AUBURN - The decision in a legal challenge filed by the Cayuga Nation claiming that two of their businesses were illegally raided on Nov. 25 for untaxed cigarettes will not be released until next week.

State Supreme Court Judge Kenneth Fisher, who signed the search warrant that authorized last week's raid, said Wednesday that he wanted to review information before issuing a decision.

Fisher heard arguments from the Cayuga and Seneca county district attorneys and lawyers representing both the sheriffs' offices that executed the raids and from the tribe's representatives.

At the center of the issue is whether or not the Lake Side Trading stores in Union Springs and Seneca Falls are on a Cayuga Nation reservation and if the counties are allowed to enforce cigarette excise tax laws, even if the state chooses not to.

If the counties are allowed to enforce the excise tax, the district attorneys will be able to file felony tax evasion charges against the nation after seizing more than 3.5 million untaxed cigarettes last week.

If Fisher determines the counties overstepped their authority, the nation has requested that the judge issue an injunction preventing another raid in addition to ordering investigators to return the confiscated evidence.

The tribe, along with other Indian nations in New York, have claimed they are exempt from collecting sales and excise taxes on their property because their businesses are protected by their sovereign nation status.

Cayuga County Chief Assistant District Attorney Christopher Valdina said that even though the state rejected requests to help local law enforcement agencies with last week's investigation, that did not mean the taxes could not be collected.

“The fact that the state said it will not enforce its own law does not does not release us from enforcing them,” Valdina said. “The district attorney is still obliged to enforce the law.”

Robert Megna, state Department of Taxation and Finance commissioner, said Gov. David Paterson declined a request from Cayuga County DA Jon Budelmann and Seneca County DA Richard Swinehart to participate in the investigation and instead opted to continue negotiations with the Indian nations regarding land claim, sovereignty and tax issues.

Margaret Murphy, an attorney for the Cayuga Nation, said the reason why the state chose not to get involved was because there was no legal basis to enforce the excise tax on the tribe due to a court injunction imposed on a section of the tax law.

The injunction was issued by state Supreme Court Judge Rose Sconiers in 2007 because state government never produced or issued coupons that would be used to exempt American Indians from the excise tax. In a written decision, Sconiers said it would be impractical to enforce the law until American Indians had access to the coupons.

Budelmann said the injunction was only issued on the excise tax collection mechanism of the law, and not the requirement to tax state citizens.

“The injunction does not exempt the sale of untaxed cigarettes to non-Native Americans,” Budelmann said. “The injunction does not effect the enforcement provision of the law.”

Another issue was whether the two stores were on a congressionally-recognized 64,000 acre reservation established by President George Washington in 1794, Murphy said.

“The land these stores are on is owned by the Cayuga Nation, and it is in that reservation,” Murphy said.

Philip Spellane, an attorney representing the sheriff's offices from Cayuga and Seneca counties, said that according to U.S. and state Supreme Court rulings, the land was no longer recognized as a reservation.

“They have made an application to put the store's land into trust,” Spellane said. “If the land was sovereign, there would be no need for them to do that because it would already be sovereign.”

According to the 1934 Indian Reorganization Act, tribes can establish or add land to their reservation by purchasing it and asking the federal government recognize it as sovereign territory.

While the lawyers made their arguments inside the Cayuga County Court House, nearly 30 residents from Cayuga and Seneca counties marched in front of the building's entrance.

Passing cars honked as they drove by protesters who lined the street to show their support for both sides by displaying signs that read “Swinehart, run your re-election campaign on your own money,” or “One nation, one country, one people.”

Most of the protesters supporting the Cayuga Nation were employees from Lake Side Trading, while those who came out to support taxing the nations were from Seneca County's Citizen's Advisory Committee.

“We are here strictly to send a message to Gov. Paterson to enforce the law,” said Brad Jones, a CAC chairman. “Our message is to enforce the tax law equally for everyone, it's as simple as that.”

B.J. Radford, the chief operating officer of the Cayuga Nation's businesses, said she was protesting to ensure the judge knew people supported the stores.

“I believe that what has happened in the last week is an attempt by the district attorneys in Seneca and Cayuga counties to make a name for themselves,” Radford said. “I want the judge to know that a large number of people support us and that this is a case of a silent majority vs. a vocal minority.”

But former Seneca Falls business owner Marjorie Baker said the issue is deeper than just collecting taxes, it's about ensuring equality.

After operating the Finger Lakes Returnables convenience store and recycling center with her husband, Floyd Baker, for 15 years, Baker said she was forced sell her business after the Cayuga Nation opened Lake Side Trading.

The month before the tribe's store opened, her business made $40,000 in cigarette sales, Baker said. The month after the store opened, sales dropped to nearly $15,000 as customers opted to go for the cheaper, untaxed products offered by the tribe.

“This decision will affect people's children and grandchildren in the future,” she said. “With a huge state deficit, this is tax money we could use to support our programs. This is a huge injustice; America is supposed to be a country based on equality, justice and fairness. Allowing them to sell untaxed cigarettes is not fair for other businesses.”

Staff writer Nate Robson can be reached at 253-5311 ext. 248 or nathan.robson@lee.net