U.S. investigators call it a modern-day Prohibition. The only difference is, this time the hot commodity is cigarettes, not liquor.
Law enforcement officials claim Western New York is a hotbed of cigarette smuggling, a centre for a new wave of illegal activity spurred by higher state taxes on cigarettes. In the first six months of this year, local, state and federal authorities seized 17 shipments of what they claim are illegal cigarettes. Each of the seizures involved truckloads of cigarettes, with the total value estimated at more than $1.5 million.
Investigators say many of the cigarettes were destined for Native American smoke shops that are fronts for illegal Internet sales. They claim Western New York is home to more than 300 Web sites offering tax-free cigarettes.
The Seneca Nation claims many of the seizures are improper and has called on the state and federal governments to end their crackdown on untaxed cigarettes sold by Native Americans.
“Today, there’s not a single state tax regulation that affects the sale of cigarettes on reservations,” said Joseph F. Crangle, a lawyer for a dealer whose cigarettes were seized by the government. “Those retailers, just like the (Seneca) nation itself, are immune from state taxes.” Crangle said his client, Seneca wholesaler Scott Maybee, went to court and succeeded in getting the state to return 48 cases of cigarettes ATF agents seized in April The U.S. government, in a recent court case, accused Ojibwa Trading Post, a smoke shop on the Seneca reservation in Irving, of selling smuggled cigarettes over the Internet. Court papers indicate the ATF received a tip about “questionable shipments” of cigarettes at two local trucking companies, investigated and seized more than 3 million cigarettes intended for Ojibwa. The trading post is owned by a California company called Rancho Equities.
The government claims the people behind Rancho Equities are white, not Native American, and that the smoke shop has acknowledged its role in selling illegal cigarettes as part of its Web site advertising: “Ojibwas.com DOES NOT report to ANY state taxation or tobacco department!” Ojibwa has countered by claiming that its primary owner, Joyce Burns, is a Native American. Burns is not a Seneca but, as a member of the Lake Superior Chippewas of Wisconsin, has been allowed to operate her business on the local reservation.
Burns, as part of a counterclaim against the government, is seeking the return of her 3 million cigarettes.
“Because she’s an Indian, she can purchase untaxed cigarettes from anyone,” said Joel L. Daniels, a lawyer for Burns. “The cigarettes seized were not purchased illegally.”