BUFFALO, N.Y. — The New York State Attorney General announced a $50 million agreement with two companies, including one in Western New York that allegedly sold cigarettes without paying the state excise tax.
Attorney General Letitia James says Grand River Enterprises Six Nations, Ltd. which based in Canada, and its wholesaler, Native Wholesale Supply Company, Inc, which is located in Western New York, allegedly violated state and federal laws by bringing millions of cartons of unstamped cigarettes into New York from Canada without paying state taxes.
In addition to the $50 million fine, both companies are no longer allowed to sell unstamped cigarettes in NYS and they also must:
- Create and maintain records of all of the Grand River cigarettes that enter New York and make those records available to OAG upon request;
- Obtain statements from out-of-state customers indicating that they do not intend to reimport any unstamped cigarettes back into New York;
- Cooperate with OAG when OAG is conducting an investigation into sales of unstamped Grand River cigarettes, or the sale of any unstamped cigarettes made by defendants;
- Utilize authorized common carriers to transport unstamped cigarettes while they are transiting through New York; and,
- Restrict sales of unstamped cigarettes to licensed cigarette stamping agents, federally bonded facilities, and other specified entities.
“Hardworking New Yorkers pay taxes and so should multi-million-dollar companies,” said Attorney General James said in a release. “Regulating and taxing cigarettes is a critical tool to protect public health from the deadly dangers of tobacco. Today’s agreement enforces New York’s laws and will stop the overflow of unstamped cigarettes into New York. I will continue to enforce the law against companies and individuals who flout New York state laws and put our residents in jeopardy.”
New York imposes state taxes on cigarettes to help minimize the usage of tobacco products that are known to serious and sometimes deadly health issues.
On Monday Native Wholesale released this statement:
Over the last three months, Native Wholesale Supply Company, Inc. (“NWS”) and Grand River Enterprises Six Nations, Ltd. (“GRE”) have negotiated in good faith to bring to closure unsubstantiated and unproven allegations brought by the New York State Attorney General’s office (“NY Attorney General”) in 2014. After eight years of ongoing litigation among the NY Attorney General, GRE, and NWS, with no decision on the merits in favor of the NY Attorney General, a Stipulation and a proposed Stipulated Judgment and Order to settle this complex lawsuit was submitted earlier today to U.S. District Court Judge Richard J. Arcara of the Western District of New York for consideration and approval.
In this almost decade-long dispute, the NY Attorney General claimed that sales of cigarettes by NWS to certain Native American Nations situated within the geographic borders of New York state were subject to New York state regulation and taxation. NWS, as well as the manufacturer of those products, GRE, vigorously objected to and adamantly denied such claims. As part of NWS’ Chapter 11 plan of reorganization, NWS allowed those claims to proceed in federal court in New York State. The settlement announced today brings an end to that litigation, without any admission of wrongdoing or liability by NWS or GRE. The settlement payments are to be paid solely by NWS and are not denominated as payment of back taxes. They are payments that the parties agreed are payments of disputed claims payable under the trust set up in accordance with the Chapter 11 plan of reorganization.
NWS and GRE have at all times maintained and continue to maintain that the transactions at issue do not and did not violate any federal or New York State laws, particularly in view of well-established sovereign and treaty rights established with the federal government. NWS is not and never has been a wholesaler or distributor of GRE. It has at all times been owned and operated independently and separately. No financial obligation under the proposed settlement is, has been, or could have been imposed on GRE via the litigation or this settlement.
The settlement and payment of the settlement amount from the trust established pursuant to NWS’ Chapter 11 plan of reorganization allows NWS and New York State to move on and put this unsettled issue of resolving New York State claims in the plan of reorganization to rest. The settlement further reiterates and contemplates that both defendants shall continue to operate in accordance with applicable law, including reporting and record-keeping requirements with which both parties have maintained and continue to maintain that they are and remain in compliance. The terms of the settlement recognize the importance and need of the manufacturing, sale and distribution of tobacco products to the Native American economy.
New York imposes state taxes on cigarettes to help minimize the usage of tobacco products that are known to serious and sometimes deadly health issues.
