Federal agents are investigating allegations that two Uni-Mart stores were illegally selling tax-free cigarettes in Salamanca.
And the Seneca Nation, which is cooperating with the federal probe, recently padlocked the stores and on Thanksgiving Day took over the buildings.
Law enforcement officials said the two stores, on Wildwood Avenue and on Broad Street, have been under investigation for months by the U.S. Bureau of Alcohol, Tobacco, Firearms & Explosives and federal prosecutors.
"We're actively investigating any businesses like this that may be illegally trafficking in cigarettes and trying to defraud the state out of revenues," said David DeJoe, a supervisory special agent with the ATF.
DeJoe said he could not comment in detail on the probe, but he confirmed that he was present on Tuesday, when agents searched two Salamanca homes of people allegedly involved in the unlawful sales.
Authorities said they are investigating allegations that, for years, an enrolled member of the Seneca Nation has been acting as a "front" for operators of the stores.
"The Senecas terminated the Uni-Mart leases, effective Thursday," said a Seneca Nation source. "A non-Seneca cannot use our tax-free status to sell cigarettes and gasoline."
Authorities said Seneca President Maurice A. John is fully aware of, and cooperating with, the ongoing investigation. Authorities said Seneca leaders are upset that some "outsiders" have illegally taken advantage of the nation's ability to sell untaxed tobacco and gasoline.
Federal agents, accompanied by Seneca police marshals, visited a home on Front Avenue, where nearly a dozen police vehicles were seen Tuesday afternoon.
In a written statement released to the news media, John said: "The Seneca Nation will continue to cooperate with federal and state authorities. The Nation has little sympathy for outsiders who take advantage of our members, their native rights and the Nation's treaty-protected jurisdiction, for their own private benefit."
Representatives of the nation's import-export business were also at the scenes of the ATF searches. That agency, through a Seneca law, imposes a fee on tobacco products imported into the Seneca Nation prior to retail sales.
Proof of payment of the fee is secured through a Seneca Nation import stamp on each pack of cigarettes and other tobacco.
In 2005, Uni-Mart stores in Salamanca and a third in Little Valley began operations. Officials involved in running the stores could not be reached to comment Saturday.
The two Salamanca stores, at 215 Broad St. and 555 Wildwood Ave., once advertised on outside banners, "Native owned tax free business," offering tax-free cigarettes and gasoline until they closed unexpectedly Oct. 10.
Several weeks later, the Seneca Nation posted each property with signs barring public trespass. They have since terminated the land leases for the two city stores, citing lease violations.
The Little Valley store also remains closed.
Another recent ATF investigation into the alleged use of Seneca "fronts" for tobacco sales led to more than 30 convictions, including that of Page Martin, a Salamanca tobacco wholesaler who was sentenced to 27 months in prison in 2005. Martin, a non-Seneca, also agreed to pay $3 million in fines and restitution.