Update on Investigation of PLCB Officials

Four companies to pay a total of $9.2 million in fines

by Linda Jones McKee
wine distributor fine pennsylvania plcb

Harrisburg, Pa.—Two distributors, a distiller and importer paid hefty fees to avoid prosecution in what has been called the “pay-to-play” scandal in which Pennsylvania alcohol regulators accepted gifts in exchange for stocking state stores with certain products.

The U.S. Department of Justice announced July 27 that four suppliers of alcohol to the Pennsylvania Liquor Control Board (PLCB) will pay fines totaling $9.2 million for gifts to three top officials at the PLCB. Bruce Brandler, U.S. Attorney for the Middle District of Pennsylvania, noted that the four suppliers will not be prosecuted after they pay their fines, in part because of the companies’ cooperation in the investigation.

The four companies, their fines and gifts given include:
• Southern Glazer’s Wine and Spirits of Pennsylvania. Fine: $5 million. Gifts: cash, all-expenses paid trips, tickets to shows and sporting events between 2000 and 2012.

• Breakthru Beverage Pennsylvania (formerly Capital Wine and Spirits). Fine: $2 million. Gifts: gift cards, tickets, meals and entertainment to officials.

• White Rock Distilleries. Fine: $2 million. Gifts: gift cards, tickets, meals and entertainment to officials.

• Pio Imports (based in North Wales, Pa.). Fine: $200,000. Gifts: gift cards.

These fines are another (but not the final) chapter in the PLCB “pay-to-play” scandal originally revealed in 2012. The Pennsylvania Ethics Commission’s investigation at that time stopped the gift-giving, and the commission’s full report was published March 17, 2014.

The ethics commission found that three top PLCB officials violated the ethics law by accepting and not reporting various gifts from alcohol marketers and others. The commission then ordered the three officials to pay the state for the various gifts they had accepted. Former PLCB chairman Patrick J. Stapleton III had to pay $7,258.92; former chief executive Joe Conti, $2,388.51; and former marketing director James H. Short Jr., $13,582.92.

As the director of marketing and merchandizing, Short was responsible for supervising the process by which alcoholic beverages were selected and acquired for sale in the PLCB stores. He was indicted by a grand jury in August 2015, pled guilty and was convicted in U.S. District Court to the charge of Honest Services Mail Fraud on Sept. 16, 2015.

To date, Short has not been sentenced. He faces up to 20 years in prison and a $250,000 fine.

After the U.S. Department of Justice’s announcement regarding the fines and non-prosecution agreement with the four companies, the current PLCB chairman, Tim Holden, and board members Mike Negra and Michael Newsome issued a statement that read, in part: “The PLCB has been fully cooperative with the U.S. Attorney’s investigations over the past two years, and these companies’ admissions of unethical behavior occurring from 2000 to 2012 are a matter the PLCB is taking very seriously. The Board has called senior leadership of each the three companies still supplying wines and spirits to Pennsylvania into PLCB headquarters in the immediate future to discuss the settlements and determine how the agency and these suppliers can move forward preserving the highest ethical standards.”

According to Elizabeth Brassell, communications director for the PLCB, White Rock Distilleries in Lewiston, Maine, is no longer in business. White Rock was sold in 2013.

The statement also noted that “the PLCB clarified and reissued its employee code of conduct and developed a new and separate code of conduct for wine and spirits vendors.”

Until last year, Pennsylvania was a “control state” that allowed sales of liquor and wine only at “state stores” owned by the Commonwealth of Pennsylvania and operated by the PLCB. Legislation in 1968 permitted “Limited Wineries” to produce and sell up to 250,000 cases of wine per year. A law passed in 2016 permits grocery and convenience stores that already sell take-out beer to sell up to four bottles of wine to a customer. In addition, licensed restaurants, hotels, bars and delis are permitted to sell the same quantity of take-out wine.

The PLCB continues to operate more than 600 wine and spirits stores and to regulate the distribution of beverage alcohol in Pennsylvania.


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