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Staten Island District Attorney’s Office, Associated Press
This undated photo provided by the Staten Island District Attorney’s Office in New York shows Michael Zekry. Zekry faces felony charges including tax fraud after he was arrested just after police caught him driving with more than 2,000 cartons of the illegal cigarettes. In Zekry's apartment, investigators found about 500 more cartons, plus $40,000 in cash and a cash-counting machine.

NEW YORK — Prosecutors say a New York man's illegal but lucrative business went up in smoke after a half million untaxed Virginia cigarettes were seized from his van and apartment.

"You got a good one!" Michael Zekry told authorities after his arrest, according to court documents. "I'm out of business now."

Zekry was arraigned this week on felony charges including tax fraud and was freed on $10,000 bond. He's due in court Monday.

Acting on a tip, authorities pulled over Zekry's van just after midnight Wednesday in Staten Island. Authorities found more than 2,000 cartons of illegal cigarettes inside the vehicle, according to Daniel M. Donovan Jr., Richmond County district attorney. In Zekry's apartment, investigators found about 500 more cartons, plus $40,000 in cash and an electronic cash-counting machine, Donovan said in a statement released Saturday.

All cigarettes sold in New York City must be taxed at the city and state level — $5.85 per pack. Anyone selling cigarettes must be licensed, and stamped cigarettes must have a serial number.

The state tax in Virginia is 30 cents per pack. By selling the nearly 26,000 packs of untaxed cigarettes that were confiscated, Zekry would have cheated the government of more than $150,000, Donovan said.

Zekry, a 67-year-old native of Morocco, is a "big-time cigarette smuggler" who sold his contraband to clients across Staten Island and Brooklyn, Donovan said.

"He would do residential drop-offs, as well as deliver to grocery stores and nail salons," Donovan said.

Zekry told investigators that he would drive to Virginia every 10 weeks.

"I make between $5,000 to $7,000 on a load," he said, according to court papers.

The arrest was part of a larger state effort to thwart illegal cigarette sales. In March, Gov. Andrew Cuomo's announced he was forming the New York State Cigarette Strike Force to target cigarette traffickers.

Phone calls to Zekry's home and cellphone seeking comment were not returned.