State regulators are seeking to close two of the largest liquor stores in Lawrence and impose fines of about $120,000 against their owners.
Investigators with the Kansas Department of Revenue's division of Alcoholic Beverage Control have filed 13 separate charges against the owners of the Cork & Barrel liquor stores at 901 Miss. and 2000 W. 23rd St.
The charges include a laundry list of violations of state liquor law, but primarily stem from a December 2002 investigation that forced the temporary closure of Parkway Liquors, 3514 Clinton Parkway.
Pete Bodyk, an ABC operations officer, said the division believed Cork & Barrel's two owners, Dan Blomgren and his wife, Jill, had an illegal ownership interest in Parkway Liquors during parts of 2001 and 2002. State law allows an individual to own only one liquor store or a husband and wife to own two.
"We believe they had a hidden ownership in the store," Bodyk said. "We believe they were the real owners, not the person who had the license."
Dan Blomgren declined comment Wednesday on the charges.
Parkway Liquors has since been sold, and the allegations do not involve the current owners.
The department is seeking to revoke the liquor licenses of both Dan and Jill Blomgren and permanently bar them from operating a liquor store in the state. Bodyk said the ban also would extend to most other states, since a majority of states won't issue a liquor license to someone who has had a license revoked in another state.
Bodyk said ABC officials also were seeking to levy $105,000 in fines against the 23rd Street store and $18,000 against the Mississippi Street store.
"These are very serious allegations," Bodyk said. "Anything around what we consider a hidden ownership are some of the more severe violations in the department's view."
The Blomgrens will have a chance to contest the allegations at an administrative hearing before the director of the ABC. A date for the hearing has not been set. The Blomgrens also could appeal the director's ruling to district court.
Bodyk declined to comment on the specific evidence gathered in the case.
But in a January interview with the Journal-World, Dan Blomgren confirmed that he was involved in the operations of Parkway Liquors. Blomgren owned Parkway Liquors before he decided to open his current store at Ninth and Mississippi streets. He said he sold Parkway Liquors to a good friend, Topeka resident Kerry Zimmerman.
But Blomgren said Zimmerman had no real desire to run the day-to-day operations of the liquor store, so Blomgren negotiated a "management agreement," whereby Blomgren would run the store for a flat monthly fee.
The agreement ended in December after ABC officials began questioning Zimmerman and he voluntarily surrendered his liquor license.
Blomgren, in January, contended that the management agreement was legal.
"The law doesn't say one thing about prohibiting these management agreements," Blomgren said at the time. "They've never come close to proving anything illegal has been done."
The single-license limitation has been a part of state law since 1949 as a way to prevent corporate ownership of liquor stores and to ensure that an individual is accountable for any violations at a store.
The two Cork & Barrel stores are accused of several other violations unrelated to the ownership issues. Those alleged violations include:
- Operating an illegal catering business. The ABC alleges that the Blomgrens operated a catering business that served alcoholic beverages. Generally, liquor store owners cannot own another business that sells or serves liquor.
- Selling liquor on credit. The department alleges Cork & Barrel allowed customers, like bars and restaurants, to take possession of liquor before they paid for it, which is a violation of state regulations.
- Sold from their 23rd Street store items other than alcohol, such as soda, glasses and bartending supplies. Liquor stores, by law, are allowed to sell only liquor and lottery tickets.
- Allowed customers to return liquor for store credit.
- Delivered liquor to nonapproved locations. Liquor stores are allowed to deliver to wholesale customers, like bars and restaurants, but generally are not allowed to deliver to other locations. Bodyk declined to say where Cork & Barrel allegedly made deliveries.
- Sold liquor for resale to a group that didn't have a license to resell liquor. Specifically, the department alleged Cork & Barrel sold liquor to a wine and cheese club that was not licensed to resell.