John Kane, a native broadcaster and the host of "Let's Talk Native", on WWKB 1520 said agents from the Bureau of Alcohol, Tobacco, Firearms and Explosives went through Wolf's Run Trading's building and took owner Will Parry, a tobacco wholesaler, into custody. He said they initially handcuffed several employees but later released them.
The raid, near the center of the reservation, 50 miles south of Buffalo, started late Wednesday morning and was about cigarettes, Kane said.
An ATF spokesman had no immediate comment.
An employee at Wolf's Run Trading on Wednesday evening said Parry was there but wasn't taking any phone calls.
The U.S. attorney in Kansas City, Mo., has filed a civil forfeiture complaint for untaxed cigarettes targeting distributors there and identifying 20 people involved including Parry and the owners of three tobacco businesses on the Tonawanda Seneca reservation, 25 miles northeast of Buffalo.
The complaint said that Parry owns a smoke shop on the reservation and that he's not a licensed wholesaler authorized to bring cigarettes into New York.
The ATF in 2009 started an investigation into the illegal sales of contraband cigarettes in the Kansas City area, using undercover agents to sell cigarettes that they tracked, according to the complaint. The ATF noted most states, including New York, require a stamp on cigarettes bought by retailers for resale to the public.
Tribes have challenged in court New York's cigarette taxes as an interference with their sovereign rights.