State regulators have ruled the owners of Lawrence's Cork & Barrel liquor stores should have their licenses revoked for participating in a hidden ownership scheme and committing other violations of Kansas law.
An administrative officer for the state's Alcoholic Beverage Control division ruled that the owners of the two stores -- Dan and Jill Blomgren -- violated the state law that requires no individual own more than one liquor store or that a husband and wife own no more than two.
"Dan Blomgren was knowledgeable of the law and regulations and consciously disregarded them," Ted Smith, an administrative officer for ABC, wrote in his ruling. "By treating the Kansas Liquor Control Act as basically a scofflaw, Dan Blomgren and Cork & Barrel Downtown created an unleveled playing field that gave him substantial economic advantage over his competitors."
Subject to appeal
The husband and wife own two liquor stores in the city -- Cork & Barrel Superstore, 2000 W. 23rd St., and Cork & Barrel Downtown, 901 Miss. Both stores were open Monday, and ABC officials said they could remain open while the ruling was subject to appeal.
Attempts to reach Dan and Jill Blomgren were unsuccessful. Neither their attorney nor a store manager returned phone calls seeking comment. The Blomgrens have until the end of November to decide whether to appeal the ruling.
The Blomgrens have three opportunities to appeal:
l First, they can ask the director of the ABC to review the ruling.
l After that review, the ruling can be appealed to the Kansas Secretary of Revenue, who oversees the ABC.
l The Blomgrens could appeal the ruling in district court.
ABC officials said it could take several months for all the appeals to be heard.
6News video: Cork & Barrel may be closed
Cork & Barrel owners enter settlement talks (1-1-04)If no appeal is filed, the stores would be required to close, ABC officials said Monday.
"We take this very seriously because we want to make sure that people who are not qualified to hold licenses don't get licenses through a back-door situation," said Tom Groneman, director of the ABC.
'Window-dressing' deal
The ruling stems from a December 2002 investigation that forced the temporary closure of Parkway Liquor, 3514 Clinton Parkway.
Before opening the Ninth Street store, Dan Blomgren owned Parkway Liquor. When he opened the Ninth Street store, Kansas law no longer allowed him to own Parkway Liquor.
An ABC investigation found Blomgren sold the store to a friend, Topeka resident Kelly Zimmerman. But according to testimony from Zimmerman, he had no interest in owning the store. Zimmerman said he had worked out an arrangement that he would be paid $400 a month from a company owned by Dan Blomgren in exchange for use of Zimmerman's name on the liquor license.
"The transaction was window dressing to cover Dan Blomgren's continued control and interest in a third retail liquor license," Smith wrote in the ruling.
The allegations do not involve the current owners of Parkway Liquor.
According to the ruling, Dan Blomgren argued that his deal with Zimmerman was valid to manage the store but not own it. He also argued that because the deal was between Zimmerman and a corporation Dan Blomgren solely owned, it was not a violation of his liquor license, which was granted to him as an individual, not a corporation.
More violations
The ruling found that Jill Blomgren had not committed fraud or given false statements as part of the deal. But Smith found that Jill Blomgren should have her liquor license revoked for several other offenses.
The ruling found she illegally allowed a catering operation, AB Catering, to operate out of her 23rd Street store; that she at times gave liquor to preferred customers; and that she sold nonalcoholic items at the store, such as wine glasses, cups, straws, toothpicks and olives. Kansas law permits only sale of alcoholic beverages in liquor stores.
"What sets this case apart from the normal violations investigated by the division, is the disregard licensee Jill Blomgren had for the Kansas Liquor Control Act," Smith wrote. "It appears that whenever the licensee was confronted with a choice between following the law or accommodating an important customer, the licensee would choose to accommodate the customer."
In addition to the loss of their licenses, the ruling ordered Dan Blomgren to pay a $1,000 fine and Jill Blomgren to pay $9,500 in fines. When the charges were filed in July 2003, the department was seeking $120,000 in fines.
The state law limiting an individual to one liquor license has been on the books since 1949 as a way to prevent corporate ownership of liquor stores and ensure that an individual is accountable for any violations at a store.
Dan Blomgren had been a vocal critic of that law.
"It limits my fair trade," he said in a January 2003 story in the Journal-World. "I don't think it is constitutional. If I were a shoe salesman, I could have 10,000 stores, so why limit me because I'm selling liquor? It is a legal product, and I sell it to people of legal age."
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