Five men received sentences of up to three years at Sheffield Crown Court yesterday for their role in the fraud, which would have cost the government hundreds of thousands of pounds in lost revenue.
The plot began to unravel in April 2013 after James Woods and Vincent McGeough were seen by HMRC officers at East Midlands airport exchanging a bag containing some £110,000.
McGeough fled the scene and attempted to flag down a passing car, only to discover the car was being driven by another HMRC investigator.
Woods was arrested on the spot.
Information uncovered in the seizure led to the arrest of Wayne Dunn, who was already on bail having been arrested for driving a van containing 800,000 cigarettes in Ipswich two months earlier.
Dunn was then linked to the recovery of a van in Eastwood, Nottinghamshire the month before, which held 169,000 illicit cigarettes.
Subsequent searches revealed Dunn’s younger brother Irwin was orchestrating the fraud from his prison cell.
The fifth member of the conspiracy, Lee Pearson, was uncovered in October 2013 after HMRC searched two barns in Everton, South Yorkshire, where Pearson was storing over 1,000 litres of illicit beer and vodka which contained 150 times the legal limit of the toxin, methanol.
Stuart Taylor, assistant director of HMRC’s Fraud Investigation Service, said: "These men all played a part in flooding the UK with illegal cigarettes, tobacco and alcohol solely to line their own pockets with money that should have been funding vital public services.
"Irvin Dunn even pulled the strings while he was in prison using coded messages. But their fraud has been broken down and picked apart and now they are all paying the price.
"The evasion of excise duty is a criminal offence. If you are caught you will not only have your goods seized but you may also face prosecution and, if convicted, a criminal record and potentially a prison sentence.
“Anyone with information about the illegal trade in smuggled cigarettes and tobacco should contact the Customs hotline on 0800 59 5000."