Ky. company contests federal cigarette seizures

Christie Moore, a Louisville attorney representing Chavez Inc., said the owners were "shocked and saddened” by the search and seizures.

"Chavez, Inc. intends to challenge the government’s unwarranted actions and hopes to once again open its doors, service its customers and provide employment to its employees,” Moore said.

Moore said in court filings that federal investigators seized $4 million in tobacco products, along with the company’s computers, business records, cars and bank accounts.

The company, run by Israel Chavez of Louisville and his ex-wife, Pam Chavez of Stockton, Calif., said the warrants, executed by the Bureau of Alcohol, Tobacco Firearms and Explosives and U.S. Postal Service inspectors, effectively shut down the business.

Moore said no indictment is expected until May or June at the earliest.

"Substantially all of the personal and business assets of Petitioners are now in the hands of the government,” Moore said in the motion.

The U.S. Attorney’s Office in Louisville declined comment because there has been no indictment in the case. The U.S. Postal Service in a statement said it does not comment on ongoing investigations. A message left for the ATF was not immediately returned on Friday.

Chavez Inc. sold cigarettes outside the state of Kentucky online and through a toll-free number. Moore said the company sold less than 10,000 cigarettes per shipment, meaning a Kentucky tax stamp wasn’t required.

The federal government has cracked down in recent years on contraband cigarettes — smokes sold by people and businesses through illegitimate channels to avoid paying local, state and federal taxes. The company’s Web site says it is "no longer conducting business.”

The Department of Justice, the ATF’s parent agency, estimates that federal, state and local governments lose out on $5 billion annually in tax revenue from cigarettes sold through illegitimate channels.

In the motion, Moore said what is publicly known about the warrants is insufficient to justify the search and seizure of her clients’ property.

"Indeed, the warrants contain nothing more than boilerplate language claiming that sealing the affidavits is necessary due to the potential that other coconspirators may be identified,” Moore wrote.