UPS Inc. must pay $247 million to the state and city of New York for what a judge called the company’s egregious and prolonged failure to stop shipments of untaxed cigarettes from American Indian reservations that undermined anti-smoking efforts.

UPS Inc. ought to pay more than $800 million in penalties for turning a blind eye to shipments of untaxed cigarettes to New Yorkers, lawyers for the state’s top cop said at the start of a trial.