Montco liquor firm among four to pay $9 million for gifts to LCB officials
The nonprosecution agreements resulted from a 2012 investigation by the Pennsylvania Inspector General's Office.
Four wine and liquor dealers, including one in Montgomery County, have agreed to pay penalties totaling $9 million to avoid prosecution for giving gifts to officials of the Pennsylvania Liquor Control Board.
The non-prosecution agreements were announced Thursday in Harrisburg by U.S. Attorney Bruce D. Brandler, the federal prosecutor for central Pennsylvania.
Brandler said the agreements were based on the cooperation of the four liquor vendors and their employees, implementing internal compliance policies, and refraining from similar conduct in the future.
The companies are:
Southern Glazer's Wine & Spirits of Pennsylvania, a subsidiary of Southern Glazer's Wine & Spirits of Miami. Southern will pay $5 million for employees who provided cash, trips, tickets to shows and sporting events, and other gifts to LCB officials from 2000 to 2012.
White Rock Distilleries Inc., formerly of Lewiston, Maine, and now in Londonderry, N.H. The company will pay $2 million for cash, gifts, and trips to LCB officials from 2000 to 2011.
Breakthru Beverage Pennsylvania, formerly Capital Wine & Spirits, of New York City. The company will pay $2 million for conduct between 2007 and 2012.
Pio Imports of North Wales, Montgomery County. Pio will pay $200,000 for providing gift cards to LCB officials between 2007 and 2012.
Pio, which is owned and operated by the third generation of the Pio family, released a statement through its attorney, Francis X. O'Brien, noting that under the nonprosecution agreement "Pio Imports does not acknowledge criminal liability. [Pio] has agreed to the payment of a fine, and will work with authorities to ensure the PLCB can continue to serve consumers in a manner consistent with good government."
According to Brandler, the conduct of the four companies ended in 2012 when the state Inspector General's Office reported to then-Gov. Tom Corbett and the Ethics Commission that three LCB officials had accepted gifts and favors from vendors and other businesses with an interest in liquor. The LCB, which regulates the sale of alcoholic beverages in the state, is also the official wholesaler of alcoholic beverages to restaurants, bars, and other retail businesses.
After the Justice Department's announcement, LCB Chairman Tim Holden and board members Mike Negra and Michael Newsome issued a statement Thursday saying that the LCB "has been fully cooperative with the U.S. attorney's investigations over the last two years, and these companies' admissions of unethical behavior occurring from 2000 to 2012 are a matter the PLCB is taking very seriously. …
"Following investigations into former PLCB employees who violated state ethics standards, in 2014 the PLCB clarified and reissued its employee code of conduct, and developed a new and separate code of conduct for wine and spirits vendors. Although we already had one of the strictest employee conduct codes in Pennsylvania state government, the unethical actions of a few cast a temporary shadow over the agency. As a result, the PLCB has embraced the opportunity to regularly remind employees of their ethical obligations and foster a culture of awareness and the highest standards of integrity among its employees and suppliers.
"The board is disappointed at the action of all parties involved, who violated the trust of the agency and Pennsylvanians."
The LCB regulates the distribution of beverage alcohol in Pennsylvania, operates more than 600 wine and spirits stores statewide, and licenses 20,000 alcohol producers, retailers, and handlers.
In 2014, the Ethics Commission determined that gifts totaling $23,000 had been accepted by the LCB's former chairman, Patrick J. Stapleton III; former CEO Joseph Conti; and former marketing director James H. Short Jr.
The commission ordered all three to reimburse the state for the gifts; all three resigned.
In September 2015, Short pleaded guilty to a federal charge of honest services fraud before a federal judge in the Middle District. No date has been set for Short's sentencing.