Republic National Distribution Co. and three employees were indicted by a federal grand jury, charged with transferring and moving liquor from Maryland, where the state excise tax rate for liquor was about $1.50 a gallon, to New York, where the rate was $7.44 a gallon, for retail sale.
In announcing the indictment, the Justice Department said the scheme defrauded the state and City of New York and registered New York liquor wholesalers.
In a statement, Tom Cole, RNDC president, said the company “emphatically denies these allegations and looks forward to our day in court where we will demonstrate that the prosecutors’ accusations are based on erroneous assumptions, unsubstantiated theories, and represent an unprecedented attempt at federal government overreach.”
The employees indicated are Eugene Gerzsenyi,the Assistant Director of Operations for RNDC at its Jessup, Md., office; Jason Lockerman, a salesman for RNDC and Lisa Robbins, an accounting manager.
The 23-count indictment alleges that from at least June 2009 through June 2012, a number of New York liquor retailers communicated with several retail liquor stores in Cecil County to order cases of wine and liquor.
People working at the Cecil County retailers then passed the orders to RNDC though salesmen, including Lockerman. The indictment alleges that Lockerman and the other RNDC salesmen knew that the liquor was intended for retail sale in New York, and they transmitted those orders to RNDC to be filled.
According to the indictment, RNDC delivered the ordered liquor to the Cecil County retailers, where it was held for the New York retailers. The New York retailers and their agents then picked up and transported the liquor to New York, where it was sold to customers without the New York excise taxes being paid.
The indictment alleges that RNDC, Robbins, Gerzsenyi, and Lockerman facilitated the payment to RNDC for liquor that was moved from RNDC, through the Cecil County retailers to the New York retailers and their agents. Specifically, RNDC submitted invoices to the Cecil County retailers that included the amounts owed to RNDC for the liquor that had been delivered to the New York retailers and their agents. The New York retailers paid the Cecil County retailers in cash, which the Cecil County retailers deposited into their business accounts. The Cecil County retailers then paid RNDC by check.
The indictment alleges that RNDC, the New York retailers, and the Maryland retailers, did not register as liquor wholesalers or distributors in New York; did not provide monthly reports of the quantities of liquor shipped into New York for retail sale; and did not pay New York excise taxes. In addition, RNDC allegedly filed false reports to the Maryland State Comptroller’s Office, indicating that all liquor sold to the Cecil County retailers was intended for resale in Maryland.
The indictment seeks forfeiture of all proceeds traceable to the scheme, including a money judgment of at least $9 million.
If convicted, the company and the individual defendants face a $250,000 fine, and the individual defendants also face a maximum sentence of 20 years in prison, for wire fraud conspiracy and each of four counts of wire fraud. If convicted of the money laundering counts, the indictment seeks forfeiture from RNDC of the funds involved in those offenses. No initial appearance has been scheduled for the defendants.
In his statement, RNDC’s Cole said that the indictment isn’t supported by facts, and is a “rogue effort by a federal agency to seize control of the state regulation of liquor sales in violation of longstanding law. The wholesale distribution of beverage alcohol in the U.S. is the most effective and efficient system of adult beverage distribution in the world today, ensuring product integrity and safety, sales to only licensed retailers, and an effective method of tax collection for local, state and federal authorities.”
In announcing the indictment, the Justice Department noted that an indictment is not a finding of guilt. An individual charged by indictment is presumed innocent unless and until proven guilty at some later criminal proceedings.