Green’s Dictionary of Slang

the selling of virtually worthless goods on the pretext that they are actually smuggled contraband.

1811

Lex. Balatronicum n.p.: Smug Lay. Persons who pretend to be smugglers of lace and valuable articles; these men borrow money of publicans by depositing these goods in their hands; they shortly decamp, and the publican discovers too late that he has been duped; and on opening the pretended treasure, he finds trifling articles of no value.