Michael Bloomberg Takes on Yakama Reservation Cigarette Company

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New York City Mayor and former smoker Michael Bloomberg, like many reformed sinners, has a bee in his bonnet about his former vice. He's donated millions of his own money for anti-smoking campaigns and pushed for higher tobacco taxes. Now, the mayor is suing a Washington state cigarette company, in part, for failing to insure that New York City and state taxes were paid. In doing so, he's got a fight over Native American sovereignty on his hands.

The company in question in King Mountain Tobacco Company, which lies on the Yakama Indian Reservation. According to the suit announced yesterday by Bloomberg (see pdf of complaint), King Mountain sold thousands of cartons of cigarettes over a nine-month period to smoke shops on the Poospatuck Indian Reservation in New York.

A recently passed federal law, called the Prevent All Cigarette Trafficking Act, requires King Mountain to ensure that taxes are paid before shipping tobacco to New York, the suit contends. Yet the Yakama company not only failed to do so, but it refused to stop supplying the bootleg cigs after being told by Bloomberg's law office that it was breaking the law, the suit charges.

The civil action, which also accuses King Mountain and two co-owners of racketeering, seeks unspecified financial damages and an injunction to stop King Mountain from sending more cigarettes to Bloomberg territory. The mayor said yesterday that the case is "extending the fight" against tobacco tax evaders to out-of-state companies.

But King Mountain is arguing that Native American sovereignty gives the company a pass on state taxes for wholesale cigarettes. "The state has no jurisdiction," Kamiakin Wheeler, King Mountain CEO and son of co-owner Delbert Wheeler argues to the Yakima Herald-Republic.

"It's just wrong," Eric Proshanky, the lead attorney on the New York suit tells Seattle Weekly. He says federal law allows Native Americans to sell cigarettes to fellow tribal members without collecting tax. But that's the only tax exemption. He also says that King Mountain broke more than just tax laws, like a regulation that prohibits companies from shipping more than 10 pounds of cigarettes.

King Mountain plays up its Native American roots on its website, which calls tobacco an "intensely sacred and spiritual plant" used by Native Americans to ward off "negative spirits."

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