NYC Sues Tobacco Dealer

Source from:  courant.com April 9, 2008  04/09/2008

The city has gone to court in an attempt to punish a tobacco wholesaler it accuses of fueling the region's trade in black-market cigarettes. Its lawsuit claims that Queens wholesaler Gutlove & Shirvint Inc. violated the federal Contraband Cigarette Trafficking Act by disguising shipments to one of its best but most notorious customers, an Indian reservation smoke shop whose owner is being tried on murder and racketeering charges. The Long Island store, called the Peace Pipe Smoke Shop, has continued to operate despite the arrest of its owner on charges that he waged a violent campaign against rival tobacco sellers on the Poospatuck Indian Reservation. Federal agents say the store has grossed as much as $35 million per month selling tax-free cigarettes, enough to make its owner, Rodney Morrison, a millionaire many times over, with Swiss bank accounts and substantial real estate holdings overseas. The government has taken no action to shut Peace Pipe, but tobacco giant Philip Morris USA decided in December that it would no longer allow wholesalers to supply the store with cigarettes. The city's lawsuit, filed Friday, claims that Gutlove initially agreed to the restrictions, then secretly evaded them by arranging to have other retailers upstate take shipments on Peace Pipe's behalf. The city claims that some 44,745 cartons of cigarettes were delivered to the store over three months, including some funneled through fictitious companies. One truckload of cigarettes bound for Peace Pipe was seized by state tax agents on March 12. A lawyer for the wholesaler said Tuesday that his client had no such secret deal with the store and had reported all its sales lawfully. Enditem