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Judge issues preliminary injunction in Pa. AG's case involving tax-free cigarette scam

By Jon Campisi | Jun 28, 2013

HARRISBURG, Pa. (Legal Newsline) -- A federal judge in Harrisburg has issued a preliminary injunction preventing the shipping, transporting, receiving or distributing of unstamped cigarettes destined for Pennsylvania or other states.

The move comes after the state Attorney General's Office filed a civil suit against four individuals for selling contraband cigarettes through websites allegedly set up to avoid paying state tobacco taxes.

The suit was filed earlier this month against William Achord, Wendy Boon and Philip and Heidi Jimerson at the U.S. District Court for the Middle District of Pennsylvania.

U.S. District Judge John E. Jones, III, had previously issued a temporary restraining order in the case, and also froze the bank accounts tied to the online entities, identified as NativeBlends.net, Savontobacco.com, SovranSolutionsOnline.com, Members Service Payment Center, Allegany Sales and Marketing, and Cloud and Company.

Jones also ordered that the companies preserve all paper and electronic transaction records, according to the Attorney General's Office.

Attorney General Kathleen Kane's office had stated that the temporary restraining order was expected to remain in effect until trial.

On June 24, the court docket in the case shows, Jones converted the temporary restraining order to a preliminary injunction enjoining the defendants from engaging in the conduct alleged in the civil suit, and agreed to by the parties in an earlier stipulation.

In that stipulation, the four individuals subject to the civil suit have agreed to stop Internet sales of cigarettes in Pennsylvania and other states.

Jones canceled a preliminary injunction hearing that had originally been scheduled for June 25 following the signing of the stipulation.

The June 21 stipulation, the record shows, was signed by Daniel J. Gallagher, a deputy attorney general with the Tobacco Enforcement Section of the Attorney General's Office, defendant William Achord, who appears to be representing himself pro se, and lawyer Elizabeth A. Holmes, of the Buffalo, N.Y., firm Lipsitz Green Scime Cambria LLP, who represents Wendy Boon and Philip and Heidi Jimerson.

Kane's suit alleges that the defendants sold cigarettes through the various websites with instructions that consumers would not be subject to state tobacco taxes if they bought their product through the aforementioned companies.

The main entity, Sovran Solutions Online, boasted that the company didn't have to comply with the requirements of the Prevent All Cigarette Trafficking Act of 2009 because it was based in Panama, the Attorney General's Office claims in the civil action.

The suit claims that the defendants ignored rules and regulations with regard to how cigarettes may be legally sold in Pennsylvania, and that they misrepresented the legality of the sales and ignored the law having to do with the fire safety of cigarettes.

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