SEATTLE (August 10, 2010) – Jury finds SGB client Kenneth Hill not guilty of all 16 counts charging him with conspiracy and violations of the Contraband Cigarette Trafficking Act (“CCTA”) in the matter of USA v. Arthur Montour, Peter Montour, Kenneth Hill, and Native Wholesale Supply, United States District Court, Western District of Washington, Case No. CR09-0214MJP.

Mr. Hill is one of seven owners of Grand River Enterprises (“GRE”), a native owned and operated cigarette manufacturing company located on the Six Nations reserve outside of Hamilton, Ontario. His company imported cigarettes into the United States by selling them to Native Wholesale Supply (“NWS”), another completely native owned company on the Seneca Reservation in upstate New York. The company and its owner, Arthur (“Sugar”) Montour were also indicted. Mr. Hill was represented by Jeff Robinson and Colette Tvedt of Schroeter, Goldmark & Bender.

The basic allegation is that Washington state has a law requiring anyone who transports unstamped cigarettes in the state to pre-notify the state of such transportation. During the six years covered by the indictment, the clients never pre-notified the state of any shipments of their cigarettes into the state. However, there was a reason for that. It started when GRE sold cigarettes to NWS. The cigarettes were sent from Canada to a free trade zone in Las Vegas, Nevada, which held the cigarettes until all customs and federal taxes were paid. NWS sold cigarettes to several distributors, including one in New Mexico. All distributors were completely native owned and on native land. The distributor in New Mexico then sold the cigarettes to smoke shop in Arlington, Washington. The owners of that smoke shop did not collect the required state tax from its customers, and, as a result, sold cigarettes much cheaper than other stores. The smoke shop owners made millions of dollars of profit by failing to collect the tax, and the defense established that not one penny of it went to the clients. Additionally, as the director of marketing for GRE, Mr. Hill spent most of his time between 2003 and 2008 in Germany marketing cigarettes and building clientele for a new manufacturing plant, which had nothing to do with selling cigarettes in the state of Washington.

Aggressive and persistent motions practice revealed a document that the government failed to disclose to the defense. This document seemed to indicate that the big tobacco companies had not filed pre-notification forms during the same time period covered in the indictment. Judge Pechman ordered additional discovery and depositions. As a result of those depositions, the defense discovered that RJR, Phillip Morris, Liggett, and Lorillard did not file pre-notification forms for the billions and billions of cigarettes that they shipped into the state of Washington between 2003 and 2009. Further, when this was discovered by the state of Washington, big tobacco received notice of wrong doing but were not indicted. The Six Nations Native Americans were.

After many motions, a seven-day trial, and two days of deliberation, the jury announced its verdict. On the second day, August 10, 2010, at 4:00 PM, the jury reached a verdict as to one defendant, but was hung on the other two. They found Mr. Hill not guilty on all charges, and were hung on the other two defendants.