Feds, Cayuga-Seneca tribe reach settlement
Federal authorities and a Native American tribe have reached a settlement over a federal seizure of more than $550,000, more than a million cigarettes and other tobacco products.
File Video: ATF seizes cigarettes, records
Agents from the federal Bureau of Alcohol, Tobacco, Firearms and Explosives last year raided the Skydancer Smoke Shop in Seneca County, seizing cases of cigarettes and pipe tobacco. Authorities alleged that the Seneca-Cayuga of Oklahoma Tribe, which owns the store, was selling untaxed cigarettes.
Authorities also seized $554,058 from a Seneca-Cayuga bank account.
The legal brouhaha pitted tribe against tribe, with the Cayuga Nation claiming that the Oklahoma-based tribe had no legal authority to sell untaxed cigarettes. Officials with the Seneca-Cayuga tribe contended that they too have a sovereign foothold in New York and have a right to sell untaxed cigarettes from the store.
The dispute represents one chapter in a bevy of court cases across New York with government officials challenging the extent to which Indian tribes can sell untaxed tobacco products. As part of the settlement over Skydancer, the Seneca-Cayuga tribe agreed to not reopen the store until upper-tier appellate courts have ruled on the rights of Indian tribes to sell untaxed cigarettes to people other than Native Americans.
The tribe could open solely as a convenience store in the interim, without selling tobacco products.
"This is hours and hours and weeks and weeks and months and months of negotiations" to reach a settlement, said Assistant U.S. Attorney Richard Kaufman, who, along with Assistant U.S. Attorney Grace Carducci, helped cement the agreement. "... We were very sensitive to the fact that this is a Native American nation, which has its own sovereignty."
Under the settlement:
• The government keeps about half of the seized money. The tribe agrees to use its half to restore some jobs lost at the Oklahoma reservation since the forfeiture litigation began last year.
• The government will auction off much of the seized tobacco inventory, and will keep 68 percent of the proceeds, with the tribe receiving the rest.
• The government will return 144 cases of seized Skydancer-brand cigarettes, which the tribe manufactures in Oklahoma and has agreed to destroy. The tribe will receive a refund of federal excise taxes it had paid on the cigarettes. Each case has 12,000 cigarettes.
The tribe wanted the cases of its signature-brand cigarettes out of circulation because the quality may have diminished during the lengthy storage period, said Kaufman.
• The tribe agreed that any cigarettes it sends into New York for sale elsewhere in the state will go through the state's cigarette stamping process, which ensures they will be taxed.
The Seneca-Cayuga tribe has consistently paid its property and school taxes for the store property, Kaufman said. The tribe has agreed to pay the 2014 taxes also, which had not been paid during the dispute.
GCRAIG@DemocratandChronicle.com