GOWANDA, N.Y. -- Federal attorneys have filed suit against a tobacco wholesale company owned by Arthur "Sugar" Montour, a former Seneca tribal councilor, for failing to pay $18.4 million in federal tobacco settlement assessments, according to a report in the Buffalo News.
Montour's company, Native Wholesale Supply Co., located in Gowanda, N.Y., on the Cattaraugus Reservation, is the exclusive American distributor for Seneca and Opal brand cigarettes manufactured in Canada by Grand River Enterprises, a Native American company.
Justice Department attorneys representing [image-nocss] the U. S. Department of Agriculture allege that Native Wholesale Supply has failed to pay federal assessments for 2006 through 2008, as required under the tobacco master settlement agreement, according to the report.
Native Wholesale Supply is closed through Jan. 5. Its New York City attorney did not return a call to the newspaper.
Seneca brand cigarettes are one of the best-selling Native American brands, and Grand River Enterprises has faced legal action by 30 state attorneys general, alleging the company has skirted requirements to comply with the agreement reached with the major U. S. tobacco companies.
Grand River, in turn, has filed a lawsuit against the state attorneys general in U. S. District Court in the Southern District of New York, as well as an action against the United States in an international tribunal, claiming damages under the North American Free Trade Agreement, the report states.
Wendy M. Ertmer, a trial attorney with the Justice Department, said in the lawsuit that Native Wholesale partially paid its 2005 assessment but since then has not paid anything or complied with reporting requirements since January 2007.
"As of its Sept. 1, 2008, statement," the suit alleges, "[National Wholesale Supply's] outstanding balance, with late payment interest, was $18,451,475.96."
The lawsuit demands that Native Wholesale pay the owed amount and provide the government the information required by the settlement act.
Meanwhile, New York convenience stores continue to struggle with the state tobacco tax that jumped by $1 in June, according to a report in the Orlean, N.Y., Times-Herald. The increase bumped the state's cigarette tax to a grand total of $2.75, the highest in the nation, part of an effort to curb smoking.
The result has been plummeting convenience-store sales, according to the newspaper report.
"Convenience stores in New York have lost anywhere between 15 and 25& of their cigarette sales since the tax increase," James Calvin, president of the New York Association of Convenience Stores, told the newspaper. "The vast majority of smokers who are no longer coming to our stores didn't quit. They just quit coming to our stores and are now buying from lower-tax or no-tax venues."
The tax affects more than just cigarette sales. C-stores are losing profits from all sectors.
"We also lose the sales of the other stuff those cigarette customers used to buy when they came through the door," Calvin said.
A typical c-store relies on cigarette sales for about 35% of its total sales, according to the report. That number is much lower in New York.
"In New York, if cigarettes are accounting for 15% of your stores, you're doing well," Calvin said. "All the tax increase has done is just fuel a tax-evasion epidemic that was already strong."
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