Friday, June 14, 2013
Four sued for selling contraband cigarettes without paying taxes
HARRISBURG - Attorney General Kathleen G. Kane today announced the filing of a civil lawsuit against four people who were selling cigarettes online. Kane says the online business was set up simply to avoid paying state cigarette taxes.
William Achord, Philip Jimerson, Heidi Jimerson, and Wendy Boon are named in the suit. They sold cigarettes through the following entities: NativeBlends.net, Savontobacco.com, Sovran Solutions Online.com, Members Service Payment Center, Allegany Sales and Marketing a/k/a Allegany Sales, and Cloud and Company.
Consumers who visited the website NativeBlend.net were told that they would be subject to "NO STATE TAXES, NO REPORTS to anyone EVER and NO Surprise Tax Bills." All purchases made on these sites were made through an entity called "SSO: The Private Cigarette Buyers Club" (Sovran Solutions Online).
According to investigators, Sovran Solutions Online website boasted that they did not have to comply with the requirements of the Prevent All Cigarette Trafficking Act of 2009 because they were based in Panama.
Consumers were encouraged to set up accounts for the buyers' club, but in reality, investigators say, payments to the "buyers' club" were deposited in a bank in Nebraska. The cigarettes were then ordered from a warehouse in New York, and were shipped from facilities in Arkansas, Missouri, and Nebraska - not Panama.
Additionally, the defendants ignored rules and regulations regarding how cigarettes may legally be sold in Pennsylvania. They also misrepresented the legality of the sales and ignored the law regarding the fire safety of the cigarettes, according to state investigators.
The Attorney General's complaint alleges violations of a series of Federal and State laws, which include the Prevent All Cigarette Trafficking Act of 2009, the Contraband Cigarette Trafficking Act, the Tobacco Product Manufacturer Directory Act, the Unfair Trade Practices and Consumer Protection Law, the Cigarette Fire and Safety and Firefighter Protection Act, and the Pennsylvania Delivery Sales statute.
On June 13, 2013, Judge John E. Jones, III, of the Federal Court for the Middle District of Pennsylvania, in Harrisburg, granted a Temporary Restraining Order which freezes the assets of the defendants and forbids further sales. The suit also seeks monetary damages and civil penalties.
The Commonwealth's case is being handled by Deputy Attorney General Daniel J. Gallagher and Deputy Attorney General Sharon K. Rogers of the Attorney General's Tobacco Enforcement Section.
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