$30 Milllion From Poospatuck to Costa Rica?

Now here’s an interesting sequence of events. You go to an Indian smoke shop on the 55-acre Poospatuck Indian Reservation in Mastic where the Indians live in small bungalows or trailers, and thinking you might help them out and help yourself too, buy a carton or two of cigarettes. You save money because you don’t have to pay the State taxes. They make money because, well, they have no competition in selling the cigarettes without the taxes. Shops off the reservation have to pay the taxes.

The Indian reservations in this state, here on Long Island at the Poospatuck Reservation and the Shinnecock Reservation, have been selling smokes without charging taxes for 30 years or more. Their argument is that on the reservation they don’t report to the United States of America. So far, anyway, in spite of lawsuits from various merchants and some legal opinions, the State has declined to step in and cut off what appears to many to be the Indian’s sole source of income.

Well, on the larger Shinnecock Reservation, this much-needed income has indeed helped the population as a whole in many ways, but on the Poospatuck Reservation, it now seems to have been a whole different matter. [expand]

There have been hints of this. The Gristedes food chain sued over the failure to collect the cigarette tax saying it was costing them millions every year. New York’s Mayor Bloomberg filed papers saying that several hundred million dollars a year in cigarette taxes were not coming his way. There is little visible improvement in the way of life there. Well, then, where was the income going?

Two years ago, Rodney Morrison, who ran the Peace Pipe Smoke Shop on the Poospatuck Reservation, was tried and convicted of operating a bootlegging scheme involving the sale of untaxed cigarettes. The cigarettes weren’t just being sold in the shop, they were also being sold, in bulk, from behind the shop to be resold in New York City. But an Appeals Court Judge overturned the conviction, saying Morrison did not have clear knowledge that what he did was illegal.

On the other hand, Morrison had also been convicted of a weapons charges. And he is currently in prison serving a 10-year sentence because of that. He had also been charged with murder, arson, extortion and robbery, but was acquitted of those charges.

Although the smoke shop operation continued after Morrison was sent off, the Philip Morris Company announced it would no longer sell its cigarettes to the Poospatuck cigarette shops. It’s main competitor, Lorillard, did not follow suit, however. So you can buy some brands at the Poospatuck shop, but not others.

Now, an arrest has been made in Costa Rica that appears to explain all this in a very clear way. The arrest was announced in Newsday last week, the day after the arrest was announced in Costa Rica.

It seems that Rodney Morrison’s half-brother, Carlos Pascall, who used to work at the Poospatuck Smoke Shop with Morrison, arrived in Costa Rica a few years ago and began behaving as a rich businessman. He bought a hotel, a supermarket, a discotheque, a restaurant, and also a major Costa Rican professional soccer team called the Limon Futbol Club. People respect a big tycoon when he comes to town like that.

Now Pascall is in jail and has been ordered held in jail for the next six months while Costa Rican authorities gather the evidence to support what they have charged him with. He’s accused of money laundering, which as you know is figuring out a way to bring a whole lot of money from one place to another in hocus-pocus fashion so nobody knows about it.

According to Costa Rica’s chief prosecutor in the case, Hernandez Ramirez, Pascall’s money came from Morrison, just before Morrison was arrested and charged here in the United States. He said that Morrison knew the cops here in America would be coming. He knew they’d be looking for the money he’d made. And so he gave it to his half-brother and sent him off to Costa Rica. Pascall has dual citizenship.

Here’s the amazing part. The authorities say the amount involved is $30 million. That’s a hell of a lot of cigarettes. And a hell of a lot of money appears not to have trickled down to the rest of the tribe in any meaningful way.It also speaks volumes about what may have been trucks pulling up to the little smoke shop in the middle of the night to meet other trucks pulling up to the smoke shop in the middle of the night, with Morrison counting the money as the middleman. There are those that say that as much as 10% of all the cigarettes sold in the City of New York do not bear the State tax stamp on the bottom and are believed to have passed in and out of the gates of the Poospatuck reservation in Mastic.

In Costa Rica, Pascall, taken from his home and put under arrest, said, “I am calm, my money is legitimate. I am open to any investigation.”

After Pascall’s arrest, a reporter went to the executive offices of Lorillard, the other giant cigarette manufacturer, to ask if now with these new developments, will Lorillard, like its major competitor, refuse to sell cigarettes to the Poospatucks.  “Cigarette manufacturers should not be expected to police the trade in untaxed cigarettes,” a representative for Lorillard said in explaining why they will not do this.

The real lesson here is for the Shinnecocks. With federal recognition last year, the Shinnecocks are now poised to make huge amounts of money running gambling casinos in this state. There are other tribes in upstate New York and in Connecticut that have done so. It has not been lost on anyone, particularly the Shinnecocks, that there is a good way to use this money and a bad way and there are examples of each.

Some tribes benefit hardly at all with the money made. Most of it goes to making certain tribal members and certain investors very rich. But then there are other tribes in this state that have used the new prosperity to benefit everyone, with ownership shares for everyone and dividends announced, with new schools, cultural programs, educational programs, health facilities, roads, restaurants, housing and other services.

Tribes stay together. Or they should. Here’s another reason. [/expand]

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