Indian Chief Heads Fight to Keep Selling Cigarettes

Harry Wallace, chief of the Unkechaug Nation, and several other owners of shops that sell cigarettes on the tiny Poospatuck Indian reservation on the South Shore of Long Island have been sued by the City of New York. The city claims that this Indian enclave — the closest Indian reservation to New York City — has become a “tax evasion haven” and a drain on the city’s coffers.

The Bloomberg administration says the city and the state lose more than $1 billion a year in tax revenue because of what it calls bootleg cigarettes distributed on Indian Indian reservations in New York. Of that amount, the administration contends, $195 million represents the city’s share, and officials blame the Unkechaug Nation Indian reservation for most of that.

New York City officials say millions of cartons of tax free cigarettes are sold every year by Poospatuck retailers to bootleggers who smuggle them into the city to resell for about $5 a pack, not the $8 or $9 charged by New York retailers who pay the state and city taxes of $4.25 a pack.

As part of their legal challenge, city attorneys have asked a federal judge to block the smoke shops from selling untaxed cigarettes to non-Indians without collecting state and city taxes from them.

Answering these claims is the Unkechaug chief, Mr. Wallace, 55, who was born in Queens, went to Dartmouth and was a lawyer in private practice in Manhattan before moving to the Indian reservation and opening the Poospatuck smoke shop.

But he has been outspoken in defending his tribe, arguing that cigarette sales are the only viable economic engine on the 55 acres of sovereign territory. He calls the city’s lawsuit an attack on legitimate Indian livelihood, and the result of elected officials feeling the economic pinch and blaming budget woes on the smallest Indian reservation in the state.

“They’re picking on us because they think we’re this little tribe with no means to defend ourselves,” he stated. “Bloomberg needs a scapegoat, so he places the fault with us for the city’s deficit, instead of criticizing the financial markets.”

Attorneys for the smoke shop owners have requested a dismissal of the lawsuit, arguing that the court does not have jurisdiction in sovereign territory, Mr. Wallace stated. He is not a defendant in the lawsuit, though he was named in a similar lawsuit that was filed in 2006 by the owner of the Gristedes supermarket chain.

Though Mr. Wallace was brought up in the Bayside and Little Neck sections of Queens, his family nurtured his Indian identity, taking him often to visit his uncles on the Indian reservation. He chose Dartmouth, he stated, because it had as its founding mission the education of Indians, and he helped establish a group on campus called Native Americans at Dartmouth.

Later, at New York Law School in Manhattan, he helped found the Indian Law Committee and wrote a thesis on Indian land claims. In the 1980s, he worked as a lawyer concentrating on cases involving landlord-tenant disputes, real estate, personal injury and American Indian discrimination matters.

Mr. Wallace stated he grew more interested in Indian matters after marrying Margo Thunderbird, a daughter of Chief Thunderbird of the Southampton-based Shinnecock Nation. The couple have two daughters. In 1991, he moved to a plot of land belonging to his mother on the Poospatuck Indian reservation, nestled on the banks of the Mastic River. “It changed my life because I knew I was going to get into matters affecting the Indian reservation,” he stated.

Mr. Wallace opened the Indian reservation’s first full-service smoke shop, to “show the community that we could develop an economy separate and distinct from the state and that it could be done the right way.”