Liqour selections

Pa. Liquor Control Board officials got dibs on high-end bourbon lottery scraps

Thousands of Pennsylvanians are trying their luck by entering the state’s limited Liquor Control Board occasional sweepstakes in hopes of a chance to purchase a limited bottle of premium wine or spirits.

In 2019 and 2020, however, for Pennsylvania Liquor Control Board member Michael Negra and four of the agency’s high-level employees, luck wasn’t necessary to claim their bottle or two.

Negra, one of three board members, and employees had the opportunity to purchase some of the coveted bottles left over from the lotteries before the public even knew there were any bottles up for grabs.

A state Ethics Commission investigation found that this sharing of confidential information did not violate the Ethics Act “due to insufficient clear and convincing evidence of pecuniary benefit.”

Although the commission concluded that there was no wrongdoing, the attention to the practice prompted the PLCB to launch an internal investigation and immediately change its practice.

The Ethics Commission in its orders released Monday said Negra; Cliff McFarland, Director of Supply Chain; Tom Bowman director of product selection; Bryan Kelleher, Business Development Office Manager for Wholesale Operations; and Carl Jolly, a retail operations manager, agreed not to “purchase any items offered by the Pennsylvania Liquor Control Board outside of the process by which a Commonwealth resident may purchase such items.”

PLCB spokesman Shawn Kelly said the agency cooperated fully with the ethics investigation. In mid-2020, the agency changed its practices to ensure that all products available through a limited release lottery are distributed strictly through drawings “and they are now never released for general sale to anyone. it would be”.

According to the ethics commission report, former PLCB marketing and merchandising director Dale Horst recommended the agency end second-chance draws for the few broadcast lottery wines and spirits. limited remaining to save time and money.

Horst instead recommended offering these products on a first-come, first-served basis on the Fine Wine and Good Spirits website “or otherwise sold by the PLCB in such manner as it deems most appropriate based on operational needs.” .

The PLCB accepted this recommendation but never formally voted on it. The first time lottery items were made available to PLCB employees and officials outside of the lottery process instead of a second-chance draw was after the July 10 limited-release lottery 2019.

Horst no longer works for the PLCB, Kelly said. Attempts to locate Horst for comment were unsuccessful.

State senators who currently and formerly chaired the Senate Law and Justice Committee, which provides oversight of the PLCB in this chamber, both agreed with the ethics committee’s finding on the matter.

Senator Mike Regan of R-Cumberland/York Counties, the current chairman, said the practice of selling leftover lottery items to employees while others had to hope for their names to be drawn in the lottery, does not pass the “sniff test”. “But he expressed confidence in the conclusion of the ethics commission that it was not possible to act. Regan further blamed it on a lack of politics within the PLCB.

R-Fayette County Sen. Pat Stefano agreed that the practice of confidentially selling leftover liquor lottery items should end. “No laws or rules were broken, but the perception on its surface looks suspicious. Perception may be 99% reality,” he said.

The PLCB spokesman said the practice recommended by Horst has since been discontinued.

“To be clear, the only way for any PLCB employee to purchase a bottle offered through a limited-handout lottery is to have been randomly selected as the winner through the computer algorithm that selects the winners of the lottery – the same process by which any Commonwealth resident can purchase these products,” Kelly said.

“We are confident that by tightening internal Limited Lottery procedures and implementing additional oversight measures, we are preventing manipulation of lottery processes and inappropriate sales of lottery products to anyone other than legitimate winners. of the lottery.”

What are limited lotteries?

Limited-release lotteries are periodically offered by the PLCB with the aim of fairly and equitably distributing limited-quantity premium products, such as highly sought-after bourbons, including the Pappy Van Winkle Collection and the Buffalo Trace Antique Collection.

PLCB customers, individuals and licensees, register for the lottery generally over a five-day registration period. Winners are randomly selected and limited to the purchase of a single item per lottery. Unclaimed bottles may be raffled off.

The lotteries were a big draw.

For example, a January 29, 2020, limited-release lottery for the chance to buy a bottle of Pappy Van Winkle Special Reserve 12-Year-Old Bourbon, which sells for $100, drew 17,876 entrants. Only 999 winners have been selected.

Twenty-four bottles were not claimed in this lottery.

In accordance with a practice recommended by Horst to the PLCB, the PLCB and its leadership chose to waive the second chance draw. Horst instead shared with several PLCB officials in executive meetings and in informal conversations that limited release lottery products were available for purchase. This information was not shared with the public or unlucky lottery entrants.

Conclusions of the ethical investigation

According to the ethics papers, Jolly, despite not participating in the lottery, purchased three bottles of Pappy Van Winkle bourbon for $410 and separately a bottle of Weller 12-year Reserve Bourbon for $40.

“On several occasions, Negra, after completing the limited-edition lottery, used personal funds to purchase bottles of alcohol at full price,” according to the ethics commission report.

Negra responded in a statement, “The Ethics Commission has determined that no ethical violations have occurred regarding my work as a member of the LCB. In addition, no violation of LCB’s code of conduct has occurred.

However, the Ethics Commission fined Negra $500 for failing to declare certain sources of income in its declaration of financial interests for 2018, 2019 and 2020. The Executive Director of the Ethics Commission, Mary Fox, confirmed that Negra has since paid his fines and corrected his declarations of financial interests. for those years.

“The Ethics Commission investigation, which I voluntarily participated in, came at substantial personal cost, but I am pleased that it has been fully resolved,” Negra said.

Bowman bought a $40 bottle of Weller 12-Year-Old Reserve bourbon left over from a July 2019 lottery that drew around 8,290 entrants and had just 180 winners. In December 2019, when another limited-release lottery was held for George T. Stagg Bourbon that sold for $110 a bottle, Bowman claimed one of 34 remaining bottles from a lottery that drew 9,753 attendees.

Although he was cleared of any ethics violation for this, Bowman was fined $250 by the Ethics Commission for failing to disclose on his 2019 Declaration of Financial Interests a “travel purchase of Irish whiskey” of $2,082 paid by the Irish Whiskey Association. Fox said he too paid the fine and corrected his paperwork.

Kelleher also bought a bottle of Bourbon Stagg left over from the December 2019 lottery and McFarland, who had entered several limited-release lotteries from 2016 to January 2020 and won only once, bought a Bourbon Eagle Rare. 17 years old at $110 remaining from the December 2019 Lottery.

How it was discovered

This practice of confidentially sharing information with PLCB employees about remaining lottery items was noted by an auditor from the Governor’s Office of the Audit Budget Office.

The auditor discovered that the inventories did not correspond to the items designated for the limited circulation lotteries. From July 2019 to February 2020, the auditor discovered that 20 bottles of limited release lottery items had been moved to the North West office building where the PLCB is headquartered.

A deputy director at the audit office told Horst of the “negative public perception the issue could create,” but according to an ethics commission order, that information never made its way up the agency’s chain of command. .

Subsequently, PLCB Chairman Tim Holden was alerted and instructed the PLCB’s attorneys and executive director to conduct an internal investigation. Kelly, the agency’s spokesperson, said the PLCB “immediately halted the sale of lottery bottles outside of the established lottery process.”

In addition to previously named employees who took advantage of this internal access to sought-after alcohol, PLCB Chief Information Officer Nick Melnick also purchased remaining limited-release lottery items, according to the commission’s report. ‘ethics. All PCLB employees used personal credit cards to make purchases.

Jan Murphy can be reached at [email protected]. Follow her on Twitter at @JanMurphy