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Tobacco Barons Charged In U.S.

Also charged in the conspiracy is a U.S. company called Native Wholesale Supply and its owner, Art Montour Jr. (no relation), a former band councillor on the Seneca tribe's reservation south of Buffalo. Hill, Peter Montour and Art Montour Jr. are long-standing business associates.

Two of the founding partners of Six Nations cigarette maker Grand River Enterprises are facing 16 charges related to trafficking of contraband discount cigarettes in the United States. A U.S. grand jury in the state of Washington has indicted Ken Hill of Ohsweken and Peter Montour of Hamilton, alleging they were part of a conspiracy to supply tens of millions of contraband cigarettes for sale over a five-year period to a smoke shop on native land just north of Seattle.

Hill and Montour are facing 15 counts of trafficking in contraband cigarettes and one count of conspiracy to traffic in contraband cigarettes. Each count carries a maximum penalty of up to five years in prison, as well as the possibility of a fine. The U.S. district attorney is also seeking a forfeiture order of nearly $5 million US, which represents allegedly unpaid cigarette taxes.

The two brands of cigarettes mentioned in the criminal charges are Seneca and Opal. According to the 27-page indictment, Peter Montour acted as a sales representative for Native Wholesale Supply in addition to his role as GRE's manager of sales. The indictment also states that both Montour and Hill received a share of profits from Native Wholesale Supply.

Hill is GRE's chief marketing officer. Hill and GRE CEO Jerry Montour, Peter's son, are the largest shareholders of the Six Nations company and in past legal documents they described themselves as GRE's controlling shareholders. Attempts to reach Hill and Peter Montour through their lawyers and the Grand River Enterprises office were unsuccessful.

Hill is scheduled to make his first appearance in a Seattle courtroom today. Peter Montour's first court appearance has been delayed because of his medical problems. The court is considering a request by Montour to appear via a video link from a courtroom in Buffalo because Montour's frail health is preventing him from travelling to Seattle. Montour, 69, underwent open heart surgery in May, suffers from diabetes and hypertension and is also scheduled to undergo a hip replacement in December.

According to the indictment, Native Wholesale Supply and the three men supplied contraband cigarettes from March 2003 to February 2008 to a smoke shop called Blue Stilly without paying the applicable cigarette tax owed for each pack. The Washington state tax for cigarettes for sale was $1.43 per pack until June 30, 2005 and $2.03 per pack after that date.

The indictment alleges the Blue Stilly smoke shop was advised to order the contraband cigarettes from a company in New Mexico, and then the cigarettes would actually be shipped from a warehouse in Las Vegas to the smoke shop, without the proper Washington state tax stamp and without the taxes paid.

The indictment also states that even after law enforcement officers raided the Washington smoke shop on May 15, 2007, and seized all contraband cigarettes, the supply of illegal smokes to the shop continued. In 1997, Peter Montour was convicted of cigarette smuggling in Ontario and fined $640,000, believed at the time to have been the largest penalty ever for smuggling in the province.

Art Montour Jr. is also facing seven additional charges of making false declarations before the court. Native Wholesale Supply is facing a $18.4 million US lawsuit launched by the U.S. Department of Agriculture over unpaid online cigarettes assessments.

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