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HEMI GROUP, LLC, and HAl GACHUPIN, Petitioners, - V. - CITY OF NEW YORK, Respondent: BRIEF IN OPPOSITION TO PETITION (PDF) 

QUESTION PRESENTED

Does State government and its subdivisions have standing under RICO because lost tax revenue may constitute an injury to "business or property" in accord with the statute and relevant authority? . . .

Respondent, the City of New York ("the City"), brought four civil actions under the Racketeer Influenced and Corrupt Organizations Act, 18 U.S.C. ¤ 1961 et seq. ('RICO"), against various defendant out-of-state cigarette retailers, including the instant petitioners, the Hemi Group and Kai Gachupin ("petitioners"). The City alleges that petitioners actively schemed to defraud the City of tax revenues through the sale of cigarettes to City residents over the Internet. By refusing to report purchases by City residents as required under the Jenkins Act, see 15 U.S.C. ¤ 375 et seq., and advertising that concealment and representing the cigarettes as "tax-free," petitioners commit mail and wire fraud, see 18 U.S.C. ¤ 1341, 1343. As a result, the City is unable to collect use taxes owed on the sales and petitioners have thus injured the City of New York through lost tax revenues. . . .

The City alleges that petitioners: (1) advertise their cigarettes over the Internet to City residents, (2) ship the orders by common carrier or the United States Postal Service into New York City, and (3) refuse to comply with the Jenkins Act registration or reporting requirements (10a). The City further alleges that petitioners' failure to comply with the Jenkins Act is an essential part of their business model because the savings that customers obtain from buying the cigarettes online are almost entirely attributable to the fact that the New York State and City taxes are not included in the cigarettes' sales price (lOa).

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