Feds return cigarette shipment to Fresno County tribe

The federal government has returned a $610,000 shipment of cigarettes that was intercepted in Southern California en route to the Big Sandy Rancheria in February.

The tribe’s lawyer says authorities didn’t explain why they relented and returned the cigarettes, which arrived at the rancheria late Thursday night.

“After evaluating the situation they decided to return the property,” said Darcie Houck, the tribe’s Sacramento-based lawyer.

Big Sandy Rancheria owns a tobacco distribution company that sends cigarettes to about 60 tribes throughout California. Tribal Chairwoman Elizabeth Kipp said she was “ecstatic we got our product back.”

Kipp said the tribe has received some smaller deliveries since the big shipment was seized, but Big Sandy wasn’t able to satisfy all its orders and had to send customers to competing distributors.

The tribe is considering whether to file legal action against the government because it lost business while the cigarettes were confiscated, Kipp said.

Cigarette distribution is the main income generator for the eastern Fresno County tribe perhaps best known for its Mono Wind Casino in Auberry. Its 349 slot machines make it the smallest tribal casino in the region.

Agents confiscated the load under the Contraband Cigarette Trafficking Act; the government contends there was no evidence of payment of applicable state and local taxes, and that the company the tribe bought the cigarettes from isn’t certified by the state.

But the tribe contended that it was not required to pay taxes, and isn’t required to have a state license as long as it only wholesales its product to other tribes and isn’t bound to deal only with state-approved distributors.

Nonetheless, the tribe in 2008 applied for a state license to distribute cigarette and tobacco products. At the time, a business tax representative for the state Board of Equalization told the tribe it was “technically not required to apply for a California distributor’s license due to the fact that you are under a sovereign nation.”

And in a November email to Kipp, a federal official says Big Sandy’s importer operating permit was valid even though it had expired, because the tribe had applied in a timely manner for a new permit that had not yet been processed.

The federal government’s only word on handing back the cigarettes is in a three-paragraph legal filing this month in U.S. District Court in Los Angeles. In it, government lawyers say the feds won’t “pursue forfeiture of the cigarettes at issue in this case.” No further explanation is offered. In the same document, the U.S. Attorney’s Office tells U.S. Customs and Border Protection officials “to request an expedited return of the seized cigarettes.”

Federal officials could not be reached for comment Friday.

The tribe went to the same L.A. court last month asking to get the cigarettes back. According to the tribe’s legal motion, the government’s first seizure notice claimed the tribe was smuggling and was not a state-licensed wholesaler, and the manufacturer, a Canadian company, was not recognized in California under the Prevent All Cigarette Trafficking Act.

The California Tobacco Directory lists tobacco products from seven countries that can be sold in California, including Armenia and Paraguay, but Canada is not named. The tribe says it isn’t restricted by the California Tobacco Directory because it’s trading with other tribes, which are sovereign nations.

A revised federal government notice issued at the end of March made no reference to smuggling or the trafficking law, the tribe’s motion stated.

In its March 26 “amended notice of seizure,” the government says the tribe engaged in money laundering, use of criminally derived property and unlawful acts.

The cigarettes were confiscated from a tractor-trailer rig traveling on Interstate 15 east of Barstow on Feb. 9 by plainclothes U.S. Customs and Border Protection agents. Authorities stored the cigarettes in a Riverside warehouse and even though they are perishable, Kipp said, she doesn’t expect the products to be damaged because they have a shelf life of more than two years.

The tribe says the cigarettes were acquired from a bonded warehouse in New York state after being brought to the warehouse from the Six Nations Reserve in Canada, where the cigarettes are manufactured by an Indian industry.

The Six Nations Reserve is just north of the New York border in the province of Ontario.

The Canadian-American border has been a hotbed for cigarette smuggling for 15 to 20 years, but Six Nations has not figured prominently in the investigations, according to Canadian and American news accounts.

This story was originally published May 22, 2015 at 2:48 PM with the headline "Feds return cigarette shipment to Fresno County tribe."