The Citizen staff report

An appeals court judge on Friday turned down the Cayuga Indian Nation's request for an immediate suspension of a lower court ruling this week that bars the tribe from selling untaxed cigarettes to non-Indian customers.

But the Cayugas' have been told their request for a stay of Judge Kenneth Fisher's latest decision will be considered by the Appellate Division on March 2.

The developments Friday were the latest twist in the attempts by district attorneys in Cayuga and Seneca counties to prosecute the nation for tax evasion related to the cigarettes it sells at convenience stores in Union Springs and Seneca Falls.

The Cayugas will cease selling cigarettes at least until the Appellate Division makes its next determination, said Lee Alcott, an attorney for the nation. He said the stores' employees have no way to know if a customer is an Indian or non-Indian, so out of “an abundance of caution,” it will not sell any cigarettes.

The Appellate Division, which is midlevel appeals court, will take up the broader issues in the case in May. In the meantime, the prosecutors have been prevented by an injunction from moving forward with their criminal cases, and at least for the next couple of weeks, the nation has been barred from selling untaxed cigarettes to non-Indians.

The back-and-forth legal motions and decisions originate from a November raid of the two stores conducted by law enforcement in the two counties. The DAs explained that they are pursuing a criminal investigation into alleged tax evasion.

The Cayugas challenged the legality of the raids and the investigation in state Supreme Court. Fisher, who had signed the original search warrants, ruled in favor of the counties, saying because the Cayugas do not operate the stores on legally recognized reservations, they are not exempt from the tax laws regarding cigarettes. The nation shut down its stores after that ruling.

The nation appealed that ruling to the Appellate Division and secured the injunction that put a temporary halt to the criminal case until the appeal is fully reviewed. Following that injunction, the Cayugas reopened the stores and began selling the untaxed cigarettes. Just before the injunction, however, a Cayuga County grand jury issued a sealed indictment in the case.

That led to Fisher's latest ruling that the sale of the cigarettes must stop. He also denied the Cayugas' motion to have the cigarettes and computers seized in the raids returned.

As a result, the Cayugas have said they will likely sue the counties for damages related to the seized cigarettes and the impact the case has had on their business's reputation.