Wisconsin and Oregon can keep money held in escrow from tobacco company..

September 14, 2010 - A federal judge in Virginia has ruled the U.S. government can't seize about $20,000 that a defunct tobacco maker held in trust for Wisconsin and Oregon.

Under a settlement states reached with major tobacco companies over health care expenses in the 1990s, states adopted statutes requiring companies that didn't participate in the settlement to pay into holding accounts. The accounts would cover the states' claims if they sued the companies within 25 years. (Tobacco manufacturers not part of the 1998 master settlement are still required to pay into escrow accounts held for the benefit of the states that they market their tobacco products in. The escrow money may be used to satisfy future judgments against tobacco firms that weren’t part of the original agreement.)

According to court documents, C.L.P. Inc. (of Ayden, NC) was convicted of conspiring to evade the federal cigarette excise tax and mail fraud. Last year U.S. District Judge James P. Jones allowed the government to seize $722,000 in C.L.P.'s holding accounts for the states. (NORTH CAROLINA MAN SENT TO PRISON AND BARRED FROM TOBACCO INDUSTRY, TTB Tobacco News, 10/2009)

Wisconsin and Oregon objected, and Jones ruled on Sept. 9 the federal government has no claim on those states' shares until the 25-year window closes.

Reference: Judge: Feds can't seize Wis., Ore. tobacco funds, Associated Press - Bloomberg Business Week, 9/13/2010.