Taxman Catches Up with Reservation Cigarette Dealers

By Helena Zhu
Helena Zhu
Helena Zhu
August 23, 2010 Updated: August 24, 2010

NEW YORK—The Second Circuit Court of Appeals denied repeated requests by Long Island-based cigarette dealers to resume sales, announced Mayor Michael Bloomberg and Corporation Counsel Michael Cardozo Monday.

The cigarette dealers on the Poospatuck Indian reservation had illegally sold massive quantities of cigarettes without paying state and city taxes until the Federal District Court for the Eastern District of New York issued a ruling to stop them in August 2009.

The dealers appealed to the injunction, but the Second Circuit rejected their appeal on Friday and sent the case back to the District Court for further proceedings as the city made amendments to the city’s cigarette tax laws. The amendments are expected to strengthen the city’s effort to stop illegal cigarette sales.

“We couldn’t be happier that a court has yet again prevented a tribe from selling large quantities of cigarettes—19,000 cigarettes a day for every man, woman, and child on the reservation—without paying the taxes owed and draining billions of dollars from the city and state,” said Bloomberg in a press release.

The city’s investigation found that these businesses sold nearly 24 million cartons of contraband cigarettes since 2004.

Helena Zhu