It's an illegal business that generates billions of dollars a year just in Virginia. It's the sale of untaxed cigarettes.

People who work on these cases every day, say it's an epidemic. Winchester Police officers are holding hundreds of cartons of cigarettes and thousands of dollars worth of cash. The officers say it's the training they got about a month ago from the Northern Virginia Cigarette Tax Board that helped them do this.

Not one, not two, but 480 cartons of untaxed cigarettes. The Winchester Police Department is packing this gold mine they seized Thursday night.

"This is a pretty sizable seizure, but this is average," said Northern Virginia Cigarette Tax Board Chief Enforcement Officer Paul Carey. "Normally a smuggler or transporter will carry about $25-30,000 worth of product."

Carey came down to Winchester to help with the bust.

"The federal government estimates it's about $5 billion dollars a year that runs through Northern Virginia to New York, New Jersey and Rhode Island and a lot of the funding goes back to organized crime and terrorist groups," said Carey.

Police say, Heng Ping Li from New York City is behind all these cigarettes. Officers got a tip and went to America's Best Value Inn on Berryville Avenue. That's where they found the cigarettes and more than $5,000 in cash.

"It's definitely something that I personally will look for in the future because of the training I received," said Winchester Police Department Officer Glenn Macher.

Macher and about three other officers responded.

"At first you're kind of shocked because you really don't know how serious it is for cigarettes," said Macher.

All these cigarettes are now property of the City of Winchester.

"I want to make sure that any revenues goes back in to the Community Response Team so we can strengthen our efforts," said City of Winchester Commissioner of the Revenue Ann Burkholder.

Burkholder says the City can sell them or auction them off. Some cartons may end up being used by the police for other operations.

"Cigarette tax trafficking is the funding for terrorism activities and was apparently the chief funding for the 9/11 attacks," said Burkholder. "And a lot of that is about a $5 billion dollar a year business and the bulk of that is funneling through Winchester. A lot of it comes up on I-81 so it really extends well beyond just the City of Winchester and our own community to a matter of national importance."

Many new laws are being passed to try to stop this. Just this summer it became illegal in Virginia for somebody to carry or transport more than 25 cartons of cigarettes if they're not licensed.

Li is charged with possession of untaxed cigarettes. Friday morning in court, he was given a $5,000 secured bond. His trail is set for February 6th.

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Additional Information from CNN: New York sells more black market cigarettes than any other state. That's according to a report by the Tax Foundation, a Washington D-C based think tank.

More than half of cigarettes sold in New York, 60.9 percent, are smuggled in, which cheats the state out of more than a billion dollars in tax revenue and 6700 jobs. New York has a higher tobacco taxes than any other state, at $4.35 per pack. That's in addition to the $1.50 per pack local New York City cigarette tax.

According to the report, Arizona had the second highest amount of smuggled cigarettes, at 54.4 percent followed by New Mexico, Washington and Rhode Island.

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