Tulsa World: State sues smoke shops, officials

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State sues smoke shops, officials

FILES SUIT
Drew Edmondson: The attorney general's lawsuit, filed on behalf of the Oklahoma Tax Commission, alleges a conspiracy by several smoke shop owners and Creek Nation officials to violate federal and state laws on Oklahoma cigarette sales.

By OMER GILLHAM World Staff Writer
Published: 2/5/2009 2:35 AM
Last Modified: 2/5/2009 2:39 AM

The Oklahoma Tax Commission is suing more than a dozen Creek Nation smoke shop owners and several Creek Nation officials, alleging that they conspired to violate federal and state laws governing cigarette sales in Oklahoma.

Attorney General Drew Edmondson filed the lawsuit Wednesday in Tulsa County District Court.

The defendants include 15 individuals who own or operate Creek Nation- affiliated smoke shops, including Creek Nation Council member Steve Bruner. Additional defendants are Toney Lee, manager of Muscogee (Creek) Nation Tobacco Wholesale, and Garry Berryhill Sr., manager of Creek Nation Travel Plaza Enterprises.

Creek Nation Tobacco Wholesale is not licensed with the Oklahoma Tax Commission to sell tobacco products in Oklahoma, the lawsuit states.

The filing claims that "the object of the conspiracy was to produce unlawful profits and gain from the sale of cigarettes in violation of the Federal Contraband Cigarette Trafficking Act, the State Complementary Act and State Cigarette Tax Act."

The lawsuit highlights the bitter battle between the Tax Commission and smoke shop owners who have alleged that the state has not negotiated fairly with the tribe for a new tobacco compact.

For the past four years, the Creek Nation has refused to sign a new compact because it allegedly does not protect the historic tax advantage the tribe has had over nontribal retailers.

Without a tobacco compact, Creek-affiliated stores have created various methods of obtaining low-tax

cigarettes and cigarettes without state tax stamps to compete in the Tulsa area, a high-tax zone, a Tulsa World investigation has shown.

From the state's point of view, these methods are a conspiracy. In essence, the Tax Commission is alleging that Creek Nation Tobacco Warehouse is coordinating the sale and delivery of millions of packs of cigarettes without Oklahoma tax stamps and which are not listed on the state's master cigarette directory.

The list is derived from the Master Settlement Agreement, reached with cigarette manufacturers in 1998. Seneca, King Mountain and Skydancer brand cigarettes are being sold by the smoke shops but are not on the list, the World investigation showed.

Smoke shop owners from Muskogee, Broken Arrow, Holdenville, Okemah, Tulsa, Okmulgee and elsewhere are alleged to be buying and selling cigarettes without an Oklahoma tax stamp, court records state. Additionally, many of the smoke shops are selling low-tax cigarettes that should be reserved for smoke shops along the Oklahoma border in competition with the tax rates of bordering states.

The lawsuit alleges that between February 2007 and May 2008, Creek Nation Tobacco Wholesale purchased or had delivered 5,330,100 packs of unstamped cigarettes to its headquarters in Okmulgee. The cigarettes allegedly were purchased from Native Wholesale Supply Co. by way of Nevada International Trade Corp., the operator of a foreign trade zone in Las Vegas. The cigarettes were manufactured by Grand River Enterprises Six Nations Ltd.

An investigation by the Tulsa World in August revealed that Native Wholesale Supply was being sued by the state on allegations that it violated the Master Settlement Agreement. The lawsuit was filed in May in Oklahoma County District Court and moved to federal court Aug. 6.

The Tax Commission says the conspiracy is costing the state millions of dollars in tax revenues that are designated to be spent on health initiatives and to reduce the number of smokers in Oklahoma.

The state is seeking damages for the loss of tax revenues caused by the alleged conspiracy and the sale of low-tax cigarettes in high-tax zones, court records show.

Omer Gillham 581-8301
omer.gillham@tulsaworld.com

Defendants in suit

Defendants in the Tax Commission lawsuit against Creek Nation officials and smoke-shop owners

Coleta Larkin

Kay Evans

Vicki Escoe

Jess Harjochee

Janelle Carr

Gary Hudgens

Steve Bruner

Anthony “Tony” Henry

Tom Givens

Marie Lyons

Emma Jean O’Hern

Karen Goodson

Phyllis Noon

Scott and Ashley Carson

Toney Lee

Garry Berryhill Sr.

By OMER GILLHAM World Staff Writer

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	Report Comment my view, Sand Springs (2/5/2009 6:04:44 AM) Oklahoma is spinning it's wheels here I don't believe they have a chance of winning this suit. It should play itself out in the courts though, and put it to rest.
	Report Comment Gailmail, (2/5/2009 6:15:09 AM) It is unfortunate that getting sued is the only way to expose the state for being unfair in a compact settlement.
	Report Comment Mistic_wolf, tahlequah (2/5/2009 8:41:18 AM) I can not belive they are sueing over this. isn't there some other way??
	Report Comment okloneprairie, Bartlesville (2/5/2009 9:12:52 AM) Drew Edmondson is notorious for filing lawsuits. He constantly wastes our money for this type of thing and it has become tiring. I hope the Creek Nation wins in this particular case. Isn't he wanting to run for Governor? Lord, that's all we need! That may be why he is doing all of this...to get recognition. Edmondson reminds me of the past when we forced Native Indians to attend our schools and learn our language. I can't stand the man.
	Report Comment rezzdog, (2/5/2009 10:12:48 AM) If the Creek nation uses revenue from Cig and other retail sales to suplement tribal programs and services, such as they do, what does the state of Oklahoma plan to do when that revenue dries if they succeed in taxing the Tribes sales making their stores non-profitable?
	Report Comment Paro, (2/5/2009 12:30:21 PM) Hum, why don't the Creek government officers tell the truth to the public. They don't own smoke shops. They give individuals and communities licenses to own them. They get a measly little tax from the millions sold each year. Most Creek people think they own the smoke shops and they don't. They even allow non-Indian and white people who are not even tribal members to own and operate smoke shops. Stop the smoke screen and tell the truth Andy Ellis. Paro
	Report Comment okie ridgerunner, small town (2/5/2009 2:52:18 PM) Okla state greed is what it is all about. hope they lose.if they win they will give themselves a raise and take a nice vacation and go shopping.
	Report Comment droopy, wagoner (2/5/2009 4:37:20 PM) I can't wait until mr. edmondson loses his bid for gov. Then he can go back to filing bogus lawsuits in Muskogee, and finish running the town into bankruptcy.
	Report Comment Skeptic, Tulsa (2/5/2009 9:17:47 PM) It seems to me that Mr. Edmondson is doing the right thing for our state. I used to smoke and I used to buy cigs from Creek at 81st and Riverside. They often had the wrong tax stamp. I don't agree with droopy. If these folks are bypassing the law, Edmondson has the responsibility to seek a legal resolution. Offering different taxes on tobacco products around the state is sure to cause this kind of illegal activity by the tribes. Tax them all the same, no matter what their proximity to border towns of other states. Pity. Move!
	Report Comment indian cpa, Broken Arrow (2/5/2009 10:55:16 PM) Everyone knows at least 50% of the tobacco sold in Oklahoma is done so by tribal retailers. What the Tulsa World could investigate is why Oklahoma has never given a cent of master trust fund monies to the tribes in spite of the above statistic. That kind of coverage would take a real man, something out of the grasp of Omer or Clifton. What you are seeing today is the result of Quik Trip Corporation, who has never been able to handle tribal tobacco competition, purchasing outright state legislators from Tulsa to "level the playing field".

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