New York City - Poospatuck Reservation stores (2) caught selling cigarettes to bootleggers..

September 17, 2010 - Poospatuck reservation dealers sold more than four million cartons of untaxed cigarettes this year; video of the undercover investigation catches dealers making illegal sales.

New York City Mayor Bloomberg announced yesterday the results of an undercover investigation into illegal cigarette sales at the Poospatuck reservation on Long Island. (Tucked away along a waterway in Mastic, Long Island is Poospatuck, the smallest Indian reservation in New York State. It means “Where the water meets” and is home to 400 enrolled members of the Unkechaug tribe of Native Americans.

Two cigarette dealers were caught on tape illegally selling large quantities of cigarettes on which state and city taxes had not been paid. According to the U.S. Census Bureau, there were 296 people living on the Poospatuck reservation last year, yet the reservation's smokeshops have so far sold more than four million cartons of un-taxed cigarettes in 2010. That works out to more than 523 packs a day for every man, woman and child living on the reservation.

October 1, 2008 - NYC sues reservation smoke shops over bootlegging..
March 23, 2009 - NYC can move forward with reservation cigarette lawsuit..
August 27, 2000 - NYC - wins round in fight against Indian Tobacco Vendors..
August 29, 2009 - NYC Area - more counterfeit Marlboro cigarettes seized
October 24, 2009 - Mastic NY man arrested illegally trafficking in untaxed cigarettes..
July 28, 2010 -PM USA filed lawsuits in NYC against eight more retailers...
Mayor Bloomberg: "A law intended to protect the sovereignty of Native Americans has been exploited to fill the pockets of bootleggers and crooked cigarette dealers. Although New York City has won some significant victories in the courts, smokeshops on the Poospatuck reservation continue to violate the law and sell un-taxed cigarettes to bootleggers who openly state that they are buying them for resale in New York City."

John Feinblatt, the mayor's chief policy advisor, noted that in 2009, sales of un-taxed cigarettes on reservations accounted for one third of all brand-name cigarette sales in New York. "That adds up to nearly a billion dollars in lost tax revenue the state and city could have used during these tough times."

Last week, working with the Mayor's Financial Crime Task Force, the City's Department of Finance sent undercover investigators to two of the approximately 49 cigarette sellers on the Poospatuck reservation. The investigators stated that they were buying cigarettes for re-sale in the city and were able to purchase 60 cartons of un-stamped, un-taxed cigarettes.

Native Americans are permitted by law to purchase and possess unstamped cigarettes on which taxes have not been pre-paid, but only for personal use or re-sale on the reservation to other tribe members. Stores on the Poospatuck Reservation illegally sell cigarettes to bootleggers in sales that are subject to taxation.

The Federal Contraband Cigarette Trafficking Act, 18 U.S.C. § 2341, makes it a felony — and also gives rise to civil liability — to sell cigarettes without tax stamps in states where the cigarettes are subject to tax. The New York Cigarette Marketing Standards Act also includes civil liability for selling cigarettes without including amounts for all taxes required by law. Cigarettes sold by Native Americans to the public are taxable and by law must bear tax stamps in New York.

VIDEO - Bloomy burns cheats Vid nails illegal sales of Indian cigs by SALLY GOLDENBERG, New York Post, 9/17.2010.

New York State is also having problems collecting taxes on cigarettes sold on Indian reservations to non-Indians.

Reference: NYC Undercover Probe Reveals Illegal Cigarette Sales, NACS (National Association of Convenience Stores) Online, 9/17/2010.