Dear Peter,

Please allow this correspondence to serve as a follow up to my letter to you dated 9/15/2000.

Also, enclosed is a copy of an article based upon a portion of the CMSA and the issue of “buy downs.”

Apparently, Lorillard Tobacco Co. and ATN Marts Inc. are attempting to take your office to task for correctly addressing the issue of “buy downs.”

Their argument is that because Lorillard “bears the cost of it’s own promotional discounts, not the wholesalers or retailers,” the promoted cigarettes are not being sold below cost.

The truth, however, is that buy downs are an antitrust violation and gimmick that only “benefit” few high volume outlets in a selective manner based solely upon a stores weekly carton volume sales, excluding hundreds of thousands of outlets in New York state, that do not compensate the state for the losses of N.Y. State Sales Taxes upon the “discounted” difference between the regular full retail price and the discounted price.

And in each and every store that advertises their cigarette prices to be at “State Minimum,” each and every package and carton of cigarettes sold at the “buy down” discounted price is sold in violation of N.Y. States minimum price statutes, as is occurring in Connecticut and states all across the country.

This results in the loss to the state of New York of anywhere from two cents upwards to twenty cents or more PER SALE of each and every illegally discounted package or carton of cigarettes.

Yet smaller stores right next to these larger volume stores are completely excluded from these buy downs and suffer an enormous loss of sales of cigarette products and thus reduce the normal, expected and legal receipt of the full N.Y. State Sales Tax revenues to your treasury.

Lorillard Tobacco Company has a good reason for trying to get you from delving further into this matter, as there are dozens more where “buy downs” come from.

And this practice not only continues to this day but has occurred for many, many years resulting in the loss to New York state of BILLIONS of Dollars in N.Y. State Sales Tax revenues alone, not to mention dozens of other state sales tax violations and other tobacco industry Fraud & False Claims losses in New York state.

Also, a Mr. Dietz, a c store distributor, is attempting to allude to “competition” as a justification for allowing state sales tax fraud and antitrust violations which would allow monopolies to only his retail and wholesale store customers over smaller volume and independent stores from also realizing a reasonable profit from a legal, fair traded, minimum priced cigarette product being sold uniformly across New York state.

Mr. Dietz would prevent protection for smaller volume and independent outlets that retail tobacco products from such monopolies by the use of these illegal, selective and antitrust practices based solely upon being able to supply just his outlets with these “discounted” goods over other businesses expecting “fair trade” in the sale of tobacco products to be applied equally to all outlets regardless of a stores “weekly volume.”

If you poll each and every retail outlet in, say, Buffalo, N.Y., you will find that the majority of those outlets either have never been offered a “buy down” by any of the tobacco companies (as Lorillard is not the only tobacco company that practices that illegal tactic) or have never even seen a tobacco company representative ever, in years or even on a regular basis as compared to those stores with, say, “weekly volumes” of 150-200 cartons or more.

The Shuster Project web site makes mention of “buy downs” briefly on this page of our web site:

http://rxshuster.org/consum_target.htm

Along with other pricing tricks and antitrust violations, as I attempted to state in my last letter to you, there are dozens of issues you have yet to discover and act upon.

Although you are not our only “best hope” for establishing a working model by which states can effectively and swiftly recover multiple BILLIONS of defrauded Dollars based upon the fraudulent business practices of the tobacco companies, you were among the first to express an extended interest in both our web site, it’s contents and the extensive work we are doing to provide the states with a potent platform of corrective initiatives and informative documentation that certifies the credibility of both our facts and of our address to these issues.

Almost two months have passed since our last correspondence with no apparent indication that your office is going to work with us to go forward and to provide New York state with the recovery of Billions of Dollars in defrauded State Income Tax Revenue losses, State Sales Tax Revenue losses and to finally establish legitimate Income Streams based upon needed corrections to just the business fraud aspect tobacco industry Fraud and False Claims practices.

As we continue to work on these and other issues, I can only say that I will not wait beyond the end of November of this year to establish a working relationship with your office and our attorneys to begin the work that lies ahead.

We continue to research and locate the officials of any state that purports to be attempting to address the “health-related” issues of tobacco industry Fraud with sincerity, for the majority of the ones we come across have absolutely no idea of the vast non-health related issues we present in our web site.

Because I am only one individual with a small but dedicated staff, my ability to travel and provide assistance on these issues is limited.

As a result, I will dedicate our resources and my personal assistance to a choice few until we can launch a working model by which a greater volume of states, their Attorneys General and other Tax Revenue officials can utilize in order to recover their multiple Billions of Dollars in various, defrauded Tax Revenues and other Income Streams and so they can also implement the needed corrections in order to realize enormous, “new,” legitimate Income Streams as a result.

I look forward to hearing back from you in this matter.

As is our custom, this correspondence will be placed into our Correspondence 2000 section for public review.

Once work begins between your office and our attorneys, we will archive any correspondence between us and understandably delay the release and display of such correspondence.

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