GOWANDA — Native Wholesale Supply Company, Inc. has responded to Monday’s announcement from New York Attorney General Letitia James’s office naming it as one of two companies agreeing to a $50 million settlement after allegedly selling cigarettes without paying the required state excise taxes.
Over the last three months, Native Wholesale and Grand River Enterprises Six Nations, Ltd. have negotiated in good faith to bring to closure unsubstantiated and unproven allegations brought by the attorney general’s office in 2014, the company said in a statement Wednesday.
After eight years of ongoing litigation among the attorney general, Grand River and Native Wholesale, with no decision on the merits in favor of the attorney general, a stipulation and a proposed stipulated judgment and order to settle this complex lawsuit were recently submitted to U.S. District Court Judge Richard J. Arcara of the Western District of New York for consideration and approval, the statement said.
“In this dispute, the attorney general’s office claimed that sales of cigarettes by Native Wholesale to certain Native American Nations situated within the geographic borders of the state were subject to state regulation and taxation,” the company said.
Native Wholesale, as well as the manufacturer of those products, Grand River, vigorously objected to and adamantly denied such claims, the statement said. As part of Native Wholesale’s Chapter 11 plan of reorganization, the company allowed those claims to proceed in federal court.
“The settlement announced Monday brings an end to that litigation, without any admission of wrongdoing or liability by the companies,” the statement said.
The settlement payments are to be paid solely by Native Wholesale and are not denominated as payment of back taxes, the statement said. They are payments that the parties agreed are payments of disputed claims payable under the trust set up in accordance with the Chapter 11 plan of reorganization.
“Native Wholesale and Grand River have at all times maintained and continue to maintain that the transactions at issue do not and did not violate any federal or state laws, particularly in view of well-established sovereign and treaty rights established with the federal government,” the statement said.
Additionally, Native Wholesale is not and never has been a wholesaler or distributor of Grand River, at all times been owned and operated independently and separately, the statement said. No financial obligation under the proposed settlement is, has been or could have been imposed on Grand River via the litigation or this settlement.
“The settlement and payment of the settlement amount from the trust established pursuant to Native Wholesale’s’ Chapter 11 plan of reorganization allows the company and the state to move on and put this unsettled issue of resolving the state’s claims in the plan of reorganization to rest,” the statement said.
The settlement further reiterates and contemplates that both defendants shall continue to operate in accordance with applicable law, including reporting and record-keeping requirements with which both parties have maintained and continue to maintain that they are and remain in compliance. The terms of the settlement recognize the importance and need of the manufacturing, sale and distribution of tobacco products to the Native American economy.
