispute that consumers are seriously misled by the published nicotine deliveries as measured by the FTC method, and Philip Morris and other tobacco companies clearly know this. Thus, Campbell's statement, made as a blunt declaration and not as a qualified opinion, may have risen to the level of perjury. In fact, tobacco manufacturers have, through their conduct, ensured that this is the case. As documented by the New York Times and summarized here: [Philip J. Hilts, "Major Flaw Cited in Cigarette Data: Testing for Tar and Nicotine Underreports Amounts," New York Times, May 2, 1994, p. A1.]

(1) The measurements of nicotine and tar, which are carried out by tobacco company laboratories under the supervision of the Federal Trade Commission ("FTC"), bear no relation to the levels of these poisons that smokers actually ingest.

(2) The misleading measurements of nicotine and tar are attributable to testing that "has not kept up with the changes [made by tobacco manufacturers themselves] in cigarette design over the last 20 years." (emphasis added) Tobacco manufacturers have engineered several new features that make the machine tests meaningless, according to Jack E. Henningfield, Ph.D., Chief of Clinical Pharmacology Research at the National Institute on Drug Abuse and Senior Scientific Editor of the 1988 Surgeon General's report on nicotine addiction. Most of the cigarettes produced by cigarette companies now contain nearly invisible holes in the cigarette paper near the filter, ostensibly to dilute the smoke. The testing machines, which hold the cigarette by the tip of the filter, both "inhale" the smoke in an even and consistent manner and allow a significant quantity of the smoke's contents to escape through the holes. This process dilutes the smoke that reaches the measuring device and results in significantly lower nicotine and tar measurements.

Tobacco manufacturers know that human smokers, who are not machines, frequently compensate, often unconsciously, for a reduction in nicotine levels both by puffing more often and more deeply and by blocking the filtration holes with their lips or fingers. Thus, smokers ingest more smoke, more nicotine and more tar. By compensating in this way, smokers sometimes ingest more of the addictive drug and the other poisons when smoking so-called low-tar/nicotine cigarettes than they would if they were to use the tobacco manufacturers' full-strength brands.

(4) National Gallup polls have found that smokers believe that cigarette brands labeled "light" are less hazardous and deliver less nicotine and tar. However, as reaffirmed by Judith D. Wilkenfeld, Assistant Director in the FTC's Division of Advertising Practices, "[w]e know that consumers do not smoke in exactly the same manner as the machine" used in testing. "So the tests will not predict the actual human consumption."

See also the 1972 internal report by William L. Dunn, Jr., a senior scientist with the Philip Morris Tobacco Company, [William L. Dunn, Jr., Philip Morris Research Center, "Motives and Incentives in Cigarette Smoking" (describing the conclusions of a 1972 Council for Tobacco Research Council conference in St. Maarten), Plaintiff's Exhibit P-5171 in the case of Cipollone v. Liggett.] which states:

"Think of a puff of smoke as the vehicle of nicotine:

"1) A convenient 35 cc mouthful contains approximately the right amount of nicotine.

"2) The smoker has wide latitude in further calibration: puff volume, puff interval, depth and duration of inhalation. We have recorded wide variability in intake among smokers. Among a group of pack-a-day smokers, some will take in less than the average half-pack smoker, some will take in more than the average two-pack-a-day smoker.

Recommendations for Further Investigation

To understand more fully Philip Morris' genuine views on this issue and the full extent of Campbell's apparent perjury, the Department of Justice is advised to obtain from Philip Morris, its agents and other appropriate entities and individuals doing business with or for Philip Morris the following information: 1) internal studies and survey data on consumers' views concerning the levels of nicotine and tar as posted on tobacco product packages and advertisements; and 2) internal studies on the effect of such labels on consumers' purchasing and consumption practices.

Campbell Perjury #5, #6, #7 and #8

#5 "Philip Morris does not manipulate nor independently control the level of nicotine in our products." [Stated twice, verbatim.]

#6 "Cigarettes contain nicotine because it occurs naturally in tobacco."

#7 But we basically, as I said, also, in my opening remarks, we do not blend for nicotine. Nicotine is a result."

#8 The following exchanges took place with Campbell:

Mr. Bryant: "Well, if nicotine is not addictive and it has no harmful characteristics in particular, why are you or why is Mr. Johnson, somebody, suing ABC for alleging that you're manipulating the nicotine? If all you're really doing is manipulating it for the purposes of flavor, why don't you just say 'so what if we are, it doesn't hurt anything?' What's your answer to that?"

Mr. Campbell: "The ABC charges are for the misrepresentation that we are spiking our products with nicotine."

Mr. Bryant: "My point is, why bother to refute them if all you need to say is, 'well, so what, all we're doing is doing it for flavor,' which is what you're saying to us today? If you're only doing it for flavor, why are you worried about the implications of that program?"

Mr. Campbell: "We were very worried about the fact that our stock dropped the next day because there were some implications that we were doing something sinister."

Mr. Bryant: "My point is, why not simply say there's nothing wrong? If you believe it, why don't you just say there's nothing wrong with manipulating the levels of nicotine, if it's only for the flavor?"

Mr. Campbell: "We don't do it. That's why I won't acknowledge it. I'm sorry."

Discussion of Campbell Perjury #5, #6, #7 and #8

These statements are false and misleading, and may constitute the most glaring amalgamation of untruthful testimony by William Campbell.

Based on information and belief, though not yet confirmed, Philip Morris cigarette manufacturing facilities in the United States and/or abroad either utilize or previously have utilized a process for controlling nicotine levels patented and marketed by the Kimberly-Clark Corporation subsidiary LTR Industries. The Kimberly-Clark tobacco reconstitution process is believed to be used throughout the tobacco industry in a number of countries. A Kimberly-Clark advertisement published in tobacco industry trade publications states:

"Nicotine levels are becoming a growing concern to the designers of modern cigarettes, particularly those with lower 'tar' deliveries. The Kimberly-Clark tobacco reconstitution process used by LTR INDUSTRIES permits adjustments of nicotine to your exact requirements. These adjustments will not affect the other important properties of customized reconstituted tobacco produced at LTR INDUSTRIES: low tar delivery, high filling power, high yield and the flexibility to convey organoleptic modifications. We can help you control your tobacco." [E.g., Advertisement, "More or Less Nicotine," Tobacco Reporter, March 1992 (emphasis added).]

The Kimberly-Clark advertisement and related information underscore two critical points:

1) Nicotine is manipulated and used as an additive. As explained in the professional medical literature, "The use of nicotine as an additive permits precise titration of the amount of this alkaloid in the finished [tobacco] product." Fortification of reconstituted tobacco is a routine part of the Kimberly-Clark process. [John Slade, "Nicotine Delivery Devices," in Nicotine Addiction: Principles and Management, C. Tracy Orleans and John Slade, eds. (Oxford University Press: New York, New York, 1993), pp. 3-23.] This is confirmed in the tobacco industry's own trade literature, which explains that the Kimberly-Clark process enables manufacturers to triple or even quadruple the nicotine content of reconstituted tobacco, [Donald A. Silberstein, "Flavouring Reconstituted Tobacco," Tobacco Journal International, Vol. 1, 1985, pp. 28-30: "Though standard reconstituted tobacco products contain 0.7 - 1.0 percent nicotine, LTR Industries [Kimberly-Clark] offers the possibility of increasing the nicotine content of the final sheet to a maximum of 3.5 percent... "A dramatic increase in tobacco taste and smoke body is noted in the nicotine-fortified reconstituted tobacco."] thereby increasing the nicotine content of the final manufactured product.

2) Nicotine is not used for taste. The Kimberly-Clark advertisement admits that nicotine is not used for taste by stating that by using the Kimberly-Clark process, a tobacco manufacturer can adjust nicotine levels without affecting the "other" important properties of reconstituted tobacco, including control over the taste of the product. [(Emphasis added in the quotation.) See also Testimony of David A. Kessler, M.D., Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994: "The tobacco industry may tell you that nicotine is important in cigarettes solely for 'flavor.' There is a great deal of information that suggests otherwise. Some of the patents specifically distinguish nicotine from flavorants. [Footnote omitted.] An RJR book on flavoring tobacco, while listing around a thousand flavorants, fails to list nicotine as a flavoring agent. [Citing J.C. Leffingwell and H.J. Yound, Tobacco Flavoring for Smoking Products (R.J. Reynolds Tobacco Company, 1972).]"] In a subtle but telling exposition of the fact that nicotine is not being used to affect taste, the advertisement explains that the adjustment of nicotine "will not affect... the flexibility to convey organoleptic modifications," rather than suggesting that nicotine can be used to modify the organoleptic character of the product. "Organoleptic" refers to "being, affecting, or relating to qualities (as taste, color, odor, and feel) of a substance (as a food or drug) that stimulate the sense organs." [Webster's Ninth New Collegiate Dictionary (Merriam-Webster Inc.: Springfield, Massachusetts, 1986), p. 832. See also multiple Discussions, infra. ]

Recommendations for Further Investigation

To further understand the apparent perjury committed by Campbell in this instance, the Department of Justice is asked to confirm Philip Morris' and other tobacco manufacturers' current or previous use of the patented Kimberly-Clark tobacco reconstitution process and/or any other processes used by Philip Morris which provide for adjustment of nicotine levels in tobacco or tobacco products. Such information may be obtained from Philip Morris, its agents and other appropriate entities and individuals doing business with or for Philip Morris, including Kimberly-Clark Corporation and LTR Industries.

It is noted that at least one other enterprise that evidently specializes in the manipulation of nicotine and the use of the drug as an additive goes by the name of "The Tobacco Companies of the Contraf Group." An advertisement run by the Contraf Group in the international trade press states, "Don't Do Everything Yourself! Let us do it More Efficiently!" Calling the group "The Niche Market Specialists," Contraf lists among its areas of specialization one dealing with "Pure Nicotine and other special additives." [E.g., Advertisement, "CNT/CIR: The Niche Market Specialists," Tobacco International, April 1, 1994 (emphasis added).] The Department of Justice is encouraged to investigate the activities and involvement of this company, as well.

Campbell Perjury #9

#9 "The fact is that tar and nicotine levels have decreased dramatically over the past 40 years."

Discussion of Campbell Perjury #9

It is fact, not opinion, that the tobacco from the five leading cigarette brands (including cigarettes manufactured by Philip Morris) in 1952 contained less, not more, nicotine (an average of 1.58 - 1.82 percent nicotine on a dry weight basis) than the 1.5 - 2.5 percent nicotine reported for finished cigarettes by RJR Chairman and CEO James W. Johnston in a February 28, 1994 letter to the Food and Drug Administration ("FDA"). [Letter from James W. Johnston to David A. Kessler, M.D., February 28, 1994. See testimony of John Slade, M.D., before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994.] Campbell perjury #9, which is consistent with similar assertions made by Campbell, Philip Morris and other tobacco companies and their representatives in other forums, is not only false, but also material and significant as to its potential impact on the drug addiction and overall health of millions of American consumers. [See generally U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, Reducing the Health Consequences of Smoking: 25 Years of Progress: A Report of the Surgeon General, 1989.]

b. Perjury by James Johnston and Andrew J. Schindler (RJR)

James Johnston Perjury #1, #2, #3 and #4

#1 "We do not add or otherwise manipulate nicotine to addict smokers."

#2 "We do reduce the amount of nicotine in our products... But we do not do anything to hook smokers or to keep them hooked. Let me repeat, we do not manipulate nicotine to addict smokers."

#3 The following exchange took place with James Johnston:

Mr. Waxman: "There's been a lot of interest in tobacco extract and whether nicotine is added by use of a tobacco extract. Mr. Johnson, has RJR ever used tobacco extract on any of its products sold domestically or abroad?"

Mr. James Johnston: "Not to my knowledge, Mr. Chairman."

Mr. Waxman: Maybe your re-search advisor - "

Mr. James Johnston: "Pardon me. In Premier, there was a spray dried tobacco extract used. In our Winstons and Camels and so forth, that is not the case."

#4 "During the past several years, there have been a wide variety of attempts to convince the American public that cigarettes are 'addictive,' and some public officials have even gone so far as to put cigarettes in the same class as such truly addictive drugs as heroin and cocaine. One does not have to be a trained behavioral scientist to see this is not true."

Schindler Perjury #1

#1 The following exchange took place with Schindler:

Mr. Waxman: "Mr. Johnston, given RJR's interest in quality control, is there a point in the manufacturing process where nicotine which is lost due to processing is restored, and could you identify each of the manufacturing procedures utilized by your company to adjust upwards, however incrementally, the nicotine level of your product, Mr. Johnston? You, RJR. You're RJR."

Mr. Schindler: "Yes."

Mr. Waxman: "I'm sorry."

Mr. Schindler: "We do not restore any nicotine anywhere in our process. We lose nicotine in the process. We lose nicotine, for example, in the reconstituted sheet process, which handles the byproducts from that stemery that I just discussed... So, generally, throughout the process, from the time we take our tobacco in, you will find a loss of nicotine and nowhere in that process is any nicotine being incrementally added into the process."

Discussion of James Johnston Perjury #1, #2, #3

and #4 and Schindler Perjury #1

The sworn statements of James Johnston and Andrew Schindler may rise to the level of perjury. The likelihood that this is so grows greater in light of the witnesses' repetition of these representations multiple times during their testimony.

House Subcommittee on Health and the Environment Chairman Henry Waxman observed at the April 14, 1994, hearing that on April 13, the evening prior to James Johnston's testimony, Dr. Robert Suber, a toxicologist with Johnston's R.J. Reynolds Tobacco Company, admitted that RJR controls the nicotine in its products. Responding during a taped interview broadcast on CNN to a question about whether RJR manipulates the level of nicotine, Suber said: "In order to deliver to the consumer a product that he wants, a consistent level of nicotine, we have to blend the tobacco accordingly. So we do control it." When asked at the hearing about Suber's statement, Johnston testified that he "disagree[d] with that wording of [Suber's] statement, yes."

It is important to understand that reconstituted tobacco ordinarily contains 25 percent or less of the nicotine in regular tobacco. At the request of ABC News' "Day One" program, the American Health Foundation performed a thorough, independent analysis of the reconstituted tobacco implanted by RJR in at least four of its cigarette brands: Winston, Magna, Salem and Now. The samples that were tested were found to have up to 70 percent, rather than the expected 25 percent, of the nicotine that would be found in regular tobacco, indicating that RJR had fortified the reconstituted tobacco with additional nicotine. In an interview broadcast on "Day One," Bogdam Prokopczyk, Ph.D., the Section Head of Bio-Organic Chemistry for the American Health Foundation who performed the analysis, expressed surprise at the nicotine levels identified, "because," he said, "I expected it to be less. The most likely explanation," he concluded, "is that some nicotine has been added, either with flavoring agents or by itself." RJR provided no credible alternative explanation for the unexpectedly high level of nicotine found in its reconstituted tobacco.[Day One, ABC News, "Smoke Screen," February 28, 1994.]

Dr. Prokopczyk confirmed in a telephone conversation on November 23, 1994, that RJR added nicotine to its reconstituted tobacco. Dr. Prokopczyk said he was certain that this nicotine was added either alone or as a part of a solution of flavorings. It is notable that since RJR and other tobacco companies have the technology to add flavorings with or without nicotine, the addition of nicotine to reconstituted tobacco is purely at the manufacturer's discretion, he said. [Telephone interview with Bogdan Prokopczyk, Ph.D., American Health Foundation, November 23, 1994.]

In addition, a confidential source interviewed by "Day One," who was identified as a former RJR manager, stated in response to the question, "In commercially sold cigarettes, what percentage of tobacco extract is nicotine?," that the precise amount of nicotine added in RJR's manufacturing process "depends on what level the process calls for. In other words, I can say to you, 'I want it at one percent, I want it at five percent, I want it at 10 percent, I want it at 50 percent." Thus, the former RJR manager not only did not question the fact that RJR fortifies its reconstituted tobacco with nicotine, but stated that RJR controls, purely at its discretion, the levels of nicotine used in its cigarettes to an exacting degree. [Day One, ABC News, "Smoke Screen," February 28, 1994.]

A fundamental question underlying all of the tobacco industry witnesses' testimony regarding the nature and use of nicotine in tobacco products is whether there is any genuine use of nicotine in tobacco products other than for its pharmacologic and addictive effects. When asked this question during testimony before Congress, FDA Commissioner David Kessler, basing his response on the extensive analysis conducted by his agency and reflected in his testimony, said simply, "No." [Testimony of David Kessler, M.D., before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994.]

Going to the central question not only of whether RJR manipulates nicotine but also why it does so is the unadorned admission made publicly by F. Ross Johnson, who was James Johnston's predecessor at the helm of RJR Nabisco for several years in the mid- to late-1980s. Johnson was a driving force behind the development of Premier, RJR's high-technology nicotine delivery product that contained substantial quantities of artificially added nicotine extract.

Johnson was quoted by the Wall Street Journal as saying the following about tobacco: "Of course it's addictive. That's why you smoke the stuff." [Eben Shapiro, "Big Spender Finds a New Place to Spend," Wall Street Journal, October 6, 1994, p. B1.]

Recommendations for Further Investigation

The Department of Justice is asked to obtain additional information from RJR, other tobacco companies and other parties, such as the Kimberly-Clark Corporation subsidiary LTR Industries and The Tobacco Companies of the Contraf Group, involved in manufacturing reconstituted tobacco and controlling nicotine. In light of the apparent perjury and other criminal acts (see infra) committed by representatives of the named tobacco companies, as well as the difficulty that the Congress, the Surgeon General, the Food and Drug Administration and other government officials have had in securing truthful and complete information from these parties, the Department of Justice is strongly encouraged to exercise its subpoena powers to obtain relevant information from the targets of the proposed criminal investigation.

"Eclipse:" The Department of Justice also is alerted to the fact that RJR currently is test-marketing a new smoking product called Eclipse. Like Premier, another unconventional smoking product marketed by RJR in the late 1980s, Eclipse contains a charcoal element, which, when lit, heats but does not burn the product's contents. RJR Chairman and CEO James Johnston admitted in his testimony of April 14, 1994, that RJR artificially had added previously extracted nicotine to Premier (see supra); in that case, the nicotine extract was added to the product's non-tobacco contents. News stories on Eclipse report that it contains reconstituted tobacco, suggesting that RJR may also be adding nicotine to the new product. [Philip J. Hilts, "Little Smoke, Little Tar, but Still Lots of Nicotine," New York Times, November 27, 1994, p. 1; Suein L. Hwang and Alix M. Friedman, "RJR is Testing a 'Smokeless Cigarette' After Attempt Failed Five Years Ago," Wall Street Journal, November 28, 1994, p. A5.]

U.S. Patent No. 5,020,548 ("Smoking Article with Improved Fuel Element"), issued on June 4, 1991, and assigned to the R.J. Reynolds Tobacco Company, appears to describe major features of Eclipse. The patent states that, inter alia, "nicotine," "spray dried tobacco extract" and "tobacco extracts" can be added to the product, supporting the presumption that RJR may be adding one or more of these additives to Eclipse in the manufacturing process. If RJR is doing so, James Johnston and Andrew Schindler may have further perjured themselves when they denied that any consumer tests of Eclipse for more than a year, starting several months before the hearing on April 14, 1994, according to the New York Times. [Philip J. Hilts, "Little Smoke, Little Tar, but Still Lots of Nicotine," New York Times, November 27, 1994, p. 1.]

Based on information and belief, RJR also manipulates the nicotine content and delivery of Eclipse in at least four other ways, which James Johnston and Andrew Schindler failed to make any mention of in their sworn Congressional testimony, despite the obvious material relevance of this information to the proceedings. These include:

1) the addition of specially blended, not ordinary, tobacco near the filter end of the product, which contains extremely high nicotine levels of between four and five percent (versus the average of 1.5 to 2.5 percent);

2) the addition of potassium carbonate to change the product's pH level, freeing up more nicotine for absorption into the consumer's bloodstream;

3) the transfer of nicotine and other poisons to the consumer by vapor, rather than by ordinary tobacco smoke, a portion of whose contents may, because of vapor's different makeup, not be detectable by the outmoded and inaccurate Federal Trade Commission tests employed by the tobacco companies; and

4) the use of nearly invisible vent holes near the filter, which dilute the smoke or vapor in machine tests, but which often are covered by the consumer's fingers or lips, resulting in a higher delivery of nicotine, tar and carbon monoxide than the test levels indicate. [It is also noteworthy that the dissection of an Eclipse discloses that the filter is much smaller than the markings on the external wrap indicate.]

In light of the RJR officials' apparently perjurious denials about the company's manipulation of nicotine and the fact that there appears to be much more to Eclipse than meets the eye, the Department of Justice is asked to further investigate RJR's use and manipulation of the content and delivery of nicotine in Eclipse and the company's other products.

c. Perjury by Andrew H. Tisch and Alexander Spears (Lorillard)

Tisch Perjury #1 and #2

#1 "Nicotine levels follow tar levels and are not raised or reduced for particular brands."

#2 "Lorillard does not take any steps to assure a minimum level of nicotine in our products. Lorillard does not add nicotine to cigarette tobacco for the purpose of manipulating or spiking the amount of nicotine received by the smoker."

Spears Perjury #1

#1 "The statement [that Spears made at a March 25, 1994, hearing before the same subcommittee [Testimony of Alexander Spears before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994.] ] was that nicotine follows tar from the period 1950s to 1990. I stick with that statement and I believe it is accurate. We've gone back and rechecked the calculations." At the March 25 hearing, Spears said: "We do not set nicotine levels for particular brands of cigarettes. Nicotine levels follow the tar level." He also stated that the correlation between tar and nicotine levels "is essentially perfect."

Discussion of Tisch Perjury #1 and #2 and Spears Perjury #1

A 1981 study co-authored by Dr. Spears in his capacity as Vice Chairman of Lorillard, and S.T. Jones, who also worked for Lorillard, discusses techniques for raising or lowering the amount of nicotine in cigarettes. The paper states explicitly that low-tar cigarettes use special blends of tobacco to keep the level of nicotine up while tar is reduced: "Higher nicotine levels can be achieved by decreasing Oriental [tobacco], and the stem and tobacco sheet, and increasing the Burley and upper stalk positions of both the Flue-cured and the Burley tobacco." As a result, "current research is directed toward increasing the nicotine levels while maintaining or marginally reducing the tar deliveries." The Spears/Jones report further states: "The lowest tar segment [of product categories] is composed of cigarettes utilizing a tobacco blend which is significantly higher in nicotine." [The report by Alexander W. Spears and S.T. Jones was presented to the 35th Tobacco Chemists' Research Conference in 1981 (emphasis added).]

Spears released a statement on the day of the April 14, 1994, hearing, in which he appears to have claimed falsely that there was no inconsistency between his 1981 study and his March 25, 1994, testimony. He asserted that the amount of nicotine in ultra-low-tar cigarettes was lower than the nicotine in regular cigarettes. However, of material relevance is the fact that Spears' statement did not dispute that tobacco companies used tobacco blends with higher levels of nicotine when they make low-tar cigarettes. As a result, the nicotine levels of the low-tar brands are closer to the nicotine levels of the regular brands than they would be if high-nicotine blends were not used, [For a useful factual background, see Philip J. Hilts, "'81 Tobacco Study Discussed Raising Levels of Nicotine," New York Times, April 14, 1994, p. A1; John Schwartz, "1981 Report on Tobacco is Released," Washington Post, April 14, 1994, p. A3.] a fact that is in direct conflict with Spears' sworn testimony and the findings of his own 1981 report.

Further contradicting Tisch's and Spears' testimony is the fact, not opinion, that the tobacco from the five leading cigarette brands in 1952 contained less, not more, nicotine (an average of 1.58 - 1.82 percent nicotine on a dry weight basis) than the 1.5 - 2.5 percent nicotine reported for finished cigarettes by RJR Chairman and CEO James W. Johnston in a February 28, 1994, letter to the FDA. [Letter from James W. Johnston to David A. Kessler, M.D., February 28, 1994.]

d. Perjury by Edward A. Horrigan (Liggett)

Horrigan Perjury #1, #2 and #3

#1 "Secondly, Liggett does not manipulate the level of nicotine in our cigarettes to hook or addict smokers."

#2 "Therefore, Liggett, like the rest of us, does not manipulate or spike the amount of nicotine during the manufacture of its cigarettes to achieve an alleged addicting level of nicotine."

#3 "In all of my years in this business worldwide, I have never known of a product-designed objective or goal that included even the notion of spiking the amount of nicotine in a cigarette to achieve a level that would hook or addict smokers."

Discussion of Horrigan Perjury #1, #2, and #3

Horrigan worked from 1978 until the late-1980s for R.J. Reynolds Tobacco Company, where he served as Chairman and CEO, and for RJR Nabisco, where he was Vice Chairman of the Board. Based on information and belief, Horrigan was directly involved in corporate decisions and the setting of strategy concerning the development and marketing of Premier and numerous other RJR cigarette brands whose manufacturing processes included the manipulation of nicotine content and delivery. See Discussion, supra, regarding the alleged perjury of current RJR CEO James Johnston.

Notably, too, Liggett (then called Liggett & Myers) had extensive tobacco-related health research done by Arthur D. Little, Inc. in Boston, Massachusetts. For example, a report for Liggett dated March 15, 1961, labeled "confidential -- limited," states:

"1. There are biologically active materials present in cigarette tobacco.

These are:

a) cancer causing

b) cancer promoting

c) poisonous

d) stimulating, pleasurable, and flavorful." [Arthur D. Little, Inc., "L & M - Perspective Review, March 15, 1961, Plaintiff's Exhibit in the case of Cipollone v. Liggett. See also Philip J. Hilts, "A History of Starting Research, and Stopping It," New York Times, June 17, 1994, p. A22.]

See multiple discussions throughout this Prosecution Memorandum regarding the addictiveness of nicotine and the manipulation of nicotine by tobacco manufacturers and companies doing business with the tobacco industry.

e. Perjury by Joseph Taddeo (UST)

Taddeo Perjury #1

#1 "The assertion that smokeless tobacco use can be addictive is without merit."

Discussion of Taddeo Perjury #1

Nicotine in tobacco is addicting, according to the overwhelming consensus of the scientific and medical communities, including all of the following:

U.S. Surgeon General [U.S. Department of Health and Human Services, Public Health Service, The Health Consequences of Using Smokeless Tobacco: A Report of the Advisory Committee to the Surgeon General, 1986; U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, Reducing the Health Consequences of Smoking; 25 Years of Progress: A Report of the Surgeon General, 1989.]

U.S. Department of Health and Human Services [U.S. Department of Health and Human Services, Office of the Inspector General, Spit Tobacco and Youth, 1992; U.S. Department of Health and Human Services, Drug Abuse and Drug Abuse Research: The Third Triennial Report to Congress from the Secretary, 1991.]

National Institutes of Health [National Institutes of Health, U.S. Department of Health and Human Services, Health Implications of Smokeless Tobacco Use: National Institutes of Health Consensus Development Conference Statement, Vol. 6, No. 1, 1986.]

National Cancer Institute [E.g., National Cancer Institute, "NCI Supports FDA's Position on Nicotine and Cigarettes" (Press Release), February 28, 1994 ("Nicotine is a naturally occurring drug found in all tobacco plants, and the pharmacologically active ingredient responsible for tobacco addiction.")]

Food and Drug Administration Drug Abuse Advisory Committee [See Philip J. Hilts, "F.D.A. Panel Takes Step Toward Setting Control on Nicotine," New York Times, August 3, 1994, p. A1.]

World Health Organization [World Health Organization, Smokeless Tobacco Control: A Report of a WHO Study Group (World Health Organization Technical Report Series 777 ), 1988.]

Medical Research Council (United Kingdom) [Medical Research Council, The Basis of Drug Dependence (Medical Research Council: London, England, 1994). The Medical Research Council serves as the official conduit for government funding for scientific and medical research in the United Kingdom, and is comparable to the National Institutes of Health in the United States.]

American Medical Association

American Psychiatric Association

American Psychological Association

Royal Society of Canada

It is apparent that the only critics of the concept that nicotine addicts are those with financial ties to tobacco companies or their agents. [See, e.g., John H. Robinson and Walter S. Pritchard (Biobehavioral R&D, R.J. Reynolds Tobacco Company), "The Role of Nicotine in Tobacco Use," 108 Psychopharmacology 397-407, 1992. Robinson and Pritchard of RJR admit that nicotine has pharmacological effects on the human body and central nervous system, it reduces anxiety and increases mental alertness. They also acknowledge that "the beneficial effects of smoking on cognitive performance are a function of nicotine absorbed from cigarette smoke." However, the RJR scientists, like those who work within or for other tobacco companies, claim that the definition of addiction applied by the U.S. Surgeon General and other leading experts is faulty and that nicotine is, therefore, not addictive. Playing a semantic rather than substantive game, the tobacco industry authors claim that to be defined as "addictive," a substance must cause intoxication. "It is not that Dr. Robinson and other scientists supported by tobacco companies disagree with the main points made by mainstream scientists, but that they define addiction differently," reported the New York Times. Indeed, the tobacco industry scientists have admitted the existence of the hallmarks of addiction, including compulsive use, withdrawal symptoms and continued use despite knowledge of harm to oneself and others. See Philip J. Hilts, "Is Nicotine Addictive? It Depends on Whose Criteria You Use," New York Times, August 2, 1994 p. C3.]It is the work of these individuals that Joseph Taddeo and UST consistently rely on in claiming that nicotine is non-addictive. In contrast, the combination of UST's own internal research and conduct demonstrate a clear understanding on the part of UST's own executives and scientists that nicotine is a drug and that it is indeed addictive.

The approach taken by David M. Warburton, whom Taddeo cited in support of his claim that smokeless tobacco is not addictive, has been rejected by every leading expert source, including those listed above. [Taddeo relied, as tobacco industry witnesses often do, on the work of British psychologist D.M. Warburton ("Is Nicotine Use and Addiction?, The Psychologist, April 1989, pp. 166-170). While some of Warburton's work has been accepted, his and other tobacco industry supporters' claim that nicotine is non-addictive has been soundly rejected, most recently by the FDA Drug Abuse Advisory Committee on August 2, 1994, which reaffirmed overwhelmingly that nicotine is: 1) addictive; and 2) the substance in tobacco products that causes addiction. See, generally, Philip J. Hilts, "F.D.A. Panel Takes Step Toward Setting Control on Nicotine," New York Times, August 3, 1994, p. A1. In addition, Taddeo testified that Warburton contributed to the 1988 Surgeon General's report on nicotine addiction, but he failed to mention that Warburton's contribution to that report was small and specifically did not address the fundamental issue of whether nicotine is addictive. See also Medical Research Council, The Basis of Drug Dependence (Medical Research Council: London, England, 1994). The MRC report is a leading authoritative reference for the scientific and medical communities in the United Kingdom, Warburton's home. It states: "Tobacco is widely regarded as one of the major environmental causes of illness and death. That most people use tobacco to obtain the effects of nicotine, and that nicotine is an addictive drug that supports dependence processes, is widely accepted." Rejecting the tobacco industry's frequent comparison of nicotine to caffeine, it states: "Caffeine is almost certainly the most widely used drug of dependence in the world. Despite this, almost no evidence of morbidity other than gastric irritation, insomnia and cardiovascular effects has been found. Studying caffeine is unlikely to tell us very much about the harmful effects of drugs of dependence, but it does illustrate that dependence per se is not a problem." (Emphasis added.)] Warburton, himself, has acknowledged in his own research that the "effects of smoking on cognitive function, when considered together with the rapid absorption and elimination of nicotine, suggest a major role in the motivation for smoking."

The investigation coincident to preparation of this Prosecution Memorandum has confirmed, moreover, that Warburton's nicotine research has been extensively funded by the tobacco industry at least since 1978, [E.g., by the Tobacco Research Council and Carreras Rothmans Ltd. Warburton also has acknowledged receiving assistance from the British-American Tobacco Company. All of the following studies have been so funded: Keith Wesnes and David M. Warburton, "The Effects of Cigarette Smoking and Nicotine Tablets Upon Human Attention," in Smoking Behaviour: Physiological Influences, Raymond E. Thornton, Senior Scientist, Group Research and Development Centre, British-American Tobacco Company Limited, ed. (Churchill Livingstone: Edinburgh, London and New York, 1978); K. Wesnes and D.M. Warburton, "Effects of Smoking on Rapid Information Processing Performance," Neuropsychobiology, Vol. 9, 1983, pp. 223-229; K. Wesnes and D.M. Warburton, "The Effects of Cigarettes of Varying Yield on Rapid Information Processing Performance, Psychopharmacology, Vol. 82, 1984, pp. 338-342; K. Wesnes and D.M. Warburton, "Smoking, Nicotine and Human Performance," Pharma. Ther., Vol. 1, 1983, pp. 189-208; K. Wesnes, D.M. Warburton, B. Matz, "Effects of Nicotine on Stimulus Sensitivity and Response Bias in a Visual Vigilance Task," Neuropsychobiology, Vol. 9, 1983, pp. 41-44.] and that he was given honoraria and sent on all-expenses-paid trips by tobacco interests to testify against the regulation of tobacco at hearings held in New Zealand. [Telephone interviews with Martin Jarvis, M.Phil., Principal Scientist, Imperial Cancer Research Fund, Health Behaviour Unit, Department of Psychiatry, Institute of Psychiatry, December 1-2, 1994; private communications received from Dr. Murray Laugesen, scientific editor of Toxic Substances Board, Department of Health (Wellington, New Zealand), Health or Tobacco, May 1989]

It also has been learned that Warburton is the founder of Associates for Research into the Science of Enjoyment ("ARISE"), a British organization funded by tobacco, distilling and brewing companies which, among other things, advocates for "smokers' rights." Explaining ARISE's mission, Warburton recently claimed that the health benefits of cigarette smoking may outweigh the damage. "It's interesting how few people die from smoking," he said. "Most smokers live to a ripe old age. Don't forget, the death rate for smokers and non-smokers is the same in the end - 100 percent." [Quoted in Madeleine Bunting, "Eat, Drink, and Be Very Provocative," The Guardian, November 12, 1994, p. 29.] Further placing the position of Warburton's group in perspective, ARISE member James McCormick said that "[t]he addictive properties of cocaine and heroin are overstated. Not everyone becomes dependent. A lot of people are stable addicts." [Id.]

The fact that Taddeo cited one discredited researcher for the blanket statement quoted above is tantamount to citing no support at all. One who wishes to cite support for an insupportable proposition and who has the resources to do so, can nearly always locate, or create, such support based on junk science.  Unfortunately, there will always be someone, or a handful of persons, who are willing to present themselves as experts on a given subject and who to attest for financial or other reasons to the "fact" that, e.g., the Earth is flat. Taddeo appears to have quite knowingly exploited this phenomenon and, thus, it is argued here, testified falsely under oath. The likelihood that this deception rises to the level of perjury seems greater in light of the other omissions and misstatements of fact conveyed elsewhere in his testimony.

Taddeo's testimony is contradicted, moreover, by his company's internal communications, which acknowledge the real role played by nicotine in smokeless tobacco. For example, intra-company correspondence dated June 5, 1981, from Per Erik Lindqvist, UST Senior Vice President of Marketing, to B.J. Nova, President of the Tobacco Division, stated: "Flavorwise we should try for innovation, taste and strength. Nicotine should be medium, recognizing the fact that virtually all tobacco usage is based upon nicotine, 'the kick,' satisfaction." [See Marsee v. U.S. Tobacco co. (W.D.Okla. 1986), UST document read into evidence by plaintiff's attorney George Braly ( Marsee trial transcript, Vol. 4, May 21, 1986, pp. 1661-1662), quoted in Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994, and November 29, 1994 (emphasis added).] Lindqvist was examined about this reference at trial in Marsee v. United States Tobacco, a celebrated case that addressed the death of a teenage smokeless tobacco user. Marsee's counsel, George W. Braly, asked what Lindqvist meant by "the kick," to which the witness responded, "All tobacco products contain nicotine. Nicotine gives the consumer satisfaction. Some would describe it as a pleasant feeling. Others would describe it as a kick... Others would describe it as a relaxing feeling." [Id.] In another intra-company memorandum, dated September 22, 1981, and addressed to UST's Strategic Management Team regarding development of "portion pack" starter brands, Lindqvist refers to "difficulties in finding the acceptable product as regards taste, strength, kick and size." [Marsee v. U.S. Tobacco Co., U.S. Tobacco Intra-Company Correspondence. "Re: Product Development," September 22, 1981, Exhibit 5 to Per Erik Lindqvist Deposition (obtained from Fort Worth, Texas. Federal Records Center) (emphasis added).] See also, infra.

Taddeo Perjury #2, #3 and #4

#2 "U.S. Tobacco does not in any way manipulate the nicotine level in its tobacco products, nor does U.S. Tobacco take any action to control the nicotine content of its tobacco products before, during, or after the manufacturing process. In fact, an incidental effect of our manufacturing process is that the nicotine content of our smokeless tobacco products is less than that which occurs naturally in the tobacco. Other than tobacco itself, the only material used in the manufacture of U.S. Tobacco's smokeless tobacco products which contains nicotine is denatured alcohol, which is purchased from a supplier as a carrying agent for the application of certain flavorings that do not dissolve in water."

#3 "Furthermore, the inflammatory allegations of Drs. [Gregory] Connolly and [David] Kessler regarding a so-called 'graduation strategy' are not supported by the facts. Smokeless tobacco products, like all tobacco products, vary in nicotine content. Any suggestion that U.S. Tobacco's line of products is developed based on 'graduating' levels of nicotine is not true."

#4 "The only material used in the manufacture of U.S. Tobacco's smokeless tobacco products, other than the tobacco itself, which contains nicotine, is denatured alcohol which is purchased from a supplier as a carrying agent for the application of certain flavorings that do not dissolve in water. The denatured alcohol (SDA-4) used by U.S. Tobacco has been denatured by its manufacturer with small amounts of nicotine."

Discussion of Taddeo Perjury #2, #3 and #4

Extensive evidence has come to light that UST for years has deliberately manipulated the nicotine levels ingested by its consumers by controlling the total quantity of nicotine in its products and the portion of that nicotine that is "freed" by chemical processes for absorption into the human body. [For extensive background on UST's manipulation and control of nicotine content and delivery, see, respectively, Testimony of Gregory N. Connolly, D.M.D., M.P.H., and Jack Henningfield, Ph.D., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, November 29, 1994. See also Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick,'" Wall Street Journal, October 26, 1994, p. A1. (The evidence discussed here is based, in significant part, on these sources.)] Exercising total discretion, UST manipulates upward the levels of free nicotine by increasing the pH levels of tobacco, causing rapid absorption of elevated quantities of the addictive drug through the membranes of the mouth directly into the bloodstream. UST also controls total nicotine levels through selection and blending of tobacco leaf, fermentation and the addition of alkaline buffering agents such as sodium carbonate and ammonium carbonate. [Sodium carbonate and ammonium carbonate are included in a list of 562 additives that the Smokeless Tobacco Council, the industry's trade association, submitted to the Subcommittee on Health and the Environment in May 1994. The additives were misleadingly described by the Smokeless Tobacco Institute merely as ingredients in edibles such as baked goods. Larry D. Story, a UST chemist until 1982, disclosed that UST routinely adds chemicals to its snuff "to deliver the free nicotine faster and to make the product stronger." Similarly, James C. Taft, head of UST's product development from 1972 until 1991, said: "The fermentation process involves adding chemicals during and after fermentation and, at the end, you add some more chemicals which increase pH, too." Without increasing the pH levels, "you couldn't nicotine release." See Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick," Wall Street Journal, October 26, 1994, p. A1. In addition, another manufacturer of oral snuff, the Swedish Tobacco Company, with which UST has cooperated closely ( see infra ), has admitted and described its control over nicotine delivery in a 1994 report on its production process, stating that "in order to release the nicotine from the tobacco, the snuff" is manipulated by adding "slightly alkaline sodium carbonate... during the production process, as this alters into bicarbonate." Quoted in Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, November 29, 1994.]

Even if it were true in some extremely narrow sense that, as Taddeo falsely testified, UST "does not in any way manipulate the nicotine level in its tobacco products... or take any action to control the nicotine content," his testimony seriously misled the Congress by failing either to disclose or explain the fact that UST controls to an exacting degree the amount of nicotine absorbed into consumers' bodies and, thus, the addiction of consumers to UST's products.

As explained by Jack Henningfield, Ph.D., Chief of the Clinical Pharmacology Branch of the National Institute on Drug Abuse's Addiction Research Center, in testimony before the House Subcommittee on Health and the Environment: "Without pH levels, nicotine content is of little value in comparing nicotine bioavailability across products... pH is a crucial determinant of nicotine absorption through the nose and mouth... [T]he amount of nicotine available for absorption... ultimately determines the dose of nicotine delivered to the user." [Committee on Energy and Commerce, House of Representatives, United States Congress, November 29, 1994.]

Furthermore, there are numerous examples of UST's own internal statements, which, when coupled with the company's actual conduct, illuminate the active execution of the "graduation" strategy that Taddeo, under oath, denied his company uses. [See Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff brands to Boost Their 'Kick.'" Wall Street Journal, October 26, 1994, p. A1; Testimony, respectively, of Gregory N. Connolly, D.M.D., M.P.H., and Jack Henningfield, Ph.D., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, November 29, 1994; Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994.] One such example is a statement by UST Executive Vice President Jack Africk in an interview published in the Spring 1985 edition of "Up to Snuff," a UST newsletter, [Appended to Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, November 29, 1994.] which was mailed to members of UST's sales force:

"As far as our strategy for entering a new market is concerned - for each market there is a set of criteria which have been established, and must be met. Skoal Bandits is the introductory product, and then we look towards establishing a normal graduation process.

(Underlining added.) The Wall Street Journal explains further:

"U.S. Tobacco denies that it has a 'graduation process' to ratchet users up the line to stronger brands, saying that 'there is no set pattern of brand switching.' However, the company itself used the term internally, and publicly alluded to it in the mid-1980s. 'They talked about graduation all the time - in sales meetings, memos and manuals for the college program. It was a mantra,' says Ken Carlsen, a division manager in U.S. Tobacco's sales department, who worked at the company from 1979 until 1986.

"'For people who haven't ever tasted [snuff], you'd of course begin them on a product that had a little tobacco taste, but wouldn't turn them off,' explains Barry Nova, U.S. Tobacco's president until 1984. He adds: 'The graduation is to a more tobacco-y product... to a stronger product.'" [Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick,'" Wall Street Journal, October 26, 1994, p. A1 (underlining added).]

The use of the graduation strategy was highlighted, as well, at the time that the starter product Skoal Bandits was introduced in 1983. Based on an interview with Barry Nova, then-President of UST's tobacco division, Advertising Age reported the following:

"Aside from appealing to smokers, the new product is designed to hook consumers into what Mr. Nova called a 'graduation process' from Bandits to Skoal itself and then to Copenhagen, the company's strongest chewing tobacco. The success of those two products has given U.S. Tobacco a 40% increase in volume sales over the last five years. Because the product is aimed at new users of oral tobacco, Mr. Nova denied that Bandits will cannibalize the older brands." [Jeremy Feigelson, "Skoal Bandits Blitz Kicks Off N.Y. Entry," Advertising Age, August 8, 1983 (emphasis added)]

Underscoring the fact that UST naturally would have a vested interest in employing a "graduation" strategy is the company's acknowledgment in internal communications of the role played by nicotine in smokeless tobacco. For example, intra-company correspondence dated June 5, 1981, from Per Erik Lindqvist, UST Senior Vice President of Marketing, to B.J. Nova, President of the Tobacco Division, states: "Flavorwise we should try for innovation, taste, and strength. Nicotine should be medium, recognizing the fact that virtually all tobacco usage is based upon nicotine, 'the kick,' satisfaction," [See Marsee v. U.S. Tobacco Co., UST document read into evidence by plaintiff's attorney George Braly ( Marsee trial transcript, pp. 1661-1662), quoted in Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994, and November 29, 1994 (emphasis added).] In another intra-company memorandum, dated September 22, 1984, and addressed to UST's Strategic Management Team regarding development of "portion pack" starter brands, Lindqvist refers to "difficulties in finding the acceptable product as regards taste, strength, kick and size." [Marsee v. U.S. Tobacco Co., U.S. Tobacco Intra-Company Correspondence, "Re: Product Development," September 22, 1981, Exhibit 5 to Per Erik Lindqvist Deposition (obtained from Fort Worth, Texas, Federal Records Center) (emphasis added).]

Yet another internal document confirming UST's use of the graduation strategy and the central role played by nicotine in UST's products is a March 30, 1981, memorandum from Tom Molito of Product Marketing management to Lindqvist. Molito's memorandum describes Good Luck, a starter product, as "Just strong enough to re-inforce nicotine expectation" (emphasis added).

See also Discussion of Taddeo Perjury #6, infra.

Taddeo Perjury #5

#5 "Oral tobacco has not been established as a cause of oral cancer."

Discussion of Taddeo Perjury #5

Taddeo had no credible basis whatsoever on which to claim that oral tobacco has not been established as a cause of oral cancer. As important, while he is, of course, at liberty to hold any opinion he chooses, no matter how outlandish, he in no way framed the quoted statement as opinion, but delivered it as a blanket declaration of fact while under oath.

A recent report of the prestigious National Academy of Science's Institute of Medicine concluded, as have the U.S. Surgeon General, the National Cancer Institute, the Centers for Disease Control and Prevention, the American Cancer Society, the American Heart Association and the American Lung Association, that "Use of tobacco products is the nation's deadliest addiction." [National Academy of Sciences, Institute of Medicine, Committee on Preventing Nicotine Addiction in Children and Youths, Growing Up Tobacco Free: Preventing Nicotine Addiction in Children and Youths, Barbara S. Lynch and Richard J. Bonnie, eds. (National Academy Press: Washington, D.C., 1994), p. 3.] This statement fully encompasses smokeless tobacco products.

It has been proven overwhelmingly that the use of smokeless (or "spit") tobacco, including the brands manufactured and marketed by UST, causes oral cancer, gum disease and tooth loss. Long term snuff users are 48 times more likely than non-users to develop cancers of the gingiva (gums) and buccal mucosa (cheek) and four times more likely to develop mouth cancer than non-users. Persons chewing tobacco are six times more likely to develop mouth cancer of the hypopharynx and three times more likely to develop cancer of the oropharynx. Nearly 30,000 new cases of oral cancer are diagnosed each year in the United States, many of them due directly to the use of smokeless tobacco, and half of those diagnosed die within five years. [U.S. Department of Health and Human Services, Office of the Inspector General, Spit Tobacco and Youth, 1992, p. 3-6; Testimony of Michael P. Eriksen, Sc.D. (Office on Smoking and Health, Department of Health and Human Services), before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress; D.M. Winn, W.J. Blot, C.M. Shy, L.W. Pickle et al., "Snuff Dipping and Oral Cancer Among Women in the Southern United States," New England Journal of Medicine, March 26, 1981, pp. 745-749; National Academy of Sciences, Institute of Medicine, Committee on Preventing Nicotine Addiction in Children and Youths, Growing Up Tobacco Free: Preventing Nicotine Addiction in Children and Youths, Barbara S. Lynch and Richard J. Bonnie, eds. (National Academy Press: Washington, D.C., 1994), p.3.] One popular form of smokeless tobacco, snuff, which is the foremost smokeless tobacco product manufactured by UST, is considered such an alarming cause of oral cancer and other illnesses that its sale is prohibited in numerous countries, including the nations of the European Community, Australia and New Zealand.

Taddeo Perjury #6

#6 "Dr. [Gregory] Connolly [in testimony before the Subcommittee on Health and the Environment] [Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994.] asserts that U.S. Tobacco's Skoal Bandit product was targeted at 'new users, mainly cigarette smokers, age 15-35.' That allegation is also false. The [Lotus Project] document relied upon by Dr. Connolly to support his assertion was written over 20 years ago, does not mention Skoal Bandits, was not created by U.S. Tobacco and does not reflect U.S. Tobacco policy."

Discussion of Taddeo Perjury #6

Again under oath, Taddeo seriously misrepresented Dr. Connolly's testimony regarding the "Lotus Project" and UST's connection to it, again deceiving the Congressional subcommittee to a degree that may have reached the level of perjury. The Wall Street Journal, in an extensive investigative article, recently identified the Lotus Project as "a joint venture between UST and Swedish Tobacco Co." [Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick,'" Wall Street Journal, October 26, 1994, p. A1 (emphasis added).] A document containing the minutes from a July 18, 1972, meeting held in the office of UST's then-President Louis A. Bantle, relied upon in part by Dr. Connolly and also cited by the Journal, indicates that the meeting was attended by 10 individuals and concerned "The Lotus Project." ["Minutes from a Meeting in Greenwich 7-18-72 at Mr. L.A. Bantle's Office," Document No. UST 000004026, in Marsee v. U.S. Tobacco Co., appended to Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994 (emphasis added).] That document states:

"Mr. L.A. Bantle opened the meeting by explaining that 'Lotus' is the code name for smokeless tobacco in a portion pack form. This project is being launched this fall in Sweden by Swedish Tobacco Company. It is and understanding between the Swedish Tobacco Company and United States Tobacco to keep one another informed and to cooperate on this project.

"Mr. Bantle further declared that he wanted a Lotus product for the U.S. market as soon as possible and that this product should not be a Copenhagen or Skoal in the portion pack form, but an entirely new product aimed at new consumers, mainly cigarette smokers.

***

"Mr. Bantle explained that in agreement with Swedish Tobacco Company, United Scandia International is going to offer Lotus to the international market. The product USA [United Scandia International] will offer may be choosen [sic] from either of the two mother companies, whichever company USI thinks is making the right product for X market. This could mean that several products might have to be developed although the ideal situation would be if the U.S.-Lotus could be used worldwide.

"To accomplish a sound an [sic] rapid development of the Lotus project, Mr. Bantle declared that he wanted to set up a special task force with the following participants:..."

The document then lists eight individuals under the heading "United States Tobacco Co." and two, including P.E. Lindqvist (identified, supra, as Per Erik Lindqvist, UST Senior Vice President of Marketing), under the heading "U.S.I." The document then states, "This task force should report directly to Mr. Bantle and always bear in mind the secrecy of the project" (emphasis added).

A second UST document relied on by Dr. Connolly -- curiously, Taddeo referred only to one document in his testimony -- is an internal memorandum entitled "LOTUS," printed on "United States Tobacco Company" letterhead and addressed from W.W. Watson, President, United Scandia International, to L.A. Bantle, UST's President. The memorandum, dated June 2, 1972, describes the activities of two working groups, one from UST and the other from Swedish Tobacco. [Document No. UST 000001471, in Marsee v. U.S. Tobacco Co., appended to Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives. United States Congress, March 25, 1994. See also Dr. Connolly's testimony of November of November 29, 1994.]

Yet a third document obtained from UST's internal files and relied on by Dr. Connolly, entitled "THE LOTUS PROJECT," [Document No. UST 000004028, in Marsee v. U.S. Tobacco Co., appended to Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives. United States Congress, March 25, 1994. See also Dr. Connolly's testimony of November 29, 1994.] describes the project and identifies the "target group" as "[n]ew users, mainly cigarette smokers, age group 15-35." Under the heading "Strength," it lists the following:

"1 Nicotine satisfaction.

Mild like Happy Days.

Instant but not shocking.

2 Feeling in the mouth.

As little harshness as possible

on the gum and in the throat."

Soon after the UST documents cited by Dr. Connolly (and used by the Wall Street Journal) were written, UST did in fact introduce a snuff product in a tea-bag-like pouch called Good Luck, which was in many ways the mirror image of the product described in the Lotus Project. Good Luck ultimately failed in the marketplace. [Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick,'" Wall Street Journal, October 26, 1994, p. A1.] Subsequently (in 1983), as Dr. Connolly accurately testified, UST successfully introduced another "starter" smokeless tobacco product, Skoal Bandits, likewise sold in a tea-bag-like pouch. [Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce. House of Representatives, United States Congress, march 25, 1994, and November 29, 1994.]

To date, Taddeo and UST have taken no action against the Wall Street Journal or Dr. Connolly for allegedly misrepresenting the nature of UST's internal communications and conduct.

f. Perjury by T.F. Riehl (B&W)

Riehl Perjury #1

1. The following exchange took place with Riehl:

Mr. Bryant: "The average nicotine content in tobacco is 1.7 percent. So if 2.3 percent [in B&W's Barclay cigarette] is correct, it's 35 percent higher than the nicotine content in the average tobacco leaf. My question is, do you deliberately mix the tobacco for the Barclay cigarette so that it will have a much higher concentration of nicotine?"

***

Mr. Riehl: "No, sir. We blend for taste, not nicotine."

Mr. Bryant: "In order to obtain your goals with regard to taste, do you deliberately mix the tobacco for the Barclay cigarette so that it will have a much higher concentration of nicotine?"

Mr. Riehl: "No, sir, we don't. We blend for taste."

Discussion of Riehl Perjury #1

Internal documents from B&W indicate that Riehl himself has for years conducted research and development on nicotine and tar content and delivery for his company. His research appears to have focused on adjusting nicotine and tar levels without regard to taste. At the 1984 Smoking Behavior-Marketing Conference, for example, Riehl gave a presentation on "Project Aries," the aim of which was to develop a "safer" cigarette. According to Riehl's presentation, Aries used a novel filter that "achieved tar reduction by ventilation alone and thus provided unfiltered smoke at low tar deliveries." He said, further, that "Aries' smoke chemistry differs" because it provides "nicotine enrichment in later puffs." His observations were made in the context of considering the levels of certain constituents found to be transmitted in Aries' cigarette smoke, and did not address the question of "taste."

A thorough review of available tobacco company-sponsored research and publications has unearthed little, of any, analysis of nicotine's role as a flavor or taste agent. As noted by FDA Commissioner David Kessler in testimony before the House Subcommittee on Health and the Environment:

"The tobacco industry may tell you that nicotine is important in cigarettes solely for 'flavor.' There is a great deal of information that suggests otherwise. Some of the patents specifically distinguish nicotine from flavorants. [Footnote omitted.] An RJR book on flavoring tobacco, while listing around a thousand flavorants, fails to list nicotine as a flavoring agent." [Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994 (citing J.C. Leffingwell and H.J. Yound, Tobacco Flavoring for Smoking Products [R.J. Reynolds Tobacco Company, 1972]).]

On the other hand, tobacco companies and their agents have funded extensive research on the pharmacology of nicotine. In testimony before Congress three weeks prior to the tobacco executives' appearance on April 14, 1994, John Slade, M.D., a leading expert in nicotine addiction and the specialty of addiction medicine, stated:

"Funded research [by or for the tobacco industry] has encompassed the entire spectrum of subjects relevant to nicotine pharmacology. Studies have ranged from basic work on nicotine receptors and nicotine analogues to human psychopharmacology studies. The existence of these research programs means that the cigarette industry is knowledgeable about all aspects of the pharmacology of nicotine.

"While there is a very large body of published research on the pharmacology of nicotine, there is remarkably little on the contribution nicotine makes to the taste and flavor of tobacco products. In fact, apart from a few patents in which experimental cigarettes were assessed for flavor, taste, harshness and the like, I cannot recall a single published study since the 1930s in which this aspect was a central focus ofthe research." [Testimony of John Slade, M.D., before the Subcommittee on Health and the Environment. Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994 (emphasis added).]

Re: Evidence from internal documents from B&W and its parent, British-American Tobacco Company [The working relationship between parent British-American Tobacco and Brown and Williamson is, and has long been, a close one. Therefore, it is likely that B&W has been well aware of the tobacco-related health research carried out by the parent company. A July 9, 1969, contract between the two companies ("BAT/B&W R&D Cost and Risk Pooling Agreement"), and a February 7, 1977, letter plus handwritten notes suggesting later amendments to their agreement, provide a detailed look at the close working relationship.]

A series of internal documents from B&W's parent, British-American Tobacco Company, [Brown & Williamson Tobacco Corporation (B&W) was formed in 1906. B&W was purchased by the British-American Tobacco Company in 1967. British-American Tobacco is now called BAT Industries (BAT). Imperial Tobacco Company is also a subsidiary of BAT Industries. In 1961, B&W and BAT entered into an agreement to pool their research efforts. In 1969, B&W and BAT entered a cost-sharing arrangement, under which B&W would help fund the research conducted at BAT laboratories. The principal research laboratory for the BAT-affiliated companies is the Group R&D Centre in Southampton, England. The BAT research program receives research recommendations and makes research reports to committees made up of representatives of BAT-affiliated companies. E.g., the "Biological Research Committee" makes recommendations for biological testing. Representatives of B&W regularly sit on these supervisory committees. Since 1962, the BAT-affiliated companies have held annual research conferences involving researchers from each of the affiliated companies. At these conferences, the results of all BAT-affiliated research are discussed and recommendations for future research are made. Representatives of B&W regularly attend these annual conferences. (Information adapted from explanatory documents prepared by Majority Staff, Subcommittee on Health and the Environment, June 23, 1994.)] illustrate vividly the company's long-term, sophisticated awareness that it manufactures and markets a powerfully addictive product, whose addictive character results from use of the drug nicotine and its manipulation by the manufacturer. Selected examples follow, with key portions highlighted by italics:

1) 1963: A research report dated May 30, 1963, prepared under contract by researchers in Switzerland for British-American Tobacco/B&W and deliberately withheld by B&W from the U.S. Surgeon General, explained the physiological basis of nicotine addiction. The report did not question that nicotine is addictive. Rather, it sought to explain the addiction by using "the then-current understanding of how nicotine might interact in the brain and with the endocrine system," according to Dr. Slade, who analyzed the report. In an interview broadcast on National Public Radio, Dr. Slade observed that B&W-commissioned report shows that tobacco industry research on the addictive properties of nicotine was years ahead of the research on the subject conducted outside of the industry. He noted, as well, that B&W and other tobacco companies never admitted to conducting such research. [Richard Harris, National Public Radio, "Report Shows Study of Nicotine Addiction in 1963," Morning Addition, May 20, 1964, see also Philip J. Hilts, "Tobacco Company Was Silent on Hazards," New York Times, May 7, 1994, p. A1, reporting that B&W explicitly decided to withhold from the U.S. Surgeon General significant research findings from Battelle Laboratories of Geneva, which had been hired to do health-related research on tobacco.] The report stated:

"In a chronic smoker the normal equilibrium in the corticotropin releasing system can be maintained only by continuous nicotine intake.

If denied nicotine, the report said:

"A body left in this unbalanced state craves for renewed drug intake in order to restore the physiological equilibrium. This unconscious desire explains the addiction of the individual to nicotine." [Philip J. Hilts, "Tobacco Maker Studied Risk But Did Little About Results, " New York Times, June 17, 1994, p. A1.]

2) 1967: At a June 1967 meeting of British-American Tobacco scientists convened specifically to discuss nicotine, the company's research chronology, emphasizing the importance of nicotine to the company, reported that "Sir Charles Ellis [Scientific Advisor to the Board of British-American Tobacco] states that Batco is in the nicotine rather than the tobacco industry. [Id.]

3) 1962: Sir Charles Ellis, himself, presented a paper in 1962, in which he said:

"One result of the recent public discussions on smoking and health must have been to make each of us examine whether smoking is just a habit or addiction or has any positive effects. It is my conviction that nicotine is a very remarkable beneficent drug that both helps the body to resist external stress and also can as a result show a pronounced tranquilizing effect. You are all aware of the very great increase in the use of artificial controls, stimulants, tranquilizers, sleeping pills and it is a fact that under modern conditions of life people find that they cannot depend just on their subconscious reactions to meet the various environmental strains with which they are confronted, they must have drugs available which they can take when they feel the need. Nicotine is not only a very fine drug, but the techniques of administration by smoking has considerable psychological advantages and a built-in control against excessive absorption. It is almost impossible to take an overdose of nicotine in the way it is only too easy to do with sleeping pills." [Sir Charles Ellis, "The Smoking and Health Problem," Paper presented at Research Conference, Southampton, England, pp. 15-16 (1962)]

4) 1968: A British-American Tobacco research conference held on Hilton Head Island, South Carolina, in 1968 reached the following conclusion:

"In view of its pre-eminent importance, the pharmacology of nicotine should continue to be kept under review and attention paid to the possible discovery of other substances possessing the desired features of brain stimulation and stress-relief without direct effects on the circulatory system. The possibility that nicotine and other substances together may exert effects larger than either separately (synergism) should be studied and if necessary the attention of Marketing Departments should be drawn to these possibilities."

5) 1972: A report of the British-American Tobacco Company, dated November 9, 1972, ["Preparation and Properties of Nicotine Analogues."] accented the fundamental role of nicotine in the success of the tobacco industry:

"It has been suggested that a considerable proportion of smokers depend on the pharmacological action of nicotine for their motivation to continue smoking. If this view is correct, the present scale of the tobacco industry is largely dependent on the intensity and nature of the pharmacological action of nicotine."

6) 1980: A British-American Tobacco Company report dated May 21, 1980, ["Method for Nicotine and Cotinine in Blood and Urine."] found that:

"Nicotine is an extremely active biological compound capable of eliciting a range of pharmacological, biochemical and physiological responses in vivo... In some instances, the pharmacological response of smokers to nicotine is believed to be responsible for an individual's smoking behavior, providing the motivation for and the degree of satisfaction by the smoker."

7) 1984: The following statements were made in presentations by scientists at British-American Tobacco's Smoking Behavior-Marketing Conference in 1984:

"Nicotine interacts with specialized sites in the body termed receptors (nicotinic cholinergic receptors)... [I]n its simplest sense puffing behavior is the means of providing nicotine dose in a metered fashion." [Presentation by G.A. Read, Group Leader, Smoker Behavior, British-American Tobacco Company, 1984.]

"Smoking is then seen as a personal tool used by the smoker to refine his behavior and reactions to the world at large. It is apparent that nicotine largely underpins those contributions through its role as a generator of central physiological arousal effects which express themselves as changes in human performance and psychological well-being." [Presentation by Rob Ferris, Manager, Psychology Group, British-American Tobacco Company, 1984.]

8) 1984: The Proposed Revisions for 1985-1987 submitted to British-American Tobacco GR&DC Research Programme, Smoker Behavior, dated September 1984, stated:

"Smoke Pharmacology... The work will continue to identify the mechanisms of nicotine interaction within the central nervous system. It will be extended to determine the specific and changing brain concentration of nicotine using the positron emission tomography techniques."

Re: Evidence that B&W manipulates nicotine levels in its cigarette manufacturing process

Reconstituted tobacco ordinarily contains 25 percent or less of the nicotine in regular tobacco. At the request of ABC News' "Day One" program, the American Health Foundation performed a thorough, independent analysis of the reconstituted tobacco in several brands of cigarettes, including B&W brand GPC. The samples that were tested were found to have up to 70 percent (as opposed to the expected 25 percent) of the nicotine that would be found in regular tobacco, indicating that B&W had fortified the reconstituted tobacco in GPC cigarettes with additional nicotine. B&W is not known to have provided any credible alternative explanation for the unexpectedly high level of nicotine found in its reconstituted tobacco. In an interview broadcast on "Day One," Bogdan Prokopczyk, Ph.D., the Section Head of Bio-Organic Chemistry for the American Health Foundation who performed the analysis, expressed surprise at the nicotine levels identified, "because," he said, "I expected it to be less. The most likely explanation," he concluded, "is that some nicotine has been added, either with flavoring agents or by itself." [Day One, ABC News, "Smoke Screen," February 28, 1994.]

Dr. Prokopczyk confirmed in a telephone conversation on November 23, 1994, that B&W added nicotine to the reconstituted tobacco implanted in GPC. Dr. Prokopczyk said he was certain that this nicotine was added either alone or as a part of a solution of flavorings. Since B&W and other tobacco companies have the technology to add flavorings with or without nicotine, the addition of nicotine to reconstituted tobacco is purely at the manufacturer's discretion, he said. [Telephone interview with Bogdan Prokopczyk, Ph.D., American Health Foundation, November 23, 1994.]

Internal documents from B&W itself also highlight some of the tobacco industry's early research efforts to blend for higher nicotine content while lowering tar levels. In a "strictly confidential" report to B&W executives, Dr. R.B. Griffith, the company's chief of research, discussed research being done at the Tobacco Research Council laboratory in Harrogate, England. In addition to noting that the Harrogate research showed the health hazards of cigarettes and ways to produce less hazardous cigarettes, Griffith reported that Harrogate's "approach seems to be to find ways of obtaining maximum nicotine for minimum tar." According to the New York Times, Harrogate's research was halted in the mid-1960s because of concerns that it could prompt significant government regulation. [See Philip J. Hilts, "Method to Produce Safer Cigarette Was Found in 60's, but Company Shelved Idea," New York Times, May 13, 1994, p. A20 (emphasis added).]

"Y-1": On June 21, 1994, FDA Commissioner David A. Kessler, M.D., disclosed in testimony before the Subcommittee on Health and the Environment that FDA investigators had discovered that Brown & Williamson had developed a super-high-nicotine tobacco plant, which the tobacco company called "Y-1." The discovery followed B&W's denials to the FDA on May 3, 1994, that it had engaged in "any breeding of tobacco for high or low nicotine levels." [Testimony of David A. Kessler, M.D., before Subcommittee on health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, June 21, 1994.] Four FDA investigators who had visited the B&W plant in Macon, Georgia, on May 3 swore in affidavits that they had asked company officials whether B&W was involved in breeding tobacco for specific nicotine levels, and that the officials had said no. Only after the FDA learned of the development of the plant in its investigation and confronted company officials with the evidence did B&W admit that it was growing and using the high-nicotine plant. [See generally Marlene Cimons, "FDA Followed Paper Trail in Hunt for Potent Tobacco," Los Angeles Times, July 18, 1994, p. A2; John Schwartz, "FDA Chief Discloses High-Nicotine Leaf," Washington Post, June 22, 1994, p. A1; Warren E. Leary, "Cigarette Company Developed A Potent Gene-Altered Tobacco," New York Times, June 22, 1994, p. A1; Laurie McGinley, "FDA Chief Says Firm Developed Altered Tobacco," Wall Street Journal, June 22, 1994, p. A3; Doug Levy, "FDA: 'Y-1' Boosts Nicotine," USA Today, June 22, 1994, p. 1A.]

The facts are that in a decade-long project, B&W secretly developed a genetically-engineered tobacco plant with a nicotine content of 6.2 percent by weight, more than twice the average found naturally in flue-cured tobacco. Use of this tobacco would enable B&W simultaneously to lower tar and raise nicotine levels. B&W took out a Brazilian patent for the new plant, which was printed in Portuguese. B&W and a Brazilian sister company, Souza Cruz Overseas, grew Y-1 in Brazil and shipped it to the United States for use in five B&W cigarette brands: Viceroy King Size, Viceroy Lights King Size, Richland King Size, Richland Lights King Size and Raleigh Lights King Size. When B&W's deception was uncovered, company officials admitted that it had as much as four million pounds of Y-1 stored in company warehouses in the United States. [Id.]

Dr. Kessler testified that B&W's cover-up extended to the company's going so far as to instruct the DNA Plant Technology Corporation of Oakland, California, which had helped develop the tobacco, to tell FDA investigators, that Y-1 had "never [been] commercialized." Only after the FDA discovered two United States Customs Service invoices indicating that "more than a half-million pounds" of Y-1 tobacco had been shipped to B&W on September 21, 1992, did B&W confess that it had developed the high-potency tobacco. [Id.]

In subsequent testimony before the Subcommittee on Health and the Environment, B&W CEO Thomas E. Sandefur, Jr., denied secretly growing Y-1 and stated that his company was being "set up." He admitted that B&W controlled nicotine, but stated that the company did so only for "taste." [Testimony of Thomas E. Sandefur, Jr., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, June 23, 1994.]

In his testimony, Dr. Kessler stated, "These findings lay to rest any notion that there is no manipulation and control of nicotine undertaken in the tobacco industry."

As for the "taste" argument, B&W and other tobacco manufacturers' claim that they blend and manipulate tobacco for taste and not for nicotine is further belied by the fact that, as noted by Dr. Kessler, "[a]fter surgery for lung cancer, almost half of smokers resume smoking. Among smokers who suffer a heart attack, 38 percent resume smoking while they are still in the hospital. Even when a smoker has his or her larynx removed, 40 percent try smoking again." [Testimony of David A. Kessler, M.D., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994 (footnotes omitted).] Health policy expert Clifford E. Douglas observed in public testimony before the FDA's Drug Abuse Advisory Committee, that:

"[M]uch of the so-called flavor comes when the nicotine is burned, and... the burning sensation experienced by the smoker is replicated in nicotine chewing gum merely by adding ground pepper. In short, the industry's argument about 'flavor' is specious, and it is remarkable that the industry has got us talking about it at all. As far as flavor goes, perhaps the industry witnesses here today can explain why so many smokers who have endured tracheostomies due to throat cancer find it necessary to continue to smoke through the holes in their throats, where they cannot taste a thing." [Testimony of Clifford E. Douglas before Food and Drug Administration Drug Abuse Advisory Committee, August 2, 1994.]

Further, a tobacco extract industry manager told ABC News' "Day One" in an interview that, as reported by "Day One" correspondent John Martin, "cigarette makers use his [the tobacco extract industry manager's] product to give reconstituted tobacco a 'kick.' That kick, he [the tobacco extract industry manager] says, comes from nicotine." [Day One, ABC News, "Smoke Screen," February 28, 1994.]

See also the April 28, 1994, Congressional testimony of former Philip Morris Tobacco Company scientist Victor DeNoble, Ph.D., discussed more fully supra. DeNoble flatly contradicted tobacco executives' sworn testimony that nicotine was in cigarettes for "taste," noting that nicotine's effect on the brain, not flavor, was the focus of his own company's research.

See also Discussion, supra, regarding the widely used nicotine manipulation process patented by the Kimberly-Clark Corporation subsidiary LTR Industries, whose primary use is to control nicotine levels without affecting the taste or other sensory characteristics of tobacco products.

2. PROVIDING FALSE INFORMATION TO, OR WITHHOLDING INFORMATION FROM, A COMMITTEE OF THE U.S. CONGRESS IN THE ABSENCE OF OATH

Tobacco company representatives, acting in their official capacities, also deceived committees of the United States Congress in violation of 18 U.S.C. §1001. Following are documented instances of specific conduct constituting the provision of false and misleading information to, or withholding of information from, a committee of the U.S. Congress:

a. The Tobacco Instituted Failed to Provide Requested Information to the House Subcommittee on Health and the Environment and Also May Have Provided or Facilitated False Testimony by Health Buildings Inter-national Before the Subcommittee.

On March 17, 1994, Gray Robertson, President of Healthy Buildings International ("HBI"), testified before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, U.S. House of Representatives on behalf of the Tobacco Institute ("TI"). In his testimony, Robertson argued that environmental tobacco smoke is not a health hazard.

Documents obtained by USA Today indicate that HBI has consulted for the Tobacco Institute since at least 1985. Donald Hoel, an attorney with the Kansas City, Missouri, law firm of Shook, Hardy & Bacon, representing the Council for Tobacco Research, recommended at that time payment to HBI (then called ACVA Atlantic Inc.) for a study to determine causes of indoor air pollution other than cigarette smoke. Homes included in the study were to be chosen "by the Tobacco Institute," according to the consultant's May 2, 1985, proposal signed by Robertson. "Results of such a study... could demonstrate that environmental tobacco smoke has a relatively insignificant effect on indoor air quality," stated the proposal, which was circulated among tobacco industry lawyers. [Doug Levy, "Struggling to Clear the Air on Tobacco," USA Today, October 12, 1994, p. 1D.]

Robertson's testimony before the Subcommittee on Health and the Environment was based in part on data that reportedly was falsified. Former HBI technician Reginald Simmons and anotherunnamed former HBI technician have said that HBI falsified field measurements of indoor smoke levels. A former "senior consultant" at HBI, Jeffrey Seckler, said that he regrets the three years he spent telling tobacco industry "lies of omission." [Id.] The unnamed technician told Subcommittee investigators that Robertson himself falsified the data. At the time, the tobacco industry-funded Center for Indoor Air Research paid HBI $118,415 to measure tobacco smoke in "typical" offices. HBI's attorney, Jeffrey Howard, has denied the allegations of falsification. [Doug Levy, "Smoking Data Tampered With, Researchers Say," USA Today, November 2, 1994, p. 1D. See also Myron Levin, "Who's Behind the Building Doctor," The Nation, August 9/16, 1993, p. 168-171.]

HBI also received between $500,000 and $750,000 per year to publish a slick-glossy magazine in French, German, Spanish, Italian and Dutch. Seckler and another source said that the money was funneled by Philip Morris through Covington & Burling, a Washington, D.C., law firm that represents the TI and Philip Morris. Most of the magazine's articles stressed ventilation improvements and made no reference to smoking. [Myron Levin, "Who's Behind the Building Doctor?," The Nation, August 9/16, 1994, pp. 168-171.]

On August 23, 1994, the Subcommittee on Health and the Environment of the Committee on Energy and Commerce, U.S. House of Representatives, requested that the TI provide copies of all correspondence between the TI and HBI. On October 31, 1994, the Chairman of the Subcommittee on Health and the Environment, Rep. Henry Waxman, wrote to the TI's President, Samuel Chilcote, expressing his "dismay at the tobacco investigation." [Letter to Mr. Samuel Chilcote, President, Tobacco Institute, from Henry A. Waxman, Chairman, Subcommittee on Health and the Environment, October 31, 1994.] His letter further states:

"The Tobacco Institute has so far refused to provide the Subcommittee with this correspondence.

"New information received by the Subcommittee makes the failure to provide this correspondence particularly troubling. As you know, one of the allegations being investigated by the Subcommittee is the allegation of a former employee of HBI, Jeffrey Seckler, that HBI falsified environmental tobacco smoke measurements in exchange for financial assistance from the Tobacco Institute and other tobacco interests. Now new information obtained by the Subcommittee appears to corroborate the allegation that falsification occurred.

"The new information is a building inspection report and field notes for a building inspection conducted by HBI at an office building in San Diego, California, in July 1989. The information shows that the inspection data appears to have been altered to cover up an environmental tobacco smoke problem in the building. Excerpts from the building inspection report (Exhibit A) and field notes(Exhibit B) are attached. [Exhibits are not included here.] (In the final inspection report, the name of the building has been changed from the field notes, because apparently the report was used as a model report by HBI for promotional purposes. However, a comparison between the field notes and the inspection report shows that the same building is involved in each case.)

"In the summary of findings in the final building report, there is no mention made of an environmental tobacco smoke problem in the building. To the contrary, the summary states:

"'Measurement of the environmental tobacco smoke (ETS) fraction of indoor air pollution in two areas featuring active smoking showed no excessive accumulation of pollutants from this source. This confirms that the current ventilation system is able to cope with moderate smoking activity' (p. 43)

"The field notes appear to contradict this statement, however. They show that the particulate level in an area occupied by two smokers was 150 micrograms per cubic meter (see 'ACVA Air Quality Survey Form,' sample 43). This is a high level. It is twice the level that HBI recommends as acceptable for indoor air.

"The field notes further disclose an apparent attempt to alter this measurement. The notes show that the reading of '150' was struck out, and a lower number, '75,' inserted in its place. Likewise, in the final report, the particulate level for sample 43 is reported as '85' -- not the reading of '150' originally recorded (p. 19).

"To further understand these changes, the Subcommittee contacted the field inspector who conducted the building inspection in question. This inspector told the Subcommittee that the true reading was '150' and that the change in the measurement to '75' in the field notes and '85' in the final report was an alternation [sic] of the actual measurement. The inspector further informed the Subcommittee that the change in the field notes was made in the handwriting of the President of HBI, Gray Robertson.

"The Subcommittee has further been informed, by persons other than HBI, that during the period that this inspection was conducted, HBI was receiving compensation from tobacco-industry organizations, including your organization, to inspect levels of environ-mental tobacco smoke in buildings and to testify about these results before federal, state and local panels.

"These are matters of great concern to the Subcommittee. The charge of alteration or falsification of data is extremely serious in its own right. Moreover, in this case the data may have been used to mislead Congress and the State of California.

"As you may recall, HBI appeared before the Subcommittee on March 17, 1994, on your behalf to argue that environmental tobacco smoke is not a health hazard. Similar testimony by HBI was provided to the California Assembly Labor Committee in 1991 and 1993. In these appearances, HBI relied heavily on the data from HBI field inspections to substantiate its contentions. If this data were tampered with, it would call into question the basis for the testimony that environmental tobacco smoke is not a health hazard."

It is not known at this writing whether, or in what fashion, the Tobacco Institute, Samuel Chilcote, Healthy Buildings International or Gray Robertson have responded to Chairman Waxman's letter.

b. Misrepresentations by Charles O. Whitley (Senior Consultant, Tobacco Institute) before House Subcommittee on Health and the Environment

Charles O. Whitley, the Tobacco Institute's Senior Consultant, testified before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, U.S. House of Representatives, on March 25, 1994. In his testimony, he stated:

"[FDA] Commissioner [David] Kessler suggested that the cigarette manufacturers... deliberately manipulate the amount of nicotine in cigarettes in order to 'produce and sustain addiction.'... I am here today to tell you -- unequivocally -- that these suggestions are false... [N]icotine levels are a function of 'tar' levels. When 'tar' levels are set, nicotine levels follow." (Emphasis added.)

In light of the evidence presented throughout this Prosecution Memorandum of tobacco companies' manipulation of nicotine content and delivery and of the companies' knowledge that nicotine is addictive, it appears that Charles Whitley deliberately sought to mislead Congress in this testimony. The Tobacco Institute, and thus Whitley, represents most of the major cigarette manufacturers in the United States, including those shown to manipulate nicotine content and delivery.

c. Deceptive Communications of Smoke-less Tobacco Council with House Subcommittee on Health and the Environment

The Smokeless Tobacco Council is the trade association of the major smokeless, or "spit," tobacco companies in the United States. In May 1994, the Smokeless Tobacco Council submitted to the House Subcommittee on Health and the Environment a list of 562 additives used in the manufacture of smokeless tobacco.

Two of the additives listed were sodium carbonate and ammonium carbonate. The Smokeless Tobacco Council's list described these additives merely as ingredients in edibles such as baked goods. This representation of two chemicals used, in fact, to "free" nicotine from smokeless tobacco for more efficient absorption into the user's bloodstream was highly deceptive.

Larry D. Story, a U.S. Tobacco chemist until 1982, disclosed that UST routinely adds such chemicals to its snuff "to deliver the free nicotine faster and to make the product stronger." Similarly, James C. Taft, head of UST's product development from 1972 until 1991, said: "The fermentation process involves adding chemicals during and after fermentation and, at the end, you addictive some more chemicals which increase pH, too." Without increasing the pH levels, "you couldn't get nicotine release." [See Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick,'" Wall Street Journal, October 26, 1994, p. A1.] UST is the Smokeless Tobacco Council's largest member company.

In short, for the Smokeless Tobacco Council and its member companies, these chemical additives appear to have nothing to do with edibles such as baked goods and much to do with boosting the pharmacological impact of the addictive drug nicotine on the nervous system and brain of the user.

d. Deception of Congress by Council for Tobacco Research and James F. Glenn, M.D., CTR's Chairman, President and CEO

As discussed at some length elsewhere in this Prosecution Memorandum (see Section C(1)(a)(2)(a), infra), one of the primary means by which the major tobacco companies have sought to induce members of the public to purchase tobacco products containing addictive levels of nicotine was by the creation and utilization of the Council for Tobacco Research - U.S.A., Inc. ("CTR"), a joint tobacco industry group originally named the Tobacco Industry Research Committee. The establishment of the tobacco company-funded CTR has consistently provided the major tobacco manufacturers with an effective vehicle for disseminating or causing to be disseminated to the media, the public, the Congress and others false and misleading information regarding the health effects of tobacco use.

James F. Glenn, M.D., the CTR's current chairman, president and CEO, testified before the Subcommittee on Health and the Environment of the Committee on Energy and Commerce, U.S. House of Representatives, on May 25, 1994. His testimony included several attempts to mislead the Sub-committee. Some examples follow, with key portions highlighted by italics. Brief explanatory comments, which are based on the extensive information now available concerning CTR's true activities (see Section C(1)(a)(2)(a), infra), are included.

Glenn began by referring to "the contributions the Council has made to the progress of scientific knowledge about diseases associated with smoking." (Fact: CTR has long blocked, sidetracked or weakened scientific research it deemed unfavorable to its sponsoring tobacco companies. The most damning study results were secreted away in CTR's "Special Projects" unit.)

Glenn stated that CTR "sponsors research into questions of tobacco use and health and makes the results of that research available to the public." (Fact: CTR has sponsored only that research which is unlikely to result in any meaningful progress in the understanding of the health impact of tobacco use. CTR has made available to the public only those results that the organization and its lawyers deemed harmless.)

"Council grantees are assured complete scientific freedom in conducting their studies. They alone are responsible for reporting their findings in the accepted scientific manner -- through medical and scientific journals and societies. Publication of research results is encouraged in all instances." (Fact: Based on the extensive information now available regarding the inner-workings of CTR and the influence of its sponsoring tobacco companies and their lawyers, this statement appears to be patently untrue.)

B. TOBACCO COMPANIES ENGAGED IN CRIMINAL CONDUCT BY DELIBERATELY DECEIVING THE U.S. SURGEON GENERAL AND THE FOOD AND DRUG ADMINISTRATION

This Prosecution Memorandum documents what appears to be a pattern and practice, spanning decades, on the part of tobacco companies and their executives, lawyers, public relations agents, scientists, trade associations and suppliers of failing to disclose critical health and manufacturing information to the U.S. Surgeon General and the Food and Drug Administration, as well as members of the public, the U.S. Congress and others.

The tobacco industry is an oligolopy consisting of a few large manufacturing companies which, while in competition with each other, have shared resources, information and strategy, informally and through trade associations -- e.g., the Tobacco Institute and the Smokeless Tobacco Council -- and other entities such as the Council for Tobacco Research and the Center for Indoor Air Research.

These companies and the entities formed to represent or work for them, having long been informed of the addictive and debilitating health effects of their tobacco products, and having long been engaged in (and/or fully informed of) the willful manipulation of such products to cause and maintain addiction in American consumers, appear to have violated 18 U.S.C. §1001 by providing false information to, and withholding information from, the U.S. Surgeon General and the Food and Drug Administration on matters within their jurisdiction. Tobacco company representatives and agents, acting in their official capacities, have systematically provided misleading and incomplete information, or no information at all, to these Federal government offices.

Following are selected examples of conduct that may have risen to the level of such crimes.

1. Brown and Williamson's Deception of the U.S. Surgeon General Regarding the Health Effects and Addictiveness of Tobacco and Nicotine:

In 1963, members of the tobacco industry were fully aware that the U.S. Surgeon General was preparing the first Surgeon General's report on smoking and health, which was released on January 11, 1964. Tobacco industry officials were consulted during the process and, prior to that, recommended and unofficially signed off on the naming of experts to the Surgeon General's committee assigned to oversee preparation of the report. Tobacco company officials kept in contact with the committee, sought to monitor its progress and undertook to provide their own health-related information to the committee.

It was during this period that B&W general counsel Addison Yeaman and senior British-American Tobacco Company official A.D. McCormick exchanged six letters and telexes, dated between June 28, 1963, and August 8, 1963, in which they discussed whether to submit to the U.S. Surgeon General their research findings on the addictive and other harmful effects of nicotine and the disease-causing properties of cigarettes. In the course of this dialogue, the two senior officials explicitly agreed to withhold this information, which they then proceeded to do.

According to the New York Times:

"The [Battelle] report found that there were some beneficial effects of nicotine, including a tranquilizer-like effect and an appetite-suppressing effect. But is also showed that it might cause heart disease.

"Mr. Yeaman wrote to Anthony D. McCormick, a senior executive of the parent company in London, that the company would have to decide what to disclose to the American Surgeon General, Dr. Luther Terry, who was about to issue the first report by a Surgeon General condemning cigarettes as a health hazard.

"Mr. Yeaman referred to the Battelle 'nicotine report' and to a new filter created by a company scientist, R.B. Griffith, which could filter out some hazardous substances in cigarettes.

"Mr. McCormick cabled back on July 3, 1963, that 'it is too early to submit Battelle reports to Surgeon Generals' Committee.'

"Mr. Yeaman cabled back 'submission Battelle or Griffith developments to Surgeon General undesirable and we agree continuance of Battelle work useful but disturbed at its implications re cardiovascular disorders.' He said the new research should cause a 'reassessment fundamental policy re health.'

"Two weeks later, as part of the corporate debate about how to handle the health hazards of cigarettes while continuing to keep the company free of the possibility of lawsuits by smokers, Mr. Yeaman wrote a 2,000-word analysis of whether the company should acknowledge the hazards of cigarettes and accept the risks of litigation, or say nothing, but give up the ability to talk about its research in public and give up credible standing to analyze and criticize the Surgeon General's report.

"Mr. Yeaman said in the report, labeled 'strictly private and confidential' and dated July 17, 1963, that the new information about the tranquilizing effects of nicotine and its positive effects on weight loss 'delivers to the industry what may well be the first effective instrument of propaganda counter to that of the American Cancer Society, et al., damning cigarettes as having a causal relationship to cancer of the lung.'

"He said the positive nicotine findings and the Griffith filter were 'a bridge over which the industry could pass from its present terrain of defense to a field for effective counter-attack.' The Griffith filter could selectively take hazardous substances out of cigarette smoke, but could leave the good taste and the nicotine. This device would provide the opening politically, and the positive uses of nicotine would be their 'weapon.'

"He noted that company research had shown that nicotine has a tranquilizing, or anxiety-reducing effect, and helps control body weight, and 'moreover, nicotine is addictive.'

"'We are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms,' he wrote.

"The research found that despite the beneficial effects of nicotine, cigarettes 'cause, or predispose, lung cancer.'

"'They contribute to certain cardio-vascular disorders,' the research found. 'They may well be truly causative in emphysema, etc. etc.'" [Philip J. Hilts, "Tobacco Company Was Silent on Hazards," New York Times, May 7, 1994, p. A1.]

2. Brown & Williamson's Deception of the Food and Drug Administration Regarding the "Y-1" High-Nicotine Tobacco Plant:

On June 21, 1994, FDA Commissioner David A. Kessler, M.D., disclosed in testimony before the Subcommittee on Health and the Environment of the Committee on Energy and Commerce, U.S. House of Representatives, that FDA investigators recently had discovered that Brown & Williamson had developed a super-high-nicotine tobacco plant, which the tobacco company called "Y-1." The discovery followed B&W's denials to the FDA on May 3, 1994, that it had engaged in "any breeding of tobacco for high or low nicotine levels." [Testimony of David A. Kessler, M.D., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, June 21, 1994.] Four FDA investigators who had visited the B&W plant on May 3 swore in affidavits that they had asked company officials whether B&W was involved in breeding tobacco for specific nicotine levels, and that the officials had said no. Only after the FDA learned of the development of the plant in its investigation and confronted company officials with the evidence did B&W admit that it was growing and using the high-nicotine plan. [See generally Marlene Cimons, "FDA Followed Paper Trail in Hunt for Potent Tobacco," Los Angeles Times, July 18, 1994, p. A1; John Schwartz, "FDA Chief Discloses High-Nicotine Leaf," Washington Post, June 22, 1994, p. A1; Warren E. Leary, "Cigarette company Developed a Potent Gene-Altered Tobacco," New York Times, June 22, 1994, p. A1; Laurie McGinley, "FDA Chief Says Firm Developed Altered Tobacco," Wall Street Journal, June 22, 1994, p. A3; Doug Levy, "FDA: 'Y-1' Boosts Nicotine," USA Today, June 22, 1994, p. 1A.]

The facts are that B&W secretly developed a genetically engineered tobacco plant with a nicotine content of 6.2 percent by weight, more than twice the average found naturally in flue-cured tobacco. B&W grew Y-1 in Brazil and shipped it to the United States for use in five B&W cigarette brands: Viceroy King Size, Viceroy Lights King Size, Richland King Size, Richland Lights King Size and Raleigh Lights King Size. When B&W's deception was uncovered, company officials admitted that it had at least three million pounds of Y-1 stored in company warehouses in the United States.

Dr. Kessler testified that B&W's cover-up extended to the company's going so far as to instruct the DNA Plant Technology Corporation of Oakland, California, which had helped develop the tobacco, to tell FDA investigators that Y-1 had "never [been] commercialized." Only after the FDA discovered two United States Customs Service invoices indicating that "more than a half-million pounds" of Y-1 tobacco had been shipped to B&W on September 21, 1992, did B&W confess that it had developed the high-potency tobacco.

In subsequent testimony before the Subcommittee on Health and the Environment, B&W CEO Thomas E. Sandefur, Jr., denied secretly growing Y-1 and stated that his company was being "set up." He admitted that B&W controlled nicotine, but stated that the company did so only for "taste." [Testimony of Thomas E. Sandefur, Jr., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, June 23, 1994.]

In his testimony, Dr. Kessler stated, "These findings lay to rest any notion that there is no manipulation and control of nicotine undertaken in the tobacco industry."

C. TOBACCO COMPANIES ENGAGED IN CRIMINAL CONDUCT BY DELIBERATELY DECEIVING THE AMERICAN PUBLIC

1. DISSEMINATION OF FALSE ADVERTISEMENTS, PRESS REL-EASES AND STATEMENTS TO THE MEDIA

a. By other than the United States Mails

Tobacco Companies, by disseminating or causing to be disseminated false advertisements, press releases and statements to the media via means other than the United States mails, sought directly or indirectly to induce individual members of the public to purchase substances known by such companies to be drugs or devices in violation of 15 U.S.C. §52(a)(2).

(1) Background: Tobacco Industry Representatives Fully Understand and Have Admitted -- Privately, or Publicly Following Separation from the Industry -- that Nicotine is an Addictive Drug and that Tobacco Causes Illness and Death.

(a) Beyond Dispute: Nicotine is Addictive and Tobacco Causes Disease and Death

i. ADDICTION

A great deal of evidence, some of which is discussed elsewhere in this Prosecution Memorandum [E. g. inter alia, internal tobacco company communications, scientific studies and meeting minutes, and the advertising and manufacturing activities of companies doing business with tobacco companies.] makes clear the tobacco industry's understanding of the addicting nature of nicotine and the companies' manipulation of nicotine and other chemicals to exploit the addictive nature of the drug in order to addict consumers. [For a thorough background, see Testimony of David A. Kessler, M.D., Commissioner of Food and Drugs, before the House of Representatives, Committee on Energy and Commerce, Subcommittee on Health and the Environment, March 25, 1994; Testimony of John Slade, M.D., before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994; Clifford E. Douglas, Special Report: The Tobacco Industry's Use of Nicotine as a Drug: What Do the Recent Revelations Mean for Tobacco Control? (American Council on Science and Health: New York, N.Y., May 1994). See also Day One, ABC News, "Smoke Screen," February 28, 1994; Day One, ABC News, "Smoke Screen, Part 2," March 7, 1994; Letter from David A. Kessler, M.D., to Coalition on Smoking OR Health, February 25, 1994.]

It is beyond legitimate dispute that nicotine is a highly addictive substance, comparable in its physiological and psychological properties to other addictive substances of abuse, according to the U.S. Surgeon General and the overwhelming consensus of the world's medical and scientific community. [See U.S. Department of Health and Human Services, Public Health Services, Centers for Disease Control, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, The Health Consequences of Smoking: Nicotine Addiction. A Report of the Surgeon General, 1988.] Recently, the independently constituted Drug Abuse Advisory Committee of the Food and Drug Administration, after holding hearings that included extensive testimony from health officials and tobacco industry representatives, concluded that nicotine is an addictive drug and the chief reason people smoke cigarettes. [See Philip J. Hilts, "F.D.A. Panel Takes Step Toward Setting Control on Nicotine," New York Times, August 3, 1994, p. A1; Laurie McGinley, "Cigarettes Now on Market are Addictive, FDA Drug Abuse Advisory Panel Finds," Wall Street Journal, August 3, 1994, p. B8.]

It is well documented that nicotine has the features of prototypic addictive drugs: it is psychoactive and produces tolerance, physical dependence and reinforcement. After a smoker inhales, nicotine from the cigarette reaches the brain within a few seconds and produces a complex series of chemical reactions that alter mood, increase the heart rate and drive the craving with which millions of smokers are intimately familiar. Addiction to nicotine through tobacco use, like addiction to heroin or cocaine, is characterized by drug craving, compulsive use and relapse after withdrawal. [U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, The Health Consequences of Smoking: Nicotine Addiction. A Report of the Surgeon General, 1988. See also Testimony of Jack Henningfield, Ph.D., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, November 29, 1994.]

It appears that, without exception, the only critics of the concept that nicotine is addictive are those with financial ties to tobacco companies or their agents. [E.g. D.M. Warburton, "Is Nicotine Use and Addiction?," The Psychologist, April 1989, pp. 166-170. See Discussion, supra, of Taddeo Perjury #1.] Scientists at R.J. Reynolds Tobacco Company, for example, admit that nicotine has pharmacological effects on the human body and that it reduces anxiety and increases mental alertness. They also acknowledge that "the beneficial effects of smoking on cognitive performance are a function of nicotine absorbed from cigarette smoke." [See e.g., John H. Robinson and Walter S. Pritchard (Biobehavioral R&D, R.J. Reynolds Tobacco Company), "The Role of Nicotine in Tobacco Use," 108 Psychopharmacology 397-407, 1992.] However, the RJR scientists, like those who work within or for other tobacco companies, claim that the definition of addiction applied by the U.S. Surgeon General and other leading experts is faulty and that nicotine is, therefore, not addictive. Playing a semantic rather than substantive game, the tobacco industry authors claim that to be defined as "addictive," a substance must cause intoxication.

"It is not that Dr. Robinson and other scientists supported by tobacco companies disagree with the main points made by mainstream scientists, but that they define addiction differently," reported the New York Times. Indeed, the tobacco industry scientists have admitted the existence of the hallmarks of addiction, including compulsive use, withdrawal symptoms and continued use despite knowledge of harm to oneself and others. [See Philip J. Hilts, "Is Nicotine Addictive? It Depends on Whose Criteria You Use," New York Times, August 2, 1994, p. C3.]

Moreover, tobacco industry representatives often assert, for public consumption, that since 40 million Americans have quit smoking, nicotine cannot be addictive. This "logic" is false and misleading. As explained by leading experts in the field of tobacco-related and other addictions, "[t]he 40 million Americans who quit did not do so all at once -- the figure represents an accumulation of about 2.5 percent of all cigarette smokers per year over 25 years. Most of them had stopped a number of times and relapsed before final success." These experts note further that just as 90 percent of those who stop smoking do so without professional help, 90 percent of soldiers addicted to heroin in Vietnam were able to stop on their own when they returned to the United States. [See, e.g., Herbert D. Kleber, M.D. (Medical Director, Center on Addiction and Substance Abuse, Columbia University) and David Conney, M.D. (Lecturer in Psychology, Columbia University's College of Physicians and Surgeons), Letter to the Editor, "Don't You Believe that Nicotine Isn't Addictive," New York Times, April 4, 1994, p. A14.]

ii. HEALTH EFFECTS

A recent report of the prestigious National Academy of Science's Institute of Medicine concluded that "Use of tobacco products is the nation's deadliest addiction." [National Academy of Sciences, Institute of Medicine, Committee on Preventing Nicotine Addiction in Children and Youths, Growing Up Tobacco Free: Preventing Nicotine Addiction in Children and Youths, Barbara S. Lynch and Richard J. Bonnie, eds. (National Academy Press: Washington, D.C., 1994), p. 3.] This conclusion has been affirmed by the U.S. Surgeon General, the National Cancer Institute, the Centers for Disease Control and Prevention, the American Cancer Society, the American Heart Association and the American Lung Association (see supra).

An estimated 419,000 Americans die prematurely each year from diseases caused by tobacco use, [Centers for Disease Control and Prevention, "Cigarette Smoking - Attributable Mortality and Years of Potential Life Lost - United States, 1990," Morbidity and Mortality Weekly Report, August 27, 1993, pp. 645-649.] constituting one out of every five deaths in the United States. [J.M. McGinnis and W.H. Foege, "Actual Causes of Death in the United States," Journal of the American Medical Association, Vol. 270, 1993, pp. 2207-2212.] The number of deaths caused by tobacco use is greater than the combined number of deaths caused by the human immunodeficiency virus epidemic (AIDS), alcohol consumption, illicit drug use, homicides, suicides, fires, automobile crashes and unintentional injuries. [Id.] Cigarette smoking causes 87 percent of deaths from lung cancer, 30 percent of all cancer deaths, 82 percent of deaths from pulmonary disease and 21 percent of deaths due to chronic heart disease. [U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, Reducing the Health Consequences of Smoking: 25 Years of Progress: A Report of the Surgeon General, 1989; National Academy of Sciences, Institute of Medicine, Committee on Preventing Nicotine Addiction in Children and Youths, Growing Up Tobacco Free: Preventing Nicotine Addiction in Children and Youths, Barbara S. Lynch and Richard J. Bonnie, eds. (National Academy Press: Washington, D.C., 1994), p.3.] Smokeless tobacco use causes oral cancer, gum disease and tooth loss. Long term snuff users are 50 times more likely to develop gum cancer and four times more likely to develop mouth cancer than non-users. Nearly 30,000 new cases of oral cancer are diagnosed each year in the United States, and half of those diagnosed die within five years. [U.S. Department of Health and Human Services, Office of the Inspector General, Spit Tobacco and Youth, 1992,, p. 3-6; D.M. Winn, W.J. Blot, C.M. Shy, L.W. Pickle et al., "Snuff Dipping and Oral Cancer Among Women in the Southern United States," New England Journal of Medicine, March 26, 1981, pp. 745-749; National Academy of Sciences, Institute of Medicine, Committee on Preventing Nicotine Addiction in Children and Youths, Growing Up Tobacco Free: Preventing Nicotine Addiction in Children and Youths, Barbara S. Lynch and Richard J. Bonnie, eds. (National Academy Press: Washington, D.C., 1994), p. 3.]

(b) Admissions by Current and Former Tobacco Industry Representatives Regarding Addiction, Manipulation of Nicotine Content or Delivery, and the Health Effects of Tobacco Use

(Note: Italics added for emphasis.)

i. F. Ross Johnson (former Chief Executive of RJR Nabisco)

F. Ross Johnson, who ran RJR Nabisco for several years in the mid- to late- 1980s, is recognized as having been the driving force behind development of Premier, RJR's high-technology nicotine delivery product that contained substantial quantities of artificially added nicotine extract. Johnson was quoted by the Wall Street Journal as saying the following about tobacco: "Of course it's addictive. That's why you smoke the stuff." [Eben Shapiro, "Big Spender Finds a New Place to Spend," Wall Street Journal, October 6, 1994, p. B1.]

ii. Victor L. Crawford (former lobbyist for the Tobacco Institute)

Victor Crawford, a lobbyist for the Tobacco Institute from the mid-1980s to 1991 and a former state senator from Maryland, was diagnosed in 1992 with throat cancer caused by cigarette smoking. Since then, he has admitted the following:

"[Smoking is] the most insidious habit, an addiction. I was an addictive personality. I'd stop six or eight weeks. Then I'd have one cigarette and the next day I was back up to two packs and the next day I was back up to three. It is highly addictive."

"The fact of the matter is that it's a killer." [Roger Rosenblatt, "How Do They Live with Themselves?," New York Times Magazine, March 20, 1994, p. 73.]

"[I am] and addict, as most cigarette smokers are."

His throat cancer, which has metastasized to his pelvis and lung, "was caused by cigarette smoking." "This stuff is a killer. I'm living proof -- dying proof -- of what can happen." [CBS "This Morning," October 18, 1994.]

iii. Larry D. Story (former UST chemist who left UST in 1982)

UST routinely adds chemicals to its snuff "to deliver the free nicotine faster and to make the product stronger."

UST tried to control as precisely as possible the dose of nicotine that each product delivered. He said, "There used to be a saying at UST that 'There's a hook in every can.' And that hook is nicotine." [Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick,'" Wall Street Journal, October 26, 1994, p. A1.]

iv. James C. Taft (chemist who is former UST head of product development from 1972 to 1991)

Reflecting the nicotine-rich varieties of the tobaccos used in UST's snuff, Taft joked that UST's products "all have enough nicotine to kill a horse."

Taft said that while he was with UST, it used certain chemicals, such as sodium carbonate and ammonium carbonate, to increase the alkalinity of its tobaccos and, thus, the levels of "free" nicotine. UST added these chemicals during and after fermentation, the process that turns tobacco into snuff. Taft said: "The fermentation process involves adding chemicals during and after fermentation and, at the end, you addictive some more chemicals which increase pH, too." Without increasing the pH levels, "you couldn't get nicotine release." [Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick,'" Wall Street Journal, October 26, 1994, p. A1.]

v. Victor DeNoble (Associate Senior Scientist for Philip Morris from 1980-1984)

Victor DeNoble, Ph.D., testified before Congress that nicotine is addicting "on a level comparable to cocaine." [Testimony of Victor John DeNoble, Ph.D., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, April 28, 1994.]

vi. Sir Charles Ellis (Scientific Advisor to Board of British-American Tobacco PLC, B&W's British parent)

In an annual meeting between executives and researchers from B&W, Batco and British-American Tobacco PLC held in Southampton, England, in July 1962, Batco's chief researcher, Sir (Dr.) Charles Ellis, presented a paper in which he called nicotine "a remarkable, beneficent drug that both helps the body to resist external stress and also can as a result show a pronounced tranquilizing effect. Nicotine is not only a very fine drug," he continued, "but the techniques of administration by smoking has considerable psychological advantages." [Sir Charles Ellis, "The Smoking and Health Problem," Paper presented at Research Conference, Southampton, England, pp. 15-16 (1962).] He also stated that "smoking is a habit of addiction." Ellis was leading the discussion, which also included Dr. S.J. Green, Vice President of Batco research, and Dr. Robert B. Griffith, Director of Research for B&W. [Id. ]

vii. Addison Yeaman (then-General Counsel for B&W and, later, President of Council on Tobacco Research)

A "strictly private and confidential" report by B&W general counsel Addison Yeaman, dated July 17, 1963, after reviewing the findings of B&W-sponsored research on the effects of nicotine, states the following:

"Moreover, nicotine is addictive.

"We are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms." [See Philip J. Hilts, "Tobacco Company Was Silent on Hazards," New York Times, May 7, 1994, p. A1, reporting that B&W explicitly decided to withhold from the U.S. Surgeon General significant findings from Battelle Laboratories of Geneva, which had been hired to do health-related research on tobacco, and R.B. Griffith, B&W's chief of research. According to the Times : "The [Battelle] report found that there were some beneficial effects of nicotine, including a tranquilizer-like drug effect and an appetite-suppressing effect. But is also showed that it might cause heart disease. *** "Mr. Yeaman referred to the Battelle 'nicotine report' and to a new filter created by a company scientist, R.B. Griffith, which could filter out some hazardous substances in cigarettes. *** "[Yeaman] noted that company research had shown that nicotine has a tranquilizing, or anxiety-reducing effect, and helps control body weight, and 'moreover, nicotine is addictive.' "' We are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms,' he wrote. "The research found that despite the beneficial effects of nicotine, cigarettes 'cause, or predispose, lung cancer. ' "' They contribute to certain cardiovascular disorders,' the research found. ' They may well be truly causative in emphysema, etc. etc. '" (Emphasis added.) In addition, according to the Wall Street Journal, Yeaman's report discussed cigarettes delivering " a nice jolt of nicotine." Eben Shapiro, "Tobacco Firms May Face New Pressure with Disclosure of Executive's Memo," May 9, 1994, p. A4 (underlining added).]

viii. Dr. J.G. Burgan (Researcher, Batco, B&W's British sister company under parent British-American Tobacco PLC)

In the July 1962 meeting noted supra, Batco researcher Dr. J.G. Burgan told meeting participants that a new set of dangerous compounds had just been identified by a German researcher: "They[nitrosamines] are several hundred times more potent as carcinogens than things like benzoapyrene; he's getting tumor yields of 100 percent and he has the feeling that there may be some of these compounds in cigarette smoke." [Philip J. Hilts, "Cigarette Makers Debated the Risks They Denied," New York Times, June 16, 1994, p. A1.]

(1) False Advertisements, False Press Releases and False Statements Made to the Media by the Tobacco Industry.

Tobacco company executives, employees and agents have made numerous false public statements regarding the health effects of tobacco and nicotine, in violation of 15 U.S.C. §52(a)(2). One of the primary means by which the major tobacco companies have sought to induce members of the public to purchase tobacco products containing addictive levels of nicotine was by the creation and utilization of the Council for Tobacco Research -- U.S.A., Inc. ("CTR"), a joint tobacco industry group originally named the Tobacco Industry Research Committee ("TIRC").

Re: The Council for Tobacco Research, Its "Special Projects" Unit, and the Tobacco Industry's Public Misinformation Campaign.

The establishment of the tobacco company-funded CTR has consistently served the major tobacco manufacturers as an effective vehicle for disseminating or causing to be disseminated false advertisements, press releases and statements to the media, thereby misleading consumers about the addictiveness and debilitating health effects of tobacco use, in violation of 15 U.S.C. §52(a)(2).

The CTR was formed not as a legitimate entity to fund research on tobacco and health, but rather as a public relations front whose primary purpose was to protect the profits of tobacco companies. Since its creation 40 years ago, the CTR, on behalf of the tobacco companies that fund it, has functioned as an integral part of the tobacco industry's endeavor to entice customers by fraudulently minimizing the risk of tobacco use, through the misrepresentation of some health data and the omission of other health data.

Based on an extensive investigation, the Wall Street Journal has characterized the CTR as the "hub" of "the longest-running misinformation campaign in U.S. business history." [Alix M. Friedman and Laurie P. Cohen, "Smoke and Mirrors: How Cigarette Makers Keep Health Question 'Open' Year After Year," Wall Street Journal, February 11, 1993, p. A1.]

All member companies of the CTR, as well as the CTR itself, may be chargeable, therefore, for violation of §52(a)(2). [In addition, the tobacco companies who representatives appeared before the House Subcommittee on Health and the Environment on April 14, 1994, issued press releases and other statements which, in light of their contents and the context in which they were produced (as described here), may similarly fall within the prohibitions of this statute.]

Soon after the first independent study directly linking cigarette smoking to cancer was published in 1953, [Ernest L. Wynder, Evarts A. Graham and Adele B. Croningen, "Experimental Production of Carcinoma with Cigarette Tar," Cancer Research, Volume 13, Number 12, December 1953, pp. 855-864.] most of the major tobacco companies [American Brands, Brown & Williamson, Liggett & Myers, Philip Morris and R.J. Reynolds.] joined forces, under the guidance of the Hill & Knowlton public relations consulting firm, and formed what eventually came to be called the CTR. CTR's publicly announced undertaking was and still is to provide funding for scientific research on tobacco and health and to make accurate tobacco-related health information available to the public. The creation of the CTR's predecessor, the TIRC, was announced with fanfare by the sponsoring tobacco companies, who claimed that the TIRC would offer "aid and assistance to the [tobacco and health] research effort." An advertisement entitled "A Frank Statement to Cigarette Smokers," which the companies jointly ran in 448 newspapers and magazines, [E.g. New York Times, January 4, 1954 (emphasis added).] stated: "We accept an interest in people's health as a basic responsibility, paramount to every other consideration in our business... We always have and always will cooperate closely with those whose task it is to safeguard the public health." The advertisement said further:

"Distinguished authorities point out:

1. That medical research of recent years indicates many possible causes of lung cancer.

2. That there is no agreement among the authorities regarding what the cause is.

3. That there is no proof that cigarette smoking is one of the causes.

4. That statistics purporting to link cigarette smoking with the disease could apply with equal force to any one of many other aspects of modern life. Indeed the validity of the statistic themselves is questioned by numerous scientists..."

Behind this announcement lay a wholly contradictory goal. In a meeting among tobacco company CEOs and chief scientists on December 15, 1953, in New York City, the executives agreed that "the industry should not engage in a merely defensive campaign," according to minutes taken by Hill & Knowlton. Rather, "[t]hey feel they should sponsor a campaign which is positive in nature and entirely 'pro-cigarettes.'" The goal was "reassurance of the public" through "communication of... the existence of weighty scientific views which hold there is no proof that cigarette smoking is a cause of lung cancer." The TIRC was formed soon thereafter as a public relations arm of the industry, as documents from within the tobacco companies and Hill & Knowlton make clear. [See Philip J. Hilts, "Cigarette Makers Debated the Risks They Denied," New York Times, June 16, 1994, p. A1 (emphasis added). E. g., an internal B&W memorandum written by chief counsel Addison Yeaman, marked "Strictly Private and Confidential," states that the TIRC "was conceived as a public relations gesture and... it has functioned as a public relations operation." "Implications of Battelle Hippo I & II and the Griffith Filter," July 17, 1963. See also letter from Ernest Pepples (Vice President and General Counsel) to several fellow B&W officials, dated April 4, 1978, stating that CTR originally was organized as a public relations effort, and that it has since become a useful tool, as well, for identifying expert witnesses for use in litigation. See also internal memorandum from B&W's Director of Public Relations to Marketing Department regarding the role of Hill & Knowlton, dated June 18, 1963: "This organization [Hill & Knowlton] serves as the Public Relations Counsel to The Tobacco Institute and the Tobacco Industry Research Committee. It is so intimately involved in the affairs of both that a proper separation of functions, as well as a strict definition of operations, is virtually impossible in this brief summary... The T.I.R.C. should not become involved in matters of public relations, but serve as the source of basic scientific data for use by the Tobacco Institute in its P.R. efforts. " (Emphasis added.)] The ensuing public relations campaign was so extensive that, as early as 1955, the TIRC hired 35 Hill & Knowlton staff members to conduct the campaign. [Hill & Knowlton quit the CTR account in the late 1960s, according to Loet Velmans, a former Hill & Knowlton chief executive, out of frustration that the tobacco industry "for legal reasons felt it couldn't admit to anything [on tobacco and health] because then it would be sued out of existence." Quoted in Alix M. Friedman and Laurie P. Coehn, "Smoke and Mirrors: How Cigarette Makers Keep Health Questions 'Open' Year After Year," Wall Street Journal, February 11, 1993, p. A1.] The TIRC and Hill & Knowlton were located one floor apart in the Empire State Building.

The Hill & Knowlton documents that were obtained and made public this year in Congressional hearings and by the media [See, e.g., Philip J. Hilts, "Cigarette Makers Debated the Risks They Denied," New York Times, June 16, 1994, p. A1.] illustrate that the tobacco industry, with the CTR and Hill & Knowlton, launched an aggressive tobacco industry campaign to saturate the media environment with positive, reassuring messages about cigarette smoking. TIRC-generated studies seen as favorable to the industry were transformed into headlines across the United States, according to a "highly confidential" memorandum from Hill and Knowlton, Inc., to T.V. Hartnett, Chairman, Tobacco Industry Research Committee, providing a "Report of Activities through July 31, 1954." [See also an internal memorandum from the Tobacco Institute's Fred Panzer to the TI's President, Horace R. Kornegay, dated May 1, 1972, which provides an informative review of the tobacco industry's success in executing the TIRC/CTR-based public relations strategy. The Panzer memorandum states: "For nearly twenty years, this industry has employed a single strategy to defend itself on three major fronts -- litigation, politics, and public opinion. "While the strategy was brilliantly conceived and executed over the years helping us win important battles, it is only fair to say that it is not -- nor was it intended to be -- a vehicle for victory. On the contrary, it has always been a holding strategy, consisting of -- creating doubt about the health charge without actually denying it -- advocating the public's right to smoke, without actually urging them to take up the practice -- encouraging objective scientific research as the only way to resolve the question of health hazard" Cipollone v. Liggett Group, Inc. (D.C.N.J. 1988), Plaintiff's Exhibit P-1105.]

The TIRC also sought successfully to influence the content of news reports in major newspapers, magazines and television shows, including the New York Times, the Washington Post and the "Edward R. Murrow Television Show," according to an internal Hill and Knowlton, Inc. "Confidential Memorandum" on the subject of "Tobacco Industry Research Committee Information Activities, August and September, 1954."

CTR past-President Addison Yeaman, who also served as B&W's General Counsel, is quoted in a contemporaneous B&W memorandum as saying at a CTR meeting in 1975 that "CTR is [the] best and cheapest insurance the tobacco industry can buy and without it the Industry [sic] would have to invent CTR or would be dead." [Cipollone v. Liggett Group, Inc. (D.C.N.J. 1988), Plaintiff's Exhibit 964; quoted in Alix M. Friedman and Laurie P. Cohen, "Smoke and Mirrors: How Cigarette Makers Keep Health Question 'Open' Year After Year," Wall Street Journal, February 11, 1993, p. A1.] Yeaman told the Wall Street Journal, in 1993 that the passage of time had not altered his faith in this view." [See Alix M. Friedman and Laurie P. Cohen, "Smoke and Mirrors: How Cigarette Makers Keep Health Question 'Open' Year After Year," Wall Street Journal, February 11, 1993, p. A1.]

Recently obtained internal documents from the files of Brown & Williamson have exposed the fact that the research conducted through the CTR typically has been "nondirected" -- that is, not designed to learn the truth about the health effects of tobacco use -- in contrast with the research conducted in-house by the tobacco manufacturers and through carefully guarded outside contracts. [E.g., "Privileged" Memorandum from Mr. E. Pepples (Vice President and General Counsel) to Mr. C.I. McCarty (Chairman and Chief Operating Officer) discussing the value of the CTR to B&W, dated September 29, 1978 (emphasis added). The memorandum states: "The point here is the value of having CTR doing work in a nondirected and independent fashion as contrasted with work either in-house or under B&W contract which, it if goes wrong, can become the smoking pistol in a lawsuit. "You may also want to refer to the note of February 11, 1977, to you and Dr. Hughes on this subject. A copy is attached to this memorandum. It is pointed out there that CTR provides a yardstick by which to measure and challenge the claims made against us on the basis of other research reports. Furthermore, the mere fact that CTR now has over two decades and $46 million worth of experience behind it shows that there is [emphasis in original] a real controversy here and that the industry is in it for the long haul, at least until real answers are found to take the place of Hammond's statistical guesswork. "This history of staying power and steadiness encourages good scientists to respond favorably to the industry when we ask them to tackle tough long-term assignments. A corollary is that, without CTR, the government and the American Cancer Society would be the only game in town. In that situation, the strong-minded scientists willing to deviate from the party line of the Mary Laskers of this world would have no place to go. As long as there is a CTR that can -- and do -- have some place to bring their applications."] The internal documents also illustrate CTR's key role as a tool to defend against, not learn the truth about, newly identified health concerns involving tobacco. In an internal B&W missive [It is not clear whether it is a letter or a memorandum. (Emphasis added.)] to several B&W officials regarding the CTR budget, dated April 4, 1978, Ernest Pepples writes:

"Originally, CTR was organized as a public relations effort. The industry told the world CTR should look at the diseases which were being associated with smoking. There was even a suggestion by our political spokesmen that if a harmful element turned up the industry would try to root it out. The research of CTR also discharged a legal responsibility. The manufacturer has a duty to know its product. The [CTR's] Scientific Advisory Board composed of highly reputable independent scientists constitute a place where the present state of the art is constantly being updated. Theoretically SAB is showing us the way in a highly complex field. There is another political need for research. Recently it has been suggested that CTR or industry research should enable us to give quick responses to new developments in the propaganda of the avid anti-smoking groups. For example, CTR or someone should be able to rebut the suggestion that smokers suffer from a peculiar disease, as widely alleged in the press some months ago. A properly designed research effort would encompass the need for instant response on subjects of public interest in the smoking and health controversy. Finally the industry research effort has included special projects designed to find scientists and medical doctors who might serve as industry witnesses in lawsuits or in a legislative forum. All of these matters and more should be considered in asking what kind of research the industry should do."

Moreover, a series of internal communications highlight the fact that the CTR and its member companies and their executives, devised sophisticated strategies for handling documents relating to smoking and health research in order to shield them under lawyer-client privilege from discovery by plaintiffs who sued the companies. [See, e.g., three internal B&W memoranda from J. Kendrick Wells, III (Corporate Counsel), to Ernest Pepples (Vice President and General Counsel), dated June 15, 1979, November 9, 1979 (marked "Privileged"), and February 7, 1986.]

At times, nonetheless, CTR officials were forced to kill, hide or weaken research findings considered unfavorable to the tobacco industry. "When CTR researchers found out that cigarettes were bad and it was better not to smoke, we didn't publicize that" in press releases, said Dorothea Cohen, who for 24 years until her retirement in 1989 wrote summaries of grantee research for the CTR's annual report. "The CTR is just a lobbying thing. We were lobbying for cigarettes." [Quoted in Alix M. Friedman and Laurie P. Cohen, "Smoke and Mirrors: How Cigarette Makers Keep Health Question 'Open' Year After Year," Wall Street Journal, February 11, 1993, p. A1.]

One instance of altered and squelched research findings that has come to light involved the work of Freddy Homburger, M.D., a certified toxicologist and research professor in pathology at Boston University. He received TIRC and then CTR funding from approximately 1955 until 1973. [See sworn deposition of Freddy Homburger, M.D., in Cipollone v. Liggett Group, Inc. (D.C.N.J., February 23, 1988). The details that follow were obtained from the Homburger deposition transcript and Alix M. Friedman and Laurie P. Cohen, "Smoke and Mirrors: How Cigarette Makers Keep Health Question 'Open' Year After Year," Wall Street Journal, February 11, 1993, p. A1.] Dr. Homburger and his colleagues at the Bio-Research Institute in Cambridge, Massachusetts, developed a sophisticated new test that enabled them to get Syrian hamsters to smoke like humans. In research conducted in the early-1970s, the scientists found that after exposure over a period of months to such smoking, more than 47 percent of the hamsters suffered from cancer of the larynx and the upper respiratory tract. In similar tests using British cigarette brands, they obtained even higher cancer rates.

Dr. Homburger informed CTR officials of the results and showed them a manuscript designed for publication. Dr. Homburger testified that he was required to show the manuscript to CTR because the CTR had changed the study from a grant to a contract "so they could control publication -- they were quite open about that." [Quoted in Alix M. Friedman and Laurie P. Cohen, "Smoke and Mirrors: How Cigarette Makers Keep Health Question 'Open' Year After Year," Wall Street Journal, February 11, 1993, p. A1.] CTR research director Robert Hockett instructed Dr. Homburger to alter the manuscript to falsely state that the hamsters experienced only pre-cancerous lesions. The CTR's chief counsel, Edwin Jacob, told Homburger, moreover, "You realize that if you publish it, you will never get a penny more from the Council for Tobacco Research." [Id. ] By that time, Dr. Homburger and his colleagues had received approximately $800 thousand in CTR funding. Notably, according to Dr. Homburger, the study in question was "the first time we had come up with a neoplasm, cancer in the respiratory tract." But, he added, the CTR "didn't want us to call anything cancer." [Id. (Emphasis added).]

Dr. Homburger ultimately published the paper after softening its findings, although he strengthened them somewhat before the paper went to press by reinstating its references to cancer. In April 1974, he presented the paper at a meeting of the American Federation of Biological Societies. The CTR acted to make certain that the paper received no press attention. As described in a confidential memorandum from Leonard Zahn, public relations counsel for the CTR, Zahn secretly "killed" a press conference that had been scheduled for Dr. Homburger "without [Homburger's] knowing why or how," resulting in "[n]o press mention of his report." Zahn's memorandum further refers to Zahn's success in this endeavor as involving "censorship of [Homburger's] findings, et cetera." [See deposition of Freddy Homburger, M.D., in Cipollone v. Liggett Group, Inc. (D.C.N.J., February 23, 1988).]

Today, the CTR boasts that it "awards approximately $20 million a year in grants-in-aid to assist biomedical research, making it one of the largest private grant-giving organizations funding scientific research in the United States," according to the May 25, 1994, testimony of James F. Glenn, M.D., CTR's Chairman, President and CEO, before the House Subcommittee on Health and the Environment. According to Glenn, the CTR "is funded primarily by five tobacco manufacturers" and has awarded more than $220 million during its (and its predecessor's) existence. [Committee on Energy and Commerce, House of Representatives, United States Congress, May 25, 1994.] Glenn also testified that "Council grantees are assured complete scientific freedom in conducting their studies." [Id. ]

At least since the early 1950s, the tobacco companies have advertised widely that the scientific evidence that tobacco use causes disease is inconclusive, while promising to continue to seek the truth about smoking and health. Following are typical examples of these false advertisements:

1970: Tobacco Institute editorial-style advertisement, "The question about smoking and health is still a question" (excerpt):

"[A] major portion of this scientific inquiry has been financed by the people who know the most about cigarettes and have a great desire to learn the truth... the tobacco industry.

"And the industry has committed itself to this task in the most objective and scientific way possible.

***

"Completely autonomous, CTR's research is directed by a board of ten scientists and physicians... This board has full authority and responsibility for policy, development and direction of the research effort." [Haines v. Liggett Group, Inc., C.A. 84-678 (D.N.J. 1992), Plaintiff's Exhibit I, p. 3.]

***

1984: R.J. Reynolds editorial-style advertisement in the New York Times (excerpt):

"Studies which conclude that smoking causes disease have regularly ignored significant evidence to the contrary. These scientific findings come from research completely independent of the tobacco industry." [Haines v. Liggett Group, Inc., C.A. 84-678 (D.N.J. 1992), Plaintiff's Exhibit I, p.5.]

Tobacco industry officials also have cited the CTR/TIRC and the results of the studies it has funded in testimony before Congress. [See Matthew Myers, "Choosing Sales Over Safety? What Haines v. Liggett Reveals," World Smoking & Health, Volume 17, Number 2, 1992.] In 1972, for example, Tobacco Institute president Horace Kornegay testified as to the following:

"Let me state at the outset that the cigarette industry is as vitally concerned or more so than any other group in determining whether cigarette smoking causes human disease, whether there is some ingredient as found in cigarette smoke that is shown to be responsible and if so what it is.

"That is why the entire tobacco industry... since 1954 has committed a total of $40 million for smoking and health research through grants to independent scientists and institutions. [Testimony of Horace Kornegay before the Consumer Subcommittee, Committee on Commerce, United States Senate, United States Congress.]

In fact, however, the tobacco companies, their lawyers and Hill & Knowlton have controlled the CTR and manipulated its affairs so as to suppress research which demonstrated the addictive or disease-causing effects of tobacco use. The CTR, by design, has publicized only that research which either obscures or has little or no bearing on the relationship between tobacco use and disease. Research indicating that cigarette smoking is addictive or otherwise harmful has been carefully screened by tobacco industry lawyers and assigned to the secret "Special Projects" unit, which hid it from the public and concealed it from discovery in tort litigation against the cigarette companies by what appears to be the unfounded assertion of the attorney-client privilege.

In addition, overtures to scientists usually have been handled by outside law firms, including Edwin Jacob's firm, Jacob, Medinger, Finnegan & Hart in New York City. Jacob, Medinger served as counsel to the CTR and Edwin Jacob took a lead role at Special Projects. According to Roy Morse, a former RJR research director, "As soon as Mr. Jacob funded" a study, "it was a privileged relationship and it couldn't come into court" because it was protected by attorney-client privilege. "So they could do projects that they could bury if they chose. [Quoted in Alix M. Friedman and Laurie P. Cohen, "Smoke and Mirrors: How Cigarette Makers Keep Health Question 'Open' Year After Year," Wall Street Journal, February 11, 1993, p. A1.]

The Special Projects unit was founded at least as early as 1966, according to Hill & Knowlton documents. Internal discussions at B&W make clear that Special Projects was designed, moreover, to identify contrarian scientists and medical doctors who could assist in tobacco industry litigation and legislative efforts. [In an internal B&W missive - it is not clear whether it is a letter or a memorandum -- to several B&W officials regarding the CTR budget, dated April 4, 1978, Ernest Pepples states: "Finally the industry research effort has included special projects designed to find scientists and medical doctors who might serve as industry witnesses in lawsuits or in a legislative forum." (Emphasis added.)]

The Kansas City, Missouri, law firm of Shook, Hardy & Bacon has for years been intimately involved with the CTR and the control and perpetuation of the Special Projects division. In an opinion in the case of Haines v. Liggett Group, Inc., C.A. 84-678 (D.N.J. 1992), Federal District Judge H. Lee Sarokin suggested that the tobacco industry, with the help of Shook, Hardy counsel, had withheld tobacco-related heath studies from public and legal scrutiny, depending on the potential impact of such studies on liability suits. "If that is true, he wrote, "then the 'use' of selected information generated for 'litigation' purposes … in and of itself establishes fraudulent intent," [(Emphasis added.) See also Linda Himelstein and Richard A. Melcher, "Did Big Tobacco's Barrister Set Up a Smokescreen?, Business Week, September 5, 1994, pp. 68-70.] The Sarokin opinion stated, further, that "[t]he evidence presented by plaintiff supports a finding that the industry research which might indict smoking as a cause of illness was diverted to secret research projects and that the publicized efforts were primarily directed at finding causes other than smoking for the illnesses being attributed to it."

Judge Sarokin's analysis is supported by the contents of documents such as the following one, a November 6, 1978, memorandum from Shook, Hardy law firm partner Donald Hoel regarding a CTR meeting of October 26, 1978, in Lexington, Kentucky:

"After some further discussion, Janet and Arnie Henson expressed American Tobacco Company's view that CTR must be maintained but needed new people. It must be more politically oriented. They felt that CTR must look at what is happening and what others are doing to see what questions can be raised, etc. The approach must be steady, slow and conservative. They must find skeptical scientists... The staff at CTR also needed to be more tobacco oriented with a skeptical view." (Emphasis added.)

In another internal memorandum, the research director of Lorillard, Inc., describes CTR-funded research as having "been selected... for various purposes, such as public relations, political relations, position for litigation etc." [Myron Levin, "Favored Scientists Got Tobacco Firm Funding," Los Angeles Times, May 26, 1994, p. A1.]

One example of the sort of "public relations" for which CTR-funded research is used is illustrated by a letter dated January 11, 1990, from R.J. Reynolds Tobacco Company to an elementary school principal in response to letters received from the school's fifth grade students. [Letter from Jo F. Sprach, Manager, Public Information, Public Relations Department, R.J. Reynolds Tobacco Company, to Principal, Willow Ridge School, Amherst, New York, January 11, 1990 (emphasis added).] After denying, in response to concerns raised by the children, that RJR allows its brand names to be used on toys or candy cigarettes, the letter states:

"The tobacco industry is also concerned about the charges being made that smoking is responsible for so many serious diseases. Long before the present criticism began, the tobacco industry, in a sincere attempt to determine what harmful effects, if any, smoking might have on human health, established the Council for Tobacco Research -- U.S.A. The industry has also supported research grants directed by the American Medical Association. Over the years the tobacco industry has given in excess of $162 million to independent research on the controversies surrounding smoking -- more than all the voluntary health associations combined.

"Despite all the research going on, the simple and unfortunate fact is that scientists do not know the cause or causes of the chronic diseases reported to be associated with smoking. The answers to the many unanswered controversies surrounding smoking -- and the fundamental causes of the diseases often statistically associated with smoking -- we believe can only be determined through more scientific research. Our company intends, therefore, to continue to support such research in a continuing search for answers.

"We would appreciate your passing this information along to your students. You may also be interested in the enclosed publications presenting the position of our company and the tobacco industry on the issue of youth smoking."

***

Following are selected examples of acts that may be found to violate 15 U.S.C. §52(a)(2). Each of them makes material assertions which are flatly contradicted both by the medical evidence and the tobacco industry's own admissions, as discussed, supra.

(a) RJR Advertisement Published in Numerous Newspapers Across the United States in 1994:

"WE DO NOT SPIKE OUR CIGARETTES WITH NICOTINE.

James W. Johnston, Chairman,

R.J. Reynolds Tobacco Company

"Recently a TV show accused tobacco companies of somehow 'spiking' the level of nicotine in our products to 'addict' smokers.

"As the Chairman of a tobacco company and a smoker, I want America's 45 million smokers to know that this is sheer nonsense. At R.J. Reynolds we do not increase the level of nicotine in any of our products in order to 'addict' smokers.

"Instead of increasing the nicotine levels in our products, we have in fact worked hard to decrease 'tar' and nicotine. Much of the recent controversy has focused on our use of various techniques that help us reduce the 'tar' (and consequently the nicotine) yields of our products.

"We could stop using those techniques. But the consequences of doing that would be a return to the 1940s, when the average cigarette yielded 40 milligrams of 'tar' and 2.8 milligrams of nicotine --more than three times what the average is today. According to the 1989 Surgeon General's Report, since 1957 'tar' and nicotine have been reduced by over 60%.

"Please rest assured that there is no truth whatsoever in these accusations. They represent yet another tactic in the anti-tobacco lobby's commitment to achieve what amounts to backdoor prohibition.

"We are committed to bringing the best quality products that we can make to our customers and we will continue to do so. If you have any questions you'd like to ask, please don't hesitate to write to me (c/o R.J. Reynolds Tobacco Company, PO Box 2959, Winston-Salem, NC 27102) or call our toll-free information number at 1-800-366-8441.

"TOGETHER, WE CAN WORK IT OUT"

(Emphasis in original.)

Discussion of RJR Advertisement

This advertisement from RJR is false and misleading in several critical respects, in part because of its bald omission of material facts. Earlier sections in this Prosecution Memorandum [See also Clifford E. Douglas, Special Report: The Tobacco Industry's Use of Nicotine as a Drug: What Do the Recent Revelations Mean for Tobacco Control? (American Council on Science and Health: New York, NY, May 1994); Testimony of John Slade, M.D., before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994; Testimony of David Kessler, M.D., before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994.] document the fact that RJR knows, but clearly fails to admit or disclose in this advertisement, that:

* nicotine is highly addictive;

* RJR extracts, adjusts and uses nicotine to fortify the reconstituted tobacco implanted in RJR's cigarettes;

* in contrast to RJR's manufacturing practices of the 1940s, RJR now applies sophisticated technology that enables RJR to exercise absolute discretion and control over the level and even the presence of nicotine in RJR's products;

* "[m]uch of the recent controversy" to which the RJR advertisement refers has focused not, as the advertisement claims, "on [RJR's] use of various techniques that help[s RJR] reduce the 'tar' )and consequently the nicotine) yields of [RJR's] products," but has focused chiefly on RJR's use of its techniques to increase nicotine levels in its reconstituted tobacco and on RJR's manipulation of tobacco to increase nicotine levels in lower-tar tobacco products; and * the tobacco from the five leading cigarette brands (including cigarettes manufactured by RJR) in 1952 contained less, not more, nicotine (an average of 1.58 - 1.82 percent nicotine on a dry weight basis) than the 1.5 - 2.5 percent nicotine reported for finished cigarettes by James Johnston in a February 28, 1994, letter to the FDA. [Letter from James W. Johnston to David A. Kessler, M.D., February 28, 1994. See testimony of John Slade, M.D., before the Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, March 25, 1994.] In fact, while the advertisement states that 2.8 milligrams of nicotine is "three times what the average is today" (emphasis in original), which entails that the average today must be less than one milligram, Johnston's own letter written during the same period as RJR published this advertisement states, as noted, that the average is now no less than 1.5 milligrams and as high as 2.5 milligrams. This inconsistency is both material and significant as to its inevitable impact on the tobacco use and, thereby, the drug addiction and overall health of millions of American consumers. [See, generally, U.S. Department of Health and Human Services, Public Health Service, Centers for Disease Control, Center for Chronic Disease Prevention and Health Promotion, Office on Smoking and Health, Reducing the Health Consequences of Smoking: 25 Years of Progress: A Report of the Surgeon General, 1989.]

Furthermore, Johnston and RJR compare apples with oranges. Comparing average nicotine yields from the 1940s with those today, as the advertisement does, is a highly misleading exercise - one that is guaranteed to confuse and deceive the average consumer. Cigarettes in the 1940s bore little resemblance to cigarettes today. For example, they had no vent holes to dilute the smoke reaching the test machines (but which are often ineffective when smoked by human consumers). They did not contain the thousands of additives used in modern-day cigarettes. They also did not contain the substances that tobacco manufacturers now add to raise the pH of the smoke in order to free up more nicotine for absorption into the user's bloodstream.

(b) Walker Merryman (Vice President, Tobacco Institute) to CNN: [CNN, "The World Today," April 13, 1994 (emphasis added).]

"There isn't any manipulation of nicotine in the cigarettes."

(c) Walker Merryman (Vice President, Tobacco Institute) to New York Times: [Quoted in Anthony Ramirez, "Lower Cigarette Sales Linked to Tax Rise," New York Times, June 12, 1990, p. D1 (emphasis added).]

The Tobacco Institute objected to the finding of a study from the National Bureau of Economic Research that smoking is addictive, citing statistics indicating that 95 percent of those who stop smoking do so on their own.

Merryman said: "These figures and common sense contradict any claim that cigarette smoking is addictive."

Discussion of False Representations (b) and (c)

See, inter alia, Section V(A)(1)(a), supra, including Discussions regarding testimony of James Johnston of RJR, which is, with other major cigarette companies, represented by the Tobacco Institute.

(d) Brennan Dawson (Vice President, Tobacco Institute) to USA Today: [Quoted in Anita Manning, "Smoking Under Fire from the FDA and Others," USA Today, p. 6D, March 29, 1994 (emphasis added).]

Manufacturers of cigarettes are "absolutely, categorically not" adding nicotine to tobacco.

(e) Brennan Dawson (Vice President, Tobacco Institute) on "Face the Nation:" [March 27, 1994.]

"The industry does take the position that... not only do they not add nicotine, but they don't manipulate nicotine. So Congress has been told formally by every cigarette manufacturer in the United States that this claim is without foundation."

Discussion of False Representations (d) and (e)

See, inter alia, Section V(A)(1)(a), supra, including, e.g., Discussions regarding testimony of James Johnston of RJR, which is, with other major cigarette companies, represented by the Tobacco Institute.

(f) Press Release from U.S. Tobacco Company Responding to Wall Street Journal Article: [U.S. Tobacco Company Press Release, Contact: Alan Kaiser, October 26, 1994. See Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick,'" Wall Street Journal, October 26, 1994, p. A1.]

In a press release responding to the Wall Street Journal's investigative article on UST discussed earlier in this Prosecution Memorandum, UST falsely denies the Journal's findings and the nature of the company's conduct. The highly misleading press release states, inter alia:

"With respect to the article's central thesis that the company somehow manipulates 'the amount of nicotine users absorb,' the fact is the 1988 Surgeon General's report concludes to the contrary that because of the 'complexity' of smokeless tobacco use, 'the dose of nicotine cannot be predicted from the nicotine content of the tobacco or its absorption characteristics.'

***

"The suggestion that there is a so called 'graduation strategy' enticing consumers to begin using low nicotine smokeless tobacco products and manipulating them to products with higher levels of nicotine is untrue - the oral tobacco market does not work that way. The company's various product lines of smokeless tobacco are based on an appreciation that we cannot make any part of the public like and use any one of our products if it does not respond to their taste and form preferences."

Discussion of False Representation (f)

See Discussions, supra, of Joseph Taddeo's alleged perjury, at Section V(A)(1)(a).

(g) Statements Made to the Press by Healthy Buildings International at the (Paid) Behest of the Tobacco Institute and Center for Indoor Air Research

The Tobacco Institute paid Healthy Buildings International ("HBI") officials to pose as independent experts on environmental tobacco smoke and indoor air issues. In this arrangement, HBI officials appeared on talk shows and testified in legislatures to argue, purportedly from a "scientific" perspective, that environmental tobacco smoke is not a health hazard and that smoking should not be restricted. [Doug Levy, "Struggling to Clear the Air on Tobacco," USA Today, October 12, 1994, p. 1D.] Documents obtained by USA Today indicate that HBI has consulted for the Tobacco Institute since at least 1985. The documents indicate, further, that HBI and its president, Gray Robertson, falsified data in order to justify HBI's public pronouncements. At the time that HBI is believed to have falsified its data, the tobacco industry-funded Center for Indoor Air Research was paying HBI $118,415 to measure tobacco smoke in "typical" offices. HBI's attorney, Jeffrey Howard, has denied the allegations of falsification. [Doug Levy, "Smoking Data Tampered With, Researchers Say," USA Today, November 2, 1994, p. 1D. See also Myron Levin, "Who's Behind the Building Doctor," The Nation, August 9/16, 1993, p. 168.]

b. By the United States Mails.

The evidence establishes that tobacco companies, by disseminating or causing to be disseminated false advertisements through the United States mails, sought directly or indirectly to induce individual members of the public to purchase substances known by such companies to be drugs or devices in violation of 15 U.S.C. §52(a)(1). [See, generally, multiple sections throughout this Prosecution Memorandum regarding the addictive nature of nicotine and its use as a drug by tobacco manufacturers.]

An example of such activity, described above, is a letter dated January 11, 1990, from R.J. Reynolds Tobacco Company to an elementary school principal in response to letters received from the school's fifth grade students. [Letter from Jo F. Sprach, Manager, Public Information, Public Relations Department, R.J. Reynolds Tobacco Company, to Principal, Willow Ridge School, Amherst, New York, January 11, 1990 (emphasis added).] After denying, in response to concerns raised by the children, that RJR allows its brand dames to be used on toys or candy cigarettes, the letter states:

"The tobacco industry is also concerned about the charges being made that smoking is responsible for so many serious diseases. Long before the present criticism began, the tobacco industry, in a sincere attempt to determine what harmful effects, if any, smoking might have on human health, established the Council for Tobacco Research -- U.S.A. The industry has also supported research grants directed by the American Medical Association. Over the years the tobacco industry has given in excess of $162 million to independent research on the controversies surrounding smoking -- more than all the voluntary health associations combined.

"Despite all the research going on, the simple and unfortunate fact is that scientists do not know the cause or causes of the chronic diseases reported to be associated with smoking. The answers to the many unanswered controversies surrounding smoking -- and the fundamental causes of the diseases often statistically associated with smoking -- we believe can only be determined through more scientific research.  Our company intends, therefore, to continue to support such research in a continuing search for answers.

"We would appreciate your passing this information along to your students. You may also be interested in the enclosed publications presenting the position of our company and the tobacco industry on the issue of youth smoking."

Tobacco manufacturers in the United States spend more than $5 billion a year on advertising and promotion, according to the Federal Trade Commission. Tobacco companies spend millions of dollars on promoting, via the United States mails, the sale of tobacco products. This Prosecution Memorandum provides extensive evidence of tobacco companies' knowing and deliberate use and manipulation of nicotine as a drug in the manufacture of their products and the hiding of critical health-related information through apparent acts of perjury, withholding of information and the activities of such industry public relations organizations as the Council for Tobacco Research, the Tobacco Institute and the Smokeless Tobacco Council. Based on information and belief, the companies' extensive advertising of these products through the mails appears, therefore, in some cases to constitute false advertising within the meaning of 15 U.S.C. §52(a)(1). Organizations, such as the trade associations and consultants named above, that have aided and abetted such false advertising may also be chargeable for such violations.

2. MAIL FRAUD

It is apparent that the tobacco companies identified in this Prosecution Memorandum have engaged in schemes to defraud members of the public, and have used the U.S. mails for the purpose of executing or attempting to execute such schemes, in violation of 18 U.S.C. §1341. Each separate use of the mails to further these schemes to defraud constitutes a separate offense. The tobacco companies have misrepresented material facts, and these misrepresentations have resulted in the passage of money to the companies. While the schemes or artifices to defraud need not have been fraudulent on their face or have involved affirmative representations, they must have involved, as they in fact did, fraudulent misrepresentations and omissions reasonably calculated to deceive persons of ordinary prudence and comprehension. Moreover, the scope of fraud under the mail and wire fraud statutes is broader than common law fraud, and no misrepresentation of fact must be shown in order to establish a scheme to defraud.

The validity of a mail fraud conviction does not hinge on a showing of actual loss by the intended victim. It is enough that the defendant knowingly devised a scheme to defraud and caused use of the mails in furtherance of the scheme. The government need not prove actual injury in a prosecution for mail fraud. United States v. Nelson, 988 F.2d 798 (8th Cir. 1993), cert. denied, 126 L.Ed.2d 250, 114 S. Ct. 302. It is not necessary, therefore, to prove that particular consumers were injured by tobacco products or duped into spending money to but tobacco products. While contemplation of harm or injury must be shown to establish mail fraud, it may be inferred when the scheme has such an effect as a necessary result of carrying it out. See United States v. London, 753 F.2d 202 (2d Cir. 1985). Thus, if millions of consumers have been harmed by fraudulent concealment of the adverse health consequences of tobacco use, the intent of the scheme may be inferred, since the harm to the consumers was the necessary result of the concealment.

A reckless disregard for truth or falsity also has been held sufficient to sustain a mail fraud conviction. United States v. Schaflander, 719 F.2d 1024 (9th Cir. 1983), cert. denied, 467 U.S. 1216, 104 S.Ct. 2660. While the government must prove that the defendant had the specific intent to defraud, the showing of an evil motive on the part of the defendant is not necessary, and intent may be inferred through circumstantial evidence. United States v. Savran, 755 F.Supp. 1165 (E.D.N.Y. 1991).

Following are documented instances of specific conduct constituting mail fraud:

i. The Council for Tobacco Research Scheme: [See also discussion of Council for Tobacco Research, supra, at Section C(1)(a)(2)(a).] The creation and role of the Council for Tobacco Research ("CTR") bears a striking resemblance to the scheme con-sidered in United States v. Biesiadecki, 933 F.2d 539, 541-542 (7th Cir. 1991). In Biesiadecki, the court found a scheme to defraud where the defendant omitted information so as to cause people of ordinary intelligence to make uninformed decisions. See also Kehr Packages, Inc. v. Fidelcor, Inc., 926 F.2d 1406 (3d Cir. 1991), cert. denied, 501 U.S. 1222, 111 S. Ct. 2839. The defendant in Biesiadecki had participated in a scheme to defraud when he enticed people to participate in his investment program by not telling investors of the money that other customers had lost and by misrepresenting customer successes. Id. at 543. The defendant's scheme was designed to entice customers by fraudulently minimizing the risk, through the misrepresentation of some figures and the omission of others.

Likewise, the CTR was formed (originally as the Tobacco Industry Research Committee) not as a legitimate entity to fund research on tobacco and health, but rather as a public relations front whose primary purpose was to protect and increase the profits of tobacco companies. Like the defendant in Biesiadecki, the CTR, on behalf of the tobacco companies that fund it, has been and continues to be an integral component in an ongoing scheme designed to entice customers by fraudulently minimizing the risk of tobacco use, through the misrepresentation of some health data and the omission of other health data.

Recently obtained internal documents from the files of Brown & Williamson have exposed the fact that the research conducted through the CTR typically has been "nondirected" -- that is, not designed to learn the truth about the health effects of tobacco use -- in contrast with the research conducted in-house by the tobacco manufacturers and through carefully guarded outside con-tracts. [E.g., "Privileged" Memorandum from Mr. E. Pepples (Vice President and General Counsel) to Mr. C.I. McCarty (Chairman and Chief Operating Officer) discussing the value of the CTR to B&W, dated September 29, 1978. The memorandum states: "The point here is the value of having CTR doing work in a nondirected and independent fashion as contrasted with work either in-house or under B&W contract which, if it goes wrong, can become the smoking pistol in a lawsuit.”  You may also want to refer to the note of February 11, 1977, to you and Dr. Hughes on this subject. A copy is attached to this memorandum. It is pointed out there that CTR provides a yardstick by which to measure and challenge the claims made against us on the basis of the research reports. Furthermore, the mere fact that CTR now has over two decades and $46 million worth of experience behind it shows that there is a real controversy here and that the industry is in it for the long haul, at least until real answers are found to take the place of Hammond's statistical guesswork. "This history of staying power and steadiness encourages good scientists to respond favorably to the industry when we ask them to tackle tough long-term assignments. A corollary is that, without CTR, the government and the American Cancer Society would be the only game in town. In that situation, the strongminded scientists willing to deviate from the party line of the Mary Laskers of this world would have no place to go. As long as there is a CTR that can -- and do -- have some place to bring their applications."] The internal documents also illustrate CTR's key role as a tool to defend against, not learn the truth about, newly identified health concerns involving tobacco. In an internal B&W missive [It is not clear whether it is a letter or a memorandum. (Emphasis added.)] to several B&W officials regarding the CTR budget, dated April 4, 1978, Ernest Pepples writes:

"Originally, CTR was organized as a public relations effort. The industry told the world CTR should look at the diseases which were being associated with smoking. There was even a suggestion by our political spokesmen that if a harmful element turned up the industry would try to root it out. The research of CTR also discharged a legal responsibility. The manufacturer has a duty to know its product. The [CTR's] Scientific Advisory Board composed of highly reputable independent scientists constitute a place where the present state of the art is constantly being updated. Theoretically SAB is showing us the way in a highly complex field. There is another political need for research. Recently it has been suggested that CTR or industry research should enable us to give quick responses to new developments in the propaganda of the avid anti-smoking groups. For example, CTR or someone should be able to rebut the suggestion that smokers suffer from a peculiar disease, as widely alleged in the press some months ago. A properly designed research effort would encompass the need for instant response on subjects of public interest in the smoking and health controversy. Finally the industry research effort has included special projects designed to find scientists and medical doctors who might serve as industry witnesses in lawsuits or in a legislative forum. All of these matters and more should be considered in asking what kind of research the industry should do."

Based on information and belief, numerous letters and other documents have been sent via the United States mails in furtherance of the CTR public relations fraud. Among the letters sent via the U.S. mails that have been identified recently as a result of the disclosure of internal tobacco company documents are the following:

a) Two letters from the CTR to five tobacco company attorneys outlining the proposed CTR budget for 1978 of the CTR's Literature Retrieval Division, the division's budget for 1977, the estimated expenses for 1977, the procedure for billing the companies according to their market share percentages, and the relationship between the five companies and the CTR. [Letter from Addison Yeaman (President of CTR) to Messrs. Thomas F. Ahrensfeld, Joseph H. Greer, Arnold Henson, Ernest Pepples and H.C. Roemer, dated December 6, 1977; letter from W. Hoyt to American Brands, Inc., Brown & Williamson Tobacco Corp., Liggett & Myers Incorporated, Philip Morris, Incorporated and R.J. Reynolds Tobacco Company, dated December 28, 1970.]

b) Letter and attached memorandum from attorney Edwin J. Jacob to Ernest Pepples "setting forth the current status of CTR's consideration of the proposals made by Micro-biological Associates for the year beginning July 1, 1978. [Letter from Edwin J. Jacob (Jacob and Medinger) to Ernest Pepples, Esq. (Vice President and General Counsel, B&W), dated June 22, 1978.]

c) Three letters exchanged among the RJR, B&W and Lorillard tobacco companies concerning the funding of CTR grantees and the companies' interest in obtaining tax credits for their contributions. [Two letters from Samuel B. Witt, III (Vice President, General Counsel and Secretary, RJR) to Ernest Pepples (B&W), dated February 7, 1983; Letter from Ernest Pepples (B&W) to Arthur Stevens (Senior Vice President & General Counsel, Lorillard), dated February 25, 1983.]

ii. The Scheme to Mislead and Withhold Information from the U.S. Surgeon General: In 1963, members of the tobacco industry were fully aware that the U.S. Surgeon General was preparing the first Surgeon General's report on smoking and health, which was released on January 11, 1964. Tobacco industry officials were consulted by, and undertook to submit tobacco and health-related information to, the Surgeon General's committee during the process of producing the report. At the outset, members of the tobacco industry recommended and un-officially approved the naming of experts to the Surgeon General's committee. Tobacco company officials kept in regular contact with the committee and sought closely to monitor its progress.

It was during this period that B&W general counsel Addison Yeaman and senior British-American Tobacco Company official A.D. McCormick exchanged six letters and telexes, dated between June 28, 1963, and August 8, 1963, in which they discussed whether to submit to the U.S. Surgeon General their research findings on the addictive and other harmful effects of nicotine and the disease-causing properties of cigarettes. In the course of this dialogue, the two senior officials explicitly agreed to withhold this information, which they then did. According to the New York Times:

"The [Battelle] report found that there were some beneficial effects of nicotine, including a tranquilizer-like drug effect and an appetite-suppressing effect. But is also showed that it might cause heart disease.

"Mr. Yeaman wrote to Anthony D. McCormick, a senior executive of the parent company in London, that the company would have to decide what to disclose to the American Surgeon General, Dr. Luther Terry, who was about to issue the first report by a Surgeon General condemning cigarettes as a health hazard.

"Mr. Yeaman referred to the Battelle 'nicotine report' and to a new filter created by a company scientist, R.B. Griffith, which could filter out some hazardous substances in cigarettes.

"Mr. McCormick cabled back on July 3, 1963, that 'it is too early to submit Battelle reports to Surgeon General's Committee.'

"Mr. Yeaman cabled back 'submission Battelle or Griffith developments to Surgeon General undesirable and we agree continuance of Battelle work useful but disturbed at its implications re cardiovascular disorders.' He said the new research should cause a 'reassessment fundamental policy re health.'

"Two weeks later, as part of the corporate debate about how to handle the health hazards of cigarettes while continuing to keep the company free of the possibility of lawsuits by smokers, Mr. Yeaman wrote a 2,000-word analysis of whether the company should acknowledge the hazards of cigarettes and accept the risks of litigation, or say nothing, but give up the ability to talk about its research in public and give up credible standing to analyze and criticize the Surgeon General's report.

"Mr. Yeaman said in the report, labeled 'strictly private and confidential' and dated July 17, 1963, that the new information about the tranquilizing effects of nicotine and its positive effects on weight loss 'delivers to the industry what may well be the first effective instrument of propaganda counter to that of the American Cancer Society, et al., damning cigarettes as having a causal relationship to cancer of the lung.'

"He said the positive nicotine findings and the Griffith filter were 'a bridge over which the industry could pass from its present terrain of defense to a field for effective counter-attack.' The Griffith filter could selectively take hazardous substances out of cigarette smoke, but could leave the good taste and the nicotine. This device would provide the opening politically, and the positive uses of nicotine would be their 'weapon.'

"He noted that company research had shown that nicotine has a tranquilizing, or anxiety-reducing effect, and helps control body weight, and 'moreover, nicotine is addictive.'

"'We are, then, in the business of selling nicotine, an addictive drug effective in the release of stress mechanisms,' he wrote.

"The research found that despite the beneficial effects of nicotine, cigarettes 'cause, or predispose, lung cancer.'

"'They contribute to certain cardiovascular disorders,' the research found. 'They may well be truly causative in emphysema, etc., etc.'" [Philip J. Hilts, "Tobacco Company Was Silent on Hazards," New York Times, May 7, 1994, p. A1.]

iii UST's Scheme to Addict Young Consumers to Smokeless Tobacco Products Through a "Graduation" Strategy: As discussed at Section A(1)(e), regarding the alleged perjury of UST's Joseph Taddeo, UST has for a number of years executed a "graduation" strategy, whereby it actively recruits new young users to consume lower-nicotine "starter" brands of smokeless tobacco and then endeavors to "graduate" them upwards to more addictive, higher-nicotine brands. Taddeo testified falsely, it appears, that UST does not do so, in violation of 18 U.S.C. §1621. UST has, in fact, used the mails in support of its apparently fraudulent efforts to carry out its graduation strategy. Thus, e.g., UST Executive Vice President Jack Africk said the following in an interview published in the Spring 1985 edition of "Up to Snuff," a UST newsletter [Appended to Testimony of Gregory N. Connolly, D.M.D., M.P.H., before Subcommittee on Health and the Environment, Committee on Energy and Commerce, House of Representatives, United States Congress, November 29, 1994.] which was mailed to members of UST's sales force:

"As far as our strategy for entering a new market is concerned - for each market there is a set of criteria which have been established, and must be met. Skoal Bandits is the introductory product, and then we look towards establishing a normal graduation process.

(Emphasis added.) The Wall Street Journal explains further:

"U.S. Tobacco denies that it has a 'graduation process' to ratchet users up the line to stronger brands, saying that 'there is no set pattern of brand switching.' However, the company itself used the term internally, and publicly alluded to it in the mid-1980s. 'They talked about graduation all the time - in sales meetings, memos and manuals for the college program. It was a mantra,' says Ken Carlsen, a division manager in U.S. Tobacco's sales department, who worked at the company from 1979 until 1986.

"'For people who haven't ever tasted [snuff], you'd of course begin them on a product that had a little tobacco taste, but wouldn't turn them off,' explains Barry Nova, U.S. Tobacco's president until 1984. He adds: 'The graduation is to a more tobacco-y product... to a stronger product.'" [Alix M. Friedman, "Juiced Up: How a Tobacco Giant Doctors Snuff Brands to Boost Their 'Kick,'" Wall Street Journal, October 26, 1994, p. A1 (emphasis added).]

Recommendation for Further Investigation

It is clear, given the enormity and duration of the business conducted by the named tobacco companies and what might be seen as a pattern and practice of criminal conduct committed by these companies, as documented by this Prosecution Memorandum, that these companies, their executives, their agents and other involved individuals have used the mails in furtherance of such criminal acts. See, generally, this Prosecution Memorandum, supra. The Department of Justice is asked, therefore, as part of the requested criminal investigation, to endeavor to identify such activity on the part of the companies and individuals named here.

3. FRAUD BY WIRE, RADIO OR TELEVISION

The tobacco companies engaged in a scheme to defraud members of the public by transmitting by means of wire, radio and television communication in interstate commerce misrepresentations of material fact, resulting in passage of money to these same companies in response to their misrepresentations in violation of the wire fraud statute, 18 U.S.C. §1343.

An example of conduct underlying such fraudulent conduct is as follows;

* An internal B&W paper, dated October 3, 1967, from President E.P. Finch, outlined answers to be given publicly regarding smoking-related health issues. The paper proposes responding to the assertion that "nicotine in cigarette smoke was shown by the 1964 Surgeon General's Report to be harmful" by quoting the same report to the effect that "'nicotine is not usually considered a carcinogen (cancer-producing substance) on the basis of animal experiments.' [sic] and that it 'probably does not represent an important health hazard.'" (Emphasis added.)

DISCUSSION

In contrast with the public stance recommended in the Finch paper, a British-American Tobacco/B&W research conference held on Hilton Head Island, South Carolina, in 1968 made clear B&W's awareness that nicotine had debilitating effects on the circulatory system in connection with the company's search for a substitute substance that would have the pharmacological impact of nicotine without the other harmful effects. It stated:

"In view of its pre-eminent importance, the pharmacology of nicotine should continue to be kept under review and attention paid to the possible discovery of other substances possessing the desired features of brain stimulation and stress-relief without direct effects on the circulatory system. The possibility that nicotine and other substances together may exert effects larger than either separately (synergism) should be studied and if necessary the attention of Marketing Departments should be drawn to these possibilities. [See Philip J. Hilts, "Tobacco Company Was Silent on Hazards," New York Times, May 7, 1994, p. A1, reporting that B&W explicitly decided to withhold from the U.S. Surgeon General significant research findings from Batelle Laboratories of Geneva, which had been hired to do health-related research on tobacco.]

See also multiple discussions of B&W's knowledge of nicotine's addictiveness and the company's manipulation of nicotine, supra.

Recommendation for Further Investigation

The foregoing serves as but one small example of potentially unlawful conduct, or, in the alternative, conduct that served to encourage unlawful conduct. It is clear, given the enormity and duration of the business conducted by the named tobacco companies and their representatives, as well as the alleged criminal conduct documented throughout this Prosecution Memorandum, that the probability is high that these companies and individuals may have defrauded the public by the use of wire, radio and television communication. The Department of Justice is asked, therefore, as part of the requested criminal investigation, to endeavor to identify such activity on the part of the companies and individuals named here.

D. OTHER POTENTIAL VIOLATIONS OF FEDERAL CRIMINAL LAWS

1. CRIMINAL CONSPIRACY

The evidence indicates that two or more tobacco company representatives, acting in their official capacities, may have violated 18 U.S.C. §371 by conspiring to violate multiple laws of the United States (see supra) and to defraud the United States, the Food and Drug Administration and the U.S. Surgeon General (see supra), since one or more of such persons committed acts to effect the object of said conspiracy.

This Prosecution Memorandum does not specifically address the issue of criminal conspiracy, leaving it to the discretion of the Department of Justice. The Department of Justice may choose, upon examination of the evidence documented supra, to investigate the applicability of 18 U.S.C. §371 to the cumulative conduct of the named corporations, associations and individuals.

2. "RICO" VIOLATIONS

The evidence indicates that tobacco company representatives, acting in their official capacities, may also have violated the prohibitions set forth at 18 U.S.C. §1962 (Racketeer Influenced and Corrupt Organizations, or "RICO") by participating in a commercial enterprise or an enterprise affecting commerce through a pattern of specific criminal racketeering activity. Tobacco company represen-tatives appear repeatedly to have committed acts prohibited by Federal law, including 18 U.S.C. §1341 and 18 U.S.C. §1342, constituting predicate acts of mail and wire fraud, respectively (see supra), within the meaning of 18 U.S.C. §1961(1). Many of these acts were related in their common objective, or were consistently repeated, and are capable of further repetition. This conduct, therefore, may have constituted a pattern of racketeering activity within the meaning of 18 U.S.C. §1961(5).

The Prosecution Memorandum does not specifically address the applicability of RICO to the facts documented supra. As with the issue of criminal conspiracy, it is appropriate for the Department of Justice, in its discretion, to determine upon consideration of the foregoing whether to investigate the applicability of 18 U.S.C. §371 to the cumulative conduct of the named corporations, associations and individuals.

3. FALSE CLAIMS AND UNPAID TAXES

In a letter dated February 7, 1983, to B&W's General Counsel Ernest Pepples, Samuel B. Witt III, RJR's Vice President, General Counsel and Secretary, suggests that the tobacco companies who fund the Council for Tobacco Research ("CTR") (see multiple discussions, supra) might be able "to take advantage of a new tax credit for basic research expenditures." Witt goes on to explain that RJR expects to take advantage of the tax credit by "paying our share of the grant to the grantee directly," adding that RJR "will shortly be working out the details with the CTR staff."

It is not clear at this writing what the tobacco companies who have funded the CTR have done to carry out such a tax strategy. If, in fact, they have executed such a strategy, their having done so raises the question of whether they have improperly received tax credits for contributions for "research" when, in fact, the research they have funded has been supported, often with the facilitation of tobacco industry lawyers, primarily for public relations purposes.

An action can be brought under the False Claims Act where there is a claim submitted to the government to receive money. Under 31 U.S.C. §3733, the Federal government can issue civil investigative findings of the Department of Justice, an action also might lie against the tobacco companies named in this Prosecution Memorandum for recovery of unpaid taxes. The Internal Revenue Code, at 26 U.S.C. §7401, provides that "[n]o civil action for collection or recovery of taxes... shall be commenced unless the Secretary authorizes or sanctions the proceedings and the Attorney General... directs that the action be commenced." See United States v. Western Pac. R. Co., 190 F.2d 243 (9th Cir. 1951).

The Department of Justice is asked to investigate the conduct of the named tobacco companies in funding the Council for Tobacco Research and the treatment of their "contributions" under the Federal tax laws.

VI.

CONCLUSION

The information uncovered during the past year and assembled for the preparation of this Prosecution Memorandum provides substantial evidence that tobacco company witnesses committed perjury in sworn testimony before the United States Congress. The evidence also demonstrates the likelihood that additional violations of Federal criminal laws have been committed by the named individuals and corporations.

The Prosecution Memorandum is not intended to be exhaustive. Rather, it seeks to identify for the U.S. Attorney General and the Department of Justice those areas of inquiry that appear most urgently to deserve the focused resources of a formal criminal investigation. While not comprehensive, this document nonetheless catalogues numerous instances of apparent criminal conduct. It also identifies some of the Federal criminal laws which may have been violated, and recommends options for further investigation by the Department of Justice.

The enormity of the harm perpetrated by tobacco companies and their agents on American consumers is difficult to comprehend. It is apparent, however, that the conduct described here, committed over decades, has contributed profoundly to the serious illness and premature death experienced by tens of millions of Americans, as well as to trillions of dollars in health care costs and lost productivity borne by the economy of this nation and the individual States.

In light of the numerous and complex facts that are involved, and the extraordinary difficulty faced by Federal government officials and agencies when they have attempted to obtain complete and truthful information from the tobacco companies and their representatives, the Department of Justice is strongly encouraged to convene a grand jury to investigate these matters. By exercising the power of subpoena, a grand jury could more effectively seek the truth. Likewise, the executives, scientists and other implicated by the evidence could be questioned in a constructive fashion, removed from the glare of television lights, in a forum designed for this purpose.

RICO Convictions of Major Tobacco Companies Affirmed

May 12, 2011

by Ronald A. Goodbread, Legal Editor

In a punishing affirmance, the D.C. Circuit Court of Appeals has issued a 92-page per curiam opinion upholding the judgment issued by D.C. District Court Judge Gladys Kessler in August 2006, in which she found eleven of America’s major Tobacco Companies and related entities guilty of nearly 150 counts of mail and wire fraud in a continuing “pattern of racketeering activity” with the “specific intent to defraud” under the Racketeer Influence Corrupt Organizations (RICO) Act. The panel consisted of two Republicans, Chief Judge David B. Sentelle, of the tobacco state of North Carolina, a Reagan appointee, and Janice R. Brown, a George W. Bush appointee, together with David S. Tatel, appointed by President Clinton. The familiar names include Philip Morris, R.J. Reynolds, Brown & Williamson, Lorillard, Liggett, British American, and the Tobacco Institute.

The Appellate Court’s opinion, dated May 22nd, is all the more astonishing in view of its magnitude. No fewer than 39 attorneys entered appearances on behalf of the Tobacco Companies urging reversal, while 59 lawyers, including the Attorneys General of 37 States, entered appearances in favor of affirming the convictions. Names were dropped on both sides, including former U.S. Solicitor General Theodore B. Olson for the Tobacco Companies and G. Robert Blakey for the Appellees. Weighing in on behalf of various States whose health care systems are being increasingly burdened by tobacco-related maladies were such luminaries as Attorneys General Edmund G. Brown, Jr. of California, Joseph R. Biden III of Delaware, Lisa Madigan of Illinois, Douglas F. Gansler of Maryland, and Andrew Cuomo of New York.

Brought in the last year of the Clinton Administration, the case charged that the Tobacco Companies had for decades engaged in “a pattern of racketeering activity” geared to “deceive the American public about the health effects and addictiveness of smoking cigarettes.” The trial lasted nine months, included live testimony from 84 witnesses, documentary evidence from 162 more, and produced almost 14,000 exhibits. The District Court had granted leave to intervene as to proposed remedies to the American Cancer Society, the American Heart Association, the American Lung Association, and Americans for Nonsmokers’ Rights, the National African-American Tobacco Prevention Network, and the Tobacco-Free Kids Action Fund.

After a review of all the evidence the Trial Court concluded that the Tobacco Companies had engaged in a decades-long scheme to defraud actual and potential smokers by falsely denying the adverse health effects of smoking; that nicotine and smoking are addictive; that the Companies had manipulated cigarette design and composition so as to assure nicotine delivery levels that create and sustain addiction; had falsely represented that light and low tar cigarettes deliver less nicotine and tar and therefore present fewer health risks than full flavor cigarettes; engaged in an invidious marketing campaign to youth; had falsely denied that secondhand smoke causes disease; and throughout it all had suppressed and destroyed documents, information, and research to prevent the public from learning the truth about these subjects and to avoid or limit liability in litigation.

The Court of Appeals pulled no punches, engaging in none of the niceties of appellate nomenclature in drawing on the record below to document its ruling.

The Baby Boom Plume. The Government adduced evidence that traversed almost the entire lifetime of the Baby Boom Generation, starting in 1953, when four of the major tobacco giants joined together to strategize a response to an emerging public concern about health risks associated with smoking. Their initial public response was that any health hazards attributable to smoking constituted “an open question.” Their first ploy was the publication on January 4, 1954, in over 400 newspapers throughout the country, of an advertisement entitled “A Frank Statement to Cigarette Smokers” in which they asserted “[t]hat there is no proof that cigarette smoking is one of the causes” of lung cancer and “[t]hat statistics purporting to link cigarette smoking with the disease could apply with equal force to any one of many other aspects of modern life.” Hearkening back to the time of John Rolfe, they assuringly concluded that “[f]or more than 300 years tobacco has given solace, relaxation, and enjoyment to mankind.” They pledged, however, to keep an eye on emerging research to monitor any health hazards to smokers.

Nicotine Addiction. What the Trial Court found, however, was that the Tobacco Companies, in fact, engaged in “disseminating advertisements, publications, and public statements denying any adverse health effects of smoking” in “promoting their … strategy of sowing doubt” when they knew full well “that smoking causes cancer and emphysema, that secondhand smoke causes lung cancer and endangers children’s respiratory and auditory systems, [and] that nicotine is an addictive drug.” The “research group” that they had promised to set up pursuant to their 1954 statement conducted its own “extensive research into the physiological impact of nicotine, how it operates within the human body, and how the physical and chemical design parameters of cigarettes influence the delivery of nicotine to smokers.” In the end it presented them with evidence early on that, in fact, showed the highly addictive nature of nicotine. As early as 1963, Brown & Williamson’s General Counsel wrote in a confidential memorandum, “We are … in the business of selling nicotine, an addictive drug ….” In 1981, a Philip Morris executive wrote, “Cigarettes are not just habit-forming – the body builds up a requirement for them.” Similarly, by 1991, an R.J. Reynolds report bluntly concluded, “We are basically in the nicotine business.” As a result of their own internal research, the Trial Court found, they “recognized and internally acknowledged that smoking and nicotine are addictive.” Thus, the Court of Appeals concluded “that Defendants were aware that nicotine creates a chemical dependency far stronger than mere habit.”

Suppressing Evidence. Yet, the Court found, “despite this internal knowledge, for decades … [the Tobacco Companies] denied and distorted the truth about the addictive nature of their products, suppressed research revealing the addictiveness of nicotine, and denied their efforts to control nicotine levels and delivery.” R.J. Reynolds ran a commercial in the mid-1950’s asserting that more doctors smoke unfiltered Camels – one of the most virulent of the carcinogen delivery devices – than any other brand because they “agree with your throat.” In one of the most pernicious examples of fraudulently misleading the public, in a 1971 CBS “Face the Nation” interview, the President of Philip Morris denied “that cigarettes posed a health hazard to pregnant women or their infants,” despite the fact that he had been notified to the contrary by his company’s own internal research division. He conceded that while it is true that "babies born to women who smoke are smaller, they're just as healthy as babies born to women who do not smoke,” adding grimly that "some women would prefer having smaller babies." Six years later one of his vice-presidents notified him of the results of a joint study with other Tobacco Companies which concluded “that exposure to cigarette smoke causes emphysema” but he never changed his public position. He was but one of the numerous executives, CEO’s Vice-Presidents, scientists, and heads of R&D divisions at each of the major Companies who had engaged in similar public conduct. The Court pointed out an assertion by a Philip Morris Vice-President that “[n]obody has yet been able to find any ingredient as found in tobacco or smoke that causes human disease.” Twenty-eight years after Reynolds scientists had conceded that the presence of carcinogenic compounds was “now well established,” a company press release continued to declare the subject “an open controversy.”

Moreover, the Tobacco Companies’ employees and attorneys were also involved in “destroying documents relevant to their pubic and litigation positions and suppressing or concealing scientific research” which contravened their public position. Indeed, these numerous false statements led the Court of Appeals to conclude that “[t]he fact that Defendants continually denied any link between smoking and cancer … suggested that they themselves consider the matter material,” thus providing one of the elements of fraud.

The industry seldom lost an opportunity to trivialize the allegations of nicotine addiction, likening it to “attachments” such as tennis, jogging, candy, rock music, Coca-Cola, girl-watching, and hamburgers – each an All-American custom. In one of the more absurd analogies, the CEO of Philip Morris was quoted in Time Magazine in 1997, as saying that cigarettes were no more addictive than his fondness for Gummi Bears, while a vice-president for public affairs at the Tobacco Institute analogized the putative addiction to being a “chocoholic.”

On such a record, Judge Kessler had found, “[i]t is absurd to believe that the[se] highly-ranked representatives and agents of these corporations and entities had no knowledge that their public statements were false and fraudulent.” The truth was, the Court of Appeals also found, that for decades those in control of the Tobacco Companies had known “that cigarette smoking causes disease, that nicotine is addictive, that light cigarettes do not present lower health risks … and that secondhand smoke is hazardous to health.”

Engineering Addiction. Worse yet, knowing that their products were already indiscriminately addictive, while denying that fact at every turn; the cigarette manufacturers actually “engineered their product around creating and sustaining this addition.” At the outset of the 1980’s, they began to spike the nicotine content by as much as 1.6%. The overwhelming evidence showed that they “designed their cigarettes to precisely control nicotine delivery levels and provide doses of nicotine sufficient to create and sustain addiction.” A 1988 Report by the U.S. Surgeon General concluded that "[c]igarettes are highly efficient delivery devices and are as addictive as drugs such as heroin or cocaine." Thus, while publicly denying that fact, what the Tobacco Companies did for decades was to engage in a process which they actually deliberately “manipulated it to sustain addiction.”

Having this knowledge clearly in mind, however, did not stop the Tobacco Companies from continuing to proclaim their denials and disbelief of the plain and compelling evidence. In one of the most notorious incidents, on April 14, 1994, the CEO's of Philip Morris, R.J. Reynolds, U.S. Tobacco, Lorillard, Liggett, Brown & Williamson, and American Tobacco, the seven largest Tobacco Companies in the country, appeared under subpoena before a subcommittee of the House Committee on Energy and Commerce and in response to inquiries from then Congressman (now Senator) Ron Wyden of Oregon each stated under oath that he "believe[d] that nicotine is not addictive.”

Low Tar Cigarettes. Beyond that, the Tobacco Companies’ creating and marketing an “alternative” to heavy-duty smoking was also a pernicious ploy. The District court had found that the companies “engaged in massive sustained and highly sophisticated marketing and promotional campaigns to portray their light brands as less harmful than regular cigarettes.” They “marketed and promoted their low tar brands to smokers – who were concerned about the health hazards of smoking or considering quitting – as less harmful than full flavor cigarettes despite either lacking evidence to substantiate their claims or knowing them to be false.” Following the simple analogies of some of their executives, the Companies analogized their light and low tar cigarettes to low caffeine sodas and low fat cookies.

The truth, the Trial Court found, was that they had “known for decades that filtered and low tar cigarettes do not offer a meaningful reduction risk, and that their marketing which emphasized reductions in tar and nicotine was false and misleading.” By the beginning of the 1970’s, the Tobacco Companies “were aware that lower tar cigarettes are unlikely to provide health benefits because they do not actually deliver the low levels of tar and nicotine as advertised.” This is because habitual smokers would modify their smoking behavior with these brands by taking more frequent puffs, inhaling more deeply, holding the smoke in their lungs longer, or simply by smoking more cigarettes. As early as 1978, the British-American Tobacco Company was informed in a report that longtime smokers who switched to the low-tar brand “will in fact increase the amounts of tar and gas phase that they take in, in order to take in the same amount of nicotine.” As a result of this “nicotine-driven behavior,” any benefits of these low-tar brands were lost. Beyond that, those who used the low-tar brand were smoking more packs, thus increasing their purchases, and enhancing company profits into the bargain.

The Court of Appeals concluded that the hundreds of example of such evidence provided “sufficient evidence from which to conclude that Defendants’ executives, who directed the activities of the Defendant corporations and their joint entities, knew about the negative health consequences of smoking, the addictiveness and manipulation of nicotine, the harmfulness of secondhand smoke, and the concept of smoker compensation, which makes light cigarettes no less harmful than regular cigarettes and possibly more” so since they result in increased attempts at nicotine maintenance.

Secondhand Smoke. The Court further found that “internal industry documents revealed that … [the Tobacco Companies] believed the public perception of secondhand smoke would determine the industry’s survival and that secondhand smoke research by the cigarette manufacturers was a sensitive issue due to the absence of ‘objective science’ supporting their position and the risk that their own research would lead to unfavorable results.” The Tobacco Companies then set up a scientific front organization euphemistically styled the Center for Indoor Air Research to feign “independence” whose assignment was to generate “marketable science” to “use for public relations purposes.” As early as the 1970s, their own research revealed the lethal hazards of secondhand smoke. A Philip Morris scientist forwarded with approval an outside report which concluded that secondhand smoke caused “significant damage to airway function” in exposed nonsmokers. Two years later the company’s own research concluded that it is “more irritating and/or toxic … than main stream smoke inhaled by the smokers” themselves. At about the same time in the early 1980,s the Tobacco Institute nevertheless criticized an independent study showing a strong correlation between secondhand smoke and lung cancer as “suffering from a statistical flaw” when the evidence showed that the Institute “knew at the time not only that the statistical error did not exist, but also that the study was in fact correct.”

Review of Remedies. The District Court imposed no fines but found that Philip Morris, Reynolds, Lorillard, American, and British-American were likely to commit future RICO violations, rejecting their argument that the injunction was unnecessary in light of their obligations under the Master Settlement Agreement emanating from the nationwide tobacco litigation in the mid-1990’s, because these Defendants were still not in full compliance with it. Liggett alone was excluded from the District Court’s general injunction because it had voluntarily withdrawn from the RICO conspiracy, admitted that smoking is addictive and causes cancer, voluntarily restricted its advertising, and cooperated with the Government in its case against the other Tobacco Companies. The other seven Companies and their subsidiaries were enjoined them from false and misleading statements and advertising and from committing further RICO violations, from setting up false research fronts such as the Tobacco Institute, were ordered to cease using any express or implied health benefit claims regarding light or low tar cigarettes; required to grant the Government and the public access to all industry documents disclosed in the litigation and to provide additional data to the Government; and were prohibited from selling or transferring their brands, product formulas, and business entities to others who were subject to the injunction, or to conduct such business outside the United States.

The District Court denied the remainder of the Government’s requests for the imposition of a national smoking cessation program, with a special provision for young smokers; a public education and counter-marketing campaign; appointment of a special monitor to restructure the Tobacco Companies themselves; and to make public all internally-developed health and safety risk information about their products.

On appeal, the Court independently assessed whether each company presented a “reasonable likelihood of further violations” and found that the general prohibitory injunction against future RICO violations and against making future false and misleading statements were sufficiently specific to withstand challenge. The Tobacco Companies were successful, however, in reversing the application of the general injunctive relief as to their “subsidiaries” because the record did not disclose the degree of control that the Companies had over various such entities. In addition, the District Court’s proscription against making health claims on low tar products was remanded for modification to limit it to instances which had no domestic effect.

The Tobacco Companies also challenged the mandatory injunction that they initiate a public program to inform present and prospective smokers of the addictiveness and major health dangers of cigarettes in general and the lack of any significant health benefit from light/low tar cigarettes, on the grounds that these requirements were imposed on them without sufficient notice and therefore amounted to a denial of due process of law. The Court of Appeals rejected this argument, finding that the massive nature of the litigation amply provided the Defendants with the scope of potential remedies. “Requiring Defendants to reveal the previously hidden truth about their products,” the Court found, “will prevent and restrain them from disseminating false and misleading statements, thereby violating RICO, in the future.”

As one of the methods for issuing corrective information, the District Court had required the Companies to affix an “onsert” to each pack of cigarettes disclosing the issues of addictiveness and the link to cancer and other diseases. The Court rejected the Companies’ argument that this did not comply with the requirement of Cigarette Labeling Act that such warnings be “on” the package, not affixed to it. At the same time, however, the Court of Appeals found that the District Court’s requirement of point-of-sale counter displays was too intrusive on uninvolved retailers such as convenience stores, and vacated that requirement with instructions on remand for the District Court to reconsider its point-of-sale injunction with the rights of retailers in mind.

Finally, the Court of Appeals swept aside the Tobacco Companies’ First Amendment argument as to protected commercial speech with the simple statement that “it is well settled that the First Amendment does not protect fraud” and that “[h]owever broad the First Amendment … may be, it cannot be stretched to cover … known falsehoods.”

It is rare to find a more excoriating appellate review of a defendant’s failed case, especially at the hand of Judges whose backgrounds might otherwise have led one to predict a less scathing, if not altogether different, result. The case is United States v. Philip Morris USA, Inc., et al., U.S.App.D.C. No. 06-5267 (May 22, 2009) and it the full text may be found and downloaded at http://www.cadc.uscourts.gov/bin/opinions/allopinions.asp.