A federal judge sentenced Paul Rainbird, former lieutenant governor of San Ildefonso Pueblo, to 33 months in prison and fined him more than $90,000 for selling contraband cigarettes.
Rainbird, 58, who in the mid-1990s directed the Southwestern Association for Indian Arts, which sponsors the annual Santa Fe Indian Market, pleaded guilty in July to two felony charges and five misdemeanors related to selling untaxed discount cigarettes over the Internet from a location in Albuquerque.
Rainbird was sentenced Friday by U.S. District Judge Browning and must report to federal marshals this week.
Court documents show Rainbird's business sold more than $20 million worth of cheap cigarettes between 2003 and his arrest in 2008.
Before entering into the plea agreement, federal prosecutors alleged that Rainbird, through his business American Indian CigCo, evaded paying more than $7 million in cigarette taxes. The government says Rainbird's enterprise had more than 6,000 out-of-state customers in about 30 states.
The misdemeanor counts to which he pleaded involved failure to notify state officials in Illinois, New York and Maryland about his sales.
Rainbird admitted to using false documents to buy tax-free cigarettes from two Albuquerque wholesalers.
The fines imposed in his sentence include $60,000 to be paid to San Ildefonso Pueblo and $34,500 in restitution to the state Taxation and Revenue Department.
In addition to the prison time and fines, the federal government confiscated nearly $170,000 from four bank accounts, a 2001 Chevrolet Corvette, a 2004 Infinity FX and 4,829 cartons of cigarettes.
Rainbird isn't the only American Indian official who has been in the news in recent months over tax-free cigarette issues.
In May, state Attorney General Gary King's office contacted Gov. Susana Martinez about her secretary of the state Department of Indian Affairs.
Secretary Arthur Allison's Star Ranch Store in the Navajo Nation near Farmington was selling a brand of cigarettes online not certified for sale in New Mexico, and selling those and other brands without the required tax stamps, King said.
A month after notifying the governor, an Associated Press reporter was able to purchase the contraband Seneca buy cigarettes and others without a tax stamp at Allison's store.
Under a 2010 law, the state increased its cigarette tax by 75 cents a pack to a total of $1.66. However, the state agreed to give Indian retailers a continued price advantage by exempting them from 91 cents of the state tax if a tribe or pueblo levied their own tax of at least 75 cents. The Navajo Nation is one of three tribes that haven't certified to the state that they impose such a tax — though a spokesman for the governor has said the tribe has imposed a $1-per-pack tax.
The attorney general contends retailers on Navajo land must charge the full amount of state tax on buy cigarette online sold to non-Indians.
In July, Scott Darnell, a spokesman for Martinez, said, "So long as Secretary Allison remains the owner of the store, we will ask him to refrain from selling cheap cigarette online that do not bear a tax-exempt stamp while the administration continues to work through the legal complexities of this issue and seek to broker a certification agreement with the Navajo Nation."
At the time, Darnell said, Allison was planning to transfer ownership of the store to his son. Allison hadn't managed or operated the store for more than a year and hadn't received revenue from the store since he was appointed, Darnell said.
Darnell said Monday that the transfer of the store to Allison's son has since occurred.
King said in July that Allison's store would be investigated. On Monday, King's spokesman, Phil Sisneros, said Assistant Attorney General Nan Erdman, who handles cigarette-tax cases, wasn't available to brief him on the status of the investigation.
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