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NY prosecutors report deal on cigarette trucking

Michael Virtanen, Associated Press

ALBANY, N.Y. (AP) -- Four prosecutors said Tuesday they and a trucking company had reached an agreement intended to curb trafficking in untaxed cigarettes from Indian reservations to locations in New York.

The agreement, signed this week by the district attorneys of St. Lawrence, Franklin, Chautauqua and Suffolk counties, is with Ohio-based Greenwood Motor Lines, which does business as R&L Carriers. The company agreed to refrain from violating New York law that prohibits shipping cigarettes that don't have tax stamps for sale within the state.

According to the agreement, the company denied wrongdoing, though authorities say their investigation showed it delivered "native brand" cigarettes to various New York counties. The company also agreed to pay $140,000 to the American Lung Association and American Cancer Society.

A telephone call to Greenwood on Tuesday wasn't immediately returned.

The district attorneys said they agreed not to bring criminal prosecutions of the trucking company if it complied with the terms of the agreement.

"The bootlegging of contraband cigarettes is a major problem for state revenues and for public health," St. Lawrence County District Attorney Nicole Duve said. "Common carriers should be on notice they have certain obligations."

The investigation followed the seizure of two truckloads of cigarettes in St. Lawrence County last year. One of those is the subject of an ongoing case at New York's midlevel Appellate Division after a judge ruled there was no tax due on the 26,000 cartons of Signal-brand cigarettes going from the St. Regis Mohawk Reservation in northern New York to HCI Distributors, a subdivision of the Winnebago Tribe of Nebraska.

Suffolk County District Attorney Thomas Spota said traffickers sometimes claim cigarettes are exempt if they are manufactured on a reservation or are being delivered from one to another.

"There is no basis on the law for such claims, and this agreement reflects that," he said.

The agreement said R&L accepts the position that the New York statute prohibits common carriers from delivering cigarettes to any person or business in New York that isn't authorized to receive them and that cigarettes transported or offered for sale in the state must have tax stamps whether they are made, sold or bought by a tribe.

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, which say that as sovereign nations they shouldn't pay state tax at all.