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Kansas charges Winnebago chairman

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WINNEBAGO, Neb. ? Two gas hauling trucks owned by Ho-Chunk Inc., a business arm of the Winnebago Tribe of Nebraska, were seized by the state of Kansas for failure to pay gas taxes.

Criminal charges were filed against John Blackhawk, tribal chairman and Lance Morgan, executive director of Ho-Chunk Inc., on April 11., the day after the civil action.

The attack is causing an outcry of foul play and a breakdown in government-to-government relations.

The Kansas Department of Revenue claims that HCI Distributing, owned by Ho-Chunk Inc., owes the state .25 million in unpaid gasoline taxes. It ordered the seizure of two trucks and the arrest of the drivers, who were released on ,000 bond.

On April 11 the state filed a six-count criminal charge against Morgan and Blackhawk in District Court in Topeka, Kansas. The six counts represent monthly non-payment of taxes for October 2001 through March 2002.

The complaint states that HCI Distribution, Morgan and Blackhawk unlawfully failed and neglected to pay the taxes to the Director of Revenue within the time required by the state.

Morgan said the charge was the state's way of resolving its previous civil action.

HCI Distributing transports motor fuel from Nebraska to Kansas tribes with convenience stores. The Kansas State Highway patrol seized 10 trucks on the same day from another gasoline company.

HCI Distributing has an agreement with two tribes in Kansas and the gasoline was sold only to those tribes. Tribal officials are charging that this seizure was a blow to government-to-government relations nationwide.

"They turned a realistic dispute on sovereign rights into a criminal matter and filed criminal charges," said Morgan

"How can they interfere with one tribe selling to another? The Treaties provide trading rights, Kansas knows this," Morgan said. "They issued a warrant and seized the trucks without a hearing."

Not only did the warrant ask for payment of the back taxes from Ho-Chunk Inc. it personally named Morgan, his wife Erin Morgan and Blackhawk. The warrant states that all personal property of the Morgans and Blackhawk are to be sold to recoup the amount of the back taxes. The charges against the Morgans and Blackhawk are civil misdemeanors. Those charges carry a maximum penalty of a ,000 fine and one year in jail if found guilty.

"These are bully tactics, nothing but bully tactics. They couldn't get their way because we were outsmarting them and they sicced the state troopers on us," Morgan said.

He said the tribe is unwilling to bend to the state's will.

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"It's something we hate to do, but from time to time it is necessary," said Stephen Richards, secretary of the Department of Revenue.

The state held a news conference to announce the bust. Richards said the parties had been notified of the delinquent taxes and were properly warned. Morgan said he had tried to get hold of the state during the day on April 9 and 10 but there was no return call. Gayle Martin, spokesperson for the state Department of Revenue, said both sides' attorneys have been communicating since the seizure took place.

Richards said it was the largest seizure involving unpaid motor fuel taxes in the state.

"At the press conference they hid the fact that we were a tribal company. They didn't discuss the fact that we were a tribe. By making it look like it's just another company avoiding Kansas' law, they think they are taking the high ground. It's a very poor tactic," Morgan said.

The only tribe not involved is the Citizen Band Potawatomi. HCI Distribution sold gasoline to the Sac and Fox, Kickapoo and Iowa tribes.

A five-year battle over taxes on reservations in Kansas ended in a court case that ruled in favor of the tribes. Tribal officials said they do not understand the state's action, since the precedent favors them in court.

"This is getting so painful. The state had been demanding that taxes be collected on tribal trust land, they present the sense that the tribes are doing something unfair and they tried to stop them," Morgan said.

The Kansas Attorney General filed criminal charges against HCI Distributing and two of its truck drivers. Mary Tritsch, spokesperson for the Attorney General's office said that James L. Knox, driver, was charged with unlawful delivery of fuel without a permit. Knox was released on ,000 bond. The other driver was not identified.

State Troopers stopped the fully loaded truck on a state highway. They ticketed the other truck, which was empty, when it stopped for repairs.

HCI Distributing and Ho-Chunk Inc. signed a tax agreement with the state of Nebraska in January after one year of negotiation. Nebraska agreed to negotiate taxation on the reservation. HCI Distributing collects the fuel taxes on the tribally owned convenience stores and turns over 25 percent to the state.

Kelly Lake of the Nebraska Motor Fuels Department said the state was willing to negotiate to avoid litigation like that undertaken in Kansas that lasted for years. The tribes eventually won.

"There are many benefits on both sides. It was win ? win," Lake said.

Kansas has now confiscated more than 0,000 of HCI Distribution's property, which belongs to the Winnebago tribe.

Tribal leaders spent April 10 discussing legal strategy but as of press time gave no word about their next move. Tribal leaders said they believed the state acted illegally in seizing the property and issuing the warrant for payment of back taxes.

"These battles are a chess game. The tribe moves, the state moves. This is the final move for the state; there is really no harsher alternative," Morgan said. "My guess is if we don't solve this in a week it won't be solved for a few years."