SEATTLE (AP) - Seven people, and a Native American reservation tobacco supplier being sued by a number of states, have been charged with arranging contraband cigarette shipments to an Indian-owned store without paying $28 million in Washington state taxes.

The charges, contained in two grand jury indictments issued in U.S. District Court in Seattle, center on accusations of untaxed cigarette shipment to the Blue Stilly Smoke Shop in Arlington, about 30 miles north of Seattle, a store described in court records as a hotbed of contraband tobacco dealing for years.

Blue Stilly's three founders, all former Stillaguamish tribal council members, were sentenced to prison in March for involvement in untaxed cigarette sales.

Charges of conspiracy to traffic in contraband cigarette and conspiracy to launder monetary instruments in the sale of untaxed cigarettes were filed last week against Rick Conn, owner of Studio City, Calif. cigarette brokerage Moorpark Ventures, and three distributors - Carol M. Silverman and Jay D. Silverman, owners of FTS Distributors in Murrieta, Calif.; and Matthew M. Cunningham, owner of MRC Enterprises LLC in Albuquerque, N.M.

They are accused of arranging with Robert Stuber, owner of Cowlitz Candy & Tobacco Co. Inc. of Longview, to ship more than a million cartons of cigarettes to Blue Stilly, first through his operation and then through a warehouse controlled by the Silvermans in Clackamas, Ore., between February 2005 and May 2007.

To avoid payment of more than $20 million in state taxes, the shipments were made to appear that the cigarettes came from Cunningham's company, according to the indictment.

Stuber, about 61, of Lake Havasu City, Ariz., pleaded guilty in February to selling untaxed cigarettes to Blue Stilly.

Laurence B. Finegold, a lawyer for Cunningham, said his client would plead not guilty when he appears in U.S. District Court on Sept. 24. Lawyers for Conn and Carol Silverman did not immediately return calls for comment.

In the other case, Arthur "Sugar" Montour Jr., 37, of Perrysburg, N.Y.; Peter Montour, 69, of Hamilton, Ontario, who has no known relation to Arthur; Kenneth Hill of Ohsweken, Ontario; and Native Wholesale Supply of Perrysburg and Gowanda, N.Y., initially indicted in June. Last month they were charged in a superseding indictment with conspiracy and 15 counts of contraband cigarette trafficking.

Arthur Montour, a former Seneca tribal council member who owns Native Wholesale, also was charged with seven counts of making a false declaration concerning a government effort to seize bank accounts. Investigators believed the accounts contained funds from Blue Stilly cigarette sales.

The Montours and Hill are charged with arranging to sell Blue Stilly more than 422,000 cartons of contraband cigarettes, avoiding more than $8 million in taxes by shipping the tobacco from a foreign trade zone near Las Vegas through a warehouse in Bosque Farms, N.M., between March 2003 and February 2008.

Hill pleaded not guilty last week, was released on $400,000 bond and was allowed to return to his home in Canada.

Angelo J. Calfo, Arthur Montour's lawyer in Seattle, would not immediately comment. A Native Wholesale receptionist who did not identify herself said Montour was not available to comment, and no one else from the company responded to a request for comment Wednesday.

In a court appearance in Seattle in July, Montour denied lying about his involvement with Blue Stilly.

Each charge in both cases carries a maximum penalty of five years in prison and a $250,000 fine. The government also is seeking forfeiture of $4.1 million that Native Wholesale is said to have been paid by Blue Stilly.

Native Wholesale is the U.S. distributor for Seneca and Opal cigarettes, two of the most popular brands sold in reservation smoke shops nationwide, typically at far lower prices than charged by off-reservation cigarette retailers. Seneca is advertised as "all natural and chemical free."

Opal and Seneca are made by Grand River Enterprises Six Nations Ltd. of Ohsweken. Hill is Grand River's chief marketing officer, and Peter Montour is a sales representative for Native Wholesale. Peter Montour's son, Jerry Montour, is chief executive of Grand River.

Thirty state attorneys general have brought legal actions accusing Grand River of skirting its requirements under a nationwide master agreement covering the tobacco industry, and the federal government is suing the company for $18.4 million under the same agreement, which was negotiated in 1998 and requires tobacco companies to make annual payments to the state and federal governments.

At least three of the state cases are lawsuits filed against National Wholesale in August and September 2008 by Idaho, Oklahoma, and New Mexico.

National Wholesale, in turn, has sued the state attorneys general in U.S. District Court in New York state and is asking an international tribunal to award damages from the U.S. government under the North American Free Trade Agreement.