Federal grand jury reviewing Liquor Control Board violations, sources tell Trib
A federal grand jury is investigating whether employees of the Pennsylvania Liquor Control Board had improper relationships with wine and spirits vendors doing business with the agency, according to sources close to the investigation.
Current and former LCB employees are being questioned in the probe, the Tribune-Review has learned.
Sources said the investigation is looking at issues raised by the state Ethics Commission, which found four former LCB officials violated the Ethics Act and state Liquor Code when they accepted gifts and lavish trips from liquor vendors and failed to disclose them on financial reports. Those sources said the grand jury's investigation appears to be looking at issues and individuals beyond those identified by the commission as well.
LCB spokeswoman Stacy Kriedeman said the agency would not be given notice of the investigation because federal grand jury operations are confidential. Since the ethics reports was issued, the agency has focused on educating employees about proper conduct with vendors, she said.
John Burkoff, a University of Pittsburgh law professor, said there are a number of federal statutes the grand jury could use in justifying its authority to investigate LCB operations, but it's hard to know for sure while the jury is operating in secret.
A significant pattern of wrongdoing or potential violations that cross state lines could prompt federal officials to look into the case, he said. Earlier this year, the Ethics Commission found the former top-ranking LCB officials guilty of taking all-expense paid trips to Florida and California, golf outings across Pennsylvania, high-end merchandise and fancy meals, all on the dime of executives and sales people at national wine and spirits companies.
The rounds of golf, dinners and hospitality gave vendors direct, informal access to influential LCB employees who played a variety of roles in selecting what wines and spirits would line the shelves of more than 600 state-owned liquor stores across Pennsylvania.
Through negotiations with the former officials' attorneys, the Ethics Commission agreed not to recommend charges in its report. The commission ordered the men to repay more than $23,000 collectively and file amended statements of financial interest.
All four employees left the LCB before the ethics reports became public.
• Former marketing director James H. Short Jr., 49, of Susquehanna Township, Dauphin County, was ordered to pay $13,583. He accepted all-expense paid trips to Pebble Beach, Calif., and two to Naples, Fla., as well as gifts including wine and liquor, an iPad and gift cards to high-end stores.
• Former board Chairman Patrick “P.J.” Stapleton III, 58, of Malvern, Chester County, was ordered to pay $7,259. He accepted meals and entrance to several golf outings and tournaments, some designed specifically to let vendors “have face time with PLCB officials” while golfing with them.
• Former CEO Joe Conti, 60, of Doylestown, Bucks County, was ordered to pay $2,389. The commission found he, too, attended golf outings sponsored by vendors and accepted gifts of sports tickets and an engraved bottle of Johnnie Walker Blue.
• Former director of product selection Matthew Schwenk, 35, of Hershey, Dauphin County, was fined $500 for two years' worth of incomplete financial disclosure forms. The commission found he attended trips to Pebble Beach and Naples at the direction of Short. The commission said he believed his job was in jeopardy if he refused, so he was not held liable for repaying the cost of the trips.
“I can't comment, as I'm sure you can understand,” said Christopher Hall, the attorney for Short, when asked about the grand jury investigation.
Henry Hockeimer, the attorney for Stapleton, said he was unaware of the probe. Matthew Haverstick, the attorney for Conti, said, “We haven't been contacted by anyone in law enforcement.”
Schwenk did not return a call seeking comment.
An ethics official said this week there was “significant interest” in the commission's findings from prosecutors and confirmed that records and documents associated with the investigation were turned over to prosecutors and had made their way to the grand jury.
Sources spoke to the Trib on condition of anonymity because grand jury operations are secret unless or until an indictment is issued recommending charges.
Officials from three vendors — Southern Wine & Spirits, Capital Wine & Spirits and Allied Beverage Group — provided the majority of gifts and trips to LCB employees. Those companies collectively account for about one-third of the products sold by the LCB, the ethics reports show.
Lee Hager, executive vice president and chief administration officer of Southern, said he “has heard nothing at this point” about the company's involvement in the federal investigation.
Capital Wine & Spirits and Allied Beverage did not respond to requests for comment.
Kriedeman said the LCB has revised its employee code of conduct, developed a new vendor code of conduct and conducted presentations “to make sure both sides were aware of what is permissible.”
“All of our employees were required to acknowledge that they received and understand it,” Kriedeman said. “Educating our employees will be an ongoing process but one we take very seriously. It is critically important that we, as an agency, maintain the highest ethical standards.”
Kari Andren is a staff writer for Trib Total Media. She can be reached at 724-850-2856 or firstname.lastname@example.org.