NY holding on to seized Indian cigarettes

ALBANY, N.Y. (AP) – New York officials are holding on to a truckload of untaxed Indian-made cigarettes they seized, challenging the recent order of a state judge who said the state had to give them back.

State police and the Cuomo administration say they are not changing their enforcement practices despite the court ruling. New York Attorney General Eric Schneiderman has filed an appeal notice that temporarily halts the order of state Supreme Court Justice David Demarest.

Demarest ruled on June 18 that there was no tax due on the 26,000 cartons of Signal-brand cigarettes going from the St. Regis Mohawk Reservation to HCI Distributors, a subdivision of the Winnebago Tribe of Nebraska, finding no legal basis under current New York tax law or regulations to hold them. They were taken from a tractor-trailer stopped Jan. 23 at a U.S. Border Patrol checkpoint at Waddington in northern New York.

Last November, administration officials said state law subjects unstamped cigarettes to seizure regardless of the origin or destination.

Richard Azzopardi, spokesman for Gov. Andrew Cuomo said: “This administration is enforcing the law and we will continue to do so.”

Representatives of cigarette manufacturers on the Akwesasne Mohawk Reservation in northern New York, whose business has been hurt by seizures this year including some other truckloads, met with administration officials last week in Albany but declined afterward to comment. No progress was reported.

HCI sued state police, St. Lawrence County District Attorney Nicole Duve and her assistant, Jonathan Becker, arguing it had legally bought the cigarettes from Ohserase Manufacturing LLC on the Mohawk reservation and that it had accurate paperwork that specified its destination as the Winnebago reservation in Nebraska.

State police seized the tobacco. Demarest concluded no taxes were due and said no criminal or civil proceedings were ever begun, so the cigarettes should be returned.

Calls to Duve and Becker were not returned.

“Here, the New York State Police, at the specific direction of the St. Lawrence County District Attorney, has seized property owned by the petitioner, without a warrant and without commencing a criminal complaint,” Demarest wrote. He rejected the state's argument that the cigarettes needed tax stamps.

Under New York law, cigarettes can be sold to tribe members without the state's tax of $4.35 per pack but should be taxed when sold to non-Indians. That has resulted in a booming discount cigarette business for some tribes who say that as sovereign nations they shouldn't pay state tax at all.

The state has renewed enforcement efforts following nearly two decades of failures. Recent measures included crackdowns on Internet sales and requiring cigarette wholesalers to prepay the sales taxes before supplying reservation stores with non-Native brands.

So far this year, troopers have seized more than 260,000 cartons of unstamped cigarettes.

The state Department of Taxation and Finance said it has taken possession of 180,000 cartons this year and has so far returned 108,500.

Newly elected St. Regis Mohawk Tribal Chief Paul Thompson, who was sworn in Sunday, told supporters economic development is his main objective and he wants to tackle the ongoing issue of state cigarette seizures, the Daily Courier-Observer in Massena reported Monday.

He said New York state “won't be happy until they take all our businesses.”

Thompson said Demarest issued “a great ruling,” that “hit it right on the head.” He said he wants the tribal council to show public support.