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    Cigarette Wholesaler Guilty of Smuggling

    Page Martin, of A.D. Bedell Co., pays $3 million fine and awaits sentencing early next year for using Native American smoke shops to distribute tax-free cigarettes.

    BUFFALO, N.Y. -- A cigarette wholesaler brought a $3 million check to federal court Wednesday as part of a plea agreement in a smuggling case that cost New York and Michigan an estimated $30 million in tax revenues.

    The money is meant to cover court-imposed fines and forfeiture orders handed down to Page Martin and his Salamanca, N.Y.-based A.D. Bedell Co. when they are sentenced early next year, the Associated Press reported.

    Martin and the company, which serves more than 1,100 convenience stores in New York and Pennsylvania, pleaded guilty to racketeering for using an Indian reservation smoke shop to put an estimated 2.3 million cartons of untaxed cigarettes worth upward of $70 million into the hands of non-Indian smugglers for resale in New York and Michigan.

    "They supplied the cigarettes. They had knowledge they were going off the reservation," Assistant U.S. Attorney William Hochul said.

    Martin and his company were among nearly three-dozen defendants named in a 102-count indictment in 1999. Fifteen have pleaded guilty to charges including racketeering, money laundering and smuggling, Hochul said. Martin is the lone stockholder of the 100-year-old family wholesaler. In addition to the fine, he faces a prison term of at least 27-33 months in prison -- longer if he does not fulfill a promise to the government to cooperate in future prosecutions.

    A.D. Bedell Co. is a licensed cigarette-stamping agent, responsible for placing excise tax stamps on all cigarettes except those destined for Indian reservations, where they are tax-exempt. The smuggling scheme began after Michigan raised its cigarette tax from 25 cents to 75 cents a pack in September 1994, the report said.

    Hochul detailed a scheme in which Martin would have Bedell employees deliver tens of thousands of untaxed cigarettes to Roseine's smoke shop on the Seneca Indian Nation's Cattaraugus reservation in western New York. A small portion of the cigarettes would be sold legitimately by Roseine's to reservation customers. The rest were divided and distributed to paying smugglers, some of whom were retail storeowners who would sell them at their stores at increased profit margins.

    "Defendants knew that cigarette smugglers were paying for the cigarettes delivered to Roseine's smoke shop in cash, checks and money orders," the plea agreement said. "On occasion, defendant Martin instructed employees of defendant A.D. Bedell Co. to wait at Roseine's smoke shop and not return until the employees had received full payment for the untaxed cigarettes."

    Authorities estimate the scheme cost New York state $12.75 million in cigarette excise tax revenues between 1995 and 1997 and Michigan just under $17.1 million.

    On Tuesday, a former Bedell warehouse manager pleaded guilty to conspiracy to commit money laundering for his role in the case. Richard Emke, of Salamanca, admitted supervising the segregation of cigarette stocks into orders marked with code names of the smugglers. He is likely to receive probation.

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