Attorney General Eric T. Schneiderman announced Monday that his office has filed a lawsuit against two companies for illegally selling contraband cigarettes without paying the required state excise taxes.
The lawsuit, which is the result of an ongoing investigation into contraband cigarette sales across the state, was filed in U.S. District Court for the Eastern District of New York against Grand River Enterprises based on Six Nations land in Ohsweken, Ontario and its wholesaler, Native Wholesale Supply, located in Perrysburg.
The lawsuit charges that Grand River Enterprises avoided state taxes by illegally selling its products to Native Wholesale Supply instead of a New York State licensed stamping agent who would prepay the New York State cigarette excise tax and affix the state tax stamp, as required under the law. During the eight-month period from November 2011 to July 2012, Native Wholesale Supply paid $85 million to Grand River Enterprises for its cigarettes, which accounts for more than three million cartons of cigarettes and a potential tax loss to the state of more than $13.2 million. Under federal law, Grand River Enterprises could face a civil penalty of up to two percent of the gross sales of cigarettes for the year. Based on 2011-2012 sales, the company's civil penalty could be tens of millions of dollars.
See the full story in Tuesday's OBSERVER.