NYC sues Seneca cigarette dealer

David B. Curuso
New York (AP) June 2012

The City of New York filed a lawsuit against a cigarette dealer on an Indian reservation in western New York, claiming that the business has been flouting state and federal law by shipping thousands of packs into the city without paying state or local taxes or verifying the age of the buyer.

The suit, filed in a federal court in Manhattan, targets Robert and Marcia Gordon, members of the Seneca tribe who were outspoken opponents of attempts by state and federal authorities to rein in the sale of untaxed cigarettes from reservations.

It accused the couple’s Salamanca-based business of blatantly ignoring state laws requiring that taxes be paid on any cigarettes shipped off a reservation to people who aren’t members of a tribe.

An official with the New York City Sheriff’s office confirmed the company’s defiance of the law through a simple sting this spring, the suit said. In April, an investigator went on the couple’s website, allofourbutts.com, and placed an order for 400 cigarettes at a cost of $30, plus $20 for shipping.

The cigarettes arrived a month later as promised, and were signed for by an office clerk. The suit said the delivery driver didn’t seek to verify the age of the person receiving the order, the cigarettes didn’t carry the surgeon general’s required health warnings and no taxes were collected. City lawyers said in the suit that they believed that thousands of similar sales had taken place, costing the city substantial tax revenue.

Reached by telephone, Marcia Gordon said she hadn’t seen the lawsuit yet, but was sure nothing the business was doing was illegal. She declined further comment.

Gordon and her husband have made no secret of their company’s operations, and have repeatedly argued in court that, as members of the Seneca tribe, they are exempt from certain state taxes.

The couple went to court in 2010 in an attempt to prevent enforcement of the federal Prevent All Cigarette Trafficking Act, a new law that banned the sale of cigarettes through the U.S. mail. They said the law had decimated their business, which, at its peak, was selling $2 million-worth of cigarettes each month.

Last December, they persuaded a federal court to temporarily block enforcement of a part of the law requiring dealers shipping through private delivery services to pay any applicable state and local taxes in advance. That suit is still pending.

New York City’s Law Department argued in the suit that the couple’s involvement in that legal challenge indicated that they were fully aware of their responsibilities under the law. The suit said the business’ willful defiance of the law amounted to civil racketeering.

“The City has made clear through our previous lawsuits that illegal sales of cigarettes will not be tolerated in any form,” the city’s chief lawyer, Corporation Counsel Michael A. Cardozo, said in a statement. “Businesses that flout the law injure the public health and evade taxes used to pay for vital public services. They can expect future enforcement actions directed against them.”
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