Wednesday, August 27, 2008
Smoke Shop Raided in Tax Scam
By Mike Gallagher
Journal Staff Writer
Federal agents raided an Albuquerque business suspected of selling more than $20 million of untaxed cigarettes over the Internet under the guise of an American Indian smoke shop.
According to federal search warrants executed Tuesday, American Indian CigCo. at 1600 Lomas NW sold hundreds of thousands of cartons of repackaged brand-name cigarettes over the Internet and failed to pay more than $6.3 million in state cigarette taxes.
The current state tax on a package of cigarettes is 91 cents, and most American Indian cigarette retailers pay a tax to the tribe instead of the state.
Federal agents believe the company, doing business under the name Silverbird Smokeshop, was able to undersell reservation and off-reservation cigarette retailers.
Agents of the Bureau of Alcohol, Tobacco, Firearms and Explosives also executed search warrants on the homes of employees and seized company bank accounts.
The company bought cigarettes wholesale from Costco and other suppliers, claiming its owner was a member in good standing of San Ildefonso Pueblo who was registered to do business on the reservation.
According to the search warrant affidavit, the wholesale companies believed they were selling to a tribal business on a reservation.
But according to ATF surveillance, the company operated out of a building near Albuquerque's Old Town. ATF agents said their investigation showed the company sold the cigarettes nationwide over the Internet through the company's Web site.
Agents watched as the cigarettes were shipped out in bulk through the post office in quantities so large the Postal Service sent a truck to pick them up.
No arrests have been made.