The embattled owners of Lawrence’s Cork & Barrel liquor stores say they’ll fight state allegations against them to the bitter end, and that regulators are unnecessarily trying to ruin their livelihood.

Dan and Jill Blomgren, who own Lawrence’s two Cork & Barrel liquor stores, last week ended their silence on charges by the state’s Alcoholic Beverage Control division that the couple broke several state liquor control laws.

“It has never been about the truth or protecting the greater good,” Dan Blomgren said of the ABC. “I’ll fight this wherever it needs to be fought.”

In November, an administrative officer with the division ruled the Blomgrens should have their liquor licenses revoked. The reason: Dan Blomgren participated in a “hidden ownership” scheme to skirt the state law allowing an individual to own only one liquor store. The officer found Jill Blomgren guilty of running a store that allowed improper deliveries of alcohol and other violations. The Blomgrens have appealed the decision and their two stores, at 2000 W. 23rd St. and 901 Miss., remain open.

Defense documentation

Dan Blomgren said he had produced reams of paperwork showing he did not have a hidden ownership interest in Parkway Liquor, 3514 Clinton Parkway, as the state alleges. Instead, he said, he had a legal management agreement with the store’s new owner to run the day-to-day operations of the business. Blomgren previously owned Parkway Liquor but had to sell the store when he opened the Cork & Barrel at 901 Miss.

He said he presented signed documents that showed the store’s owner, Topeka resident and Blomgren’s friend Kerry Zimmerman, was responsible for the payroll and taxes at the business and was entitled to all the profits of the business, except 3 percent of gross sales, which Dan Blomgren received as a management fee.

“Dan’s management of this store was completely above board,” said Dan Owen, an attorney for the couple. “Every penny has been properly accounted for.”

Parkway Liquor has since been sold. None of the allegations involve the current owners.

Dan and Jill Blomgren, owners of Cork & Barrel liquor stores, talked recently about their legal battle with the state's Alcoholic Beverage Control division.

‘In too deep’

Dan Blomgren said state officials started their investigation without knowing the details of the management agreement. Now that they know the details, Blomgren said, they are too stubborn to admit falsely accusing him of wrongdoing.

“I think they feel like they’re in too deep,” Blomgren said. “They have spent too much of the taxpayers’ money to just back off now.”

Attempts last week to contact Tom Groneman, ABC director, for comment were unsuccessful. But in its ruling issued last month, the ABC officer wrote the management agreement was “window dressing” to cover Dan Blomgren’s continued control of Parkway Liquor and that Blomgren “consciously disregarded” liquor laws.

Owen said he’s more disturbed about the state’s case against Jill Blomgren, who is the owner of the Cork & Barrel store at 23rd and Iowa streets. Dan Blomgren, though, runs the day-to-day operations of the store, which state officials deem legal because the two are husband and wife.

Owen said the Blomgrens admitted to making improper deliveries on 13 different occasions to organizations that did not have a liquor license. Kansas liquor stores are allowed to deliver liquor only to organizations or businesses that have a license to sell it.

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Illegal deliveries

The organizations that the Blomgrens delivered to in all cases were departments within Kansas University, the city of Lawrence and St. John the Evangelist Catholic Church. The university used the liquor for various fund-raising and social events, the city used it for a Parks and Recreation wine-tasting class, and St. John used the liquor as part of a fund-raising event. None of the organizations committed a crime by serving liquor without a license because none of the liquor was sold. Blomgren said he stopped making the deliveries after he realized the organizations didn’t have liquor licenses.

Owen said the typical penalty for making an improper delivery was a fine up to $1,000 for each offense. He said Jill Blomgren was willing to pay that amount, but should not have her license revoked for the deliveries.

“The reason to revoke someone’s license is because they’re a danger to the public if they’re allowed to continue operating,” Owen said. “They sell to minors, they cooperate with organized crime, they won’t comply with tax laws. None of that happened here. This division knows they’re not a danger to the public.”

State extortion?

Owen said state officials at one time entered settlement negotiations with the Blomgrens, but the talks fell apart after the state asked for $250,000 in fines in exchange for allowing them to keep their liquor licenses. The Blomgrens rejected that deal.

“I feel like the state is trying to extort a quarter-million dollars out of us,” Dan Blomgren said.

The case, which started in 2002, is not the only issue weighing on the Blomgrens’ minds. During the ordeal, they have been caring for their 3- and 6-year-old sons. Both have a rare liver disease that required them to have liver transplants.

“That is plenty stressful enough, but to put this (case) on top of that, it is just unbelievable,” Jill Blomgren said.

Both children have had transplants and are doing fine, but likely will require expensive medication for the rest of their lives.

Groneman, the state’s ABC director, is scheduled to hear an appeal of the administrative ruling later this month. If he upholds his department’s decision, the Blomgrens can appeal the case to the secretary of the Kansas Department of Revenue. After that, the Blomgrens could appeal the ruling to district court.

Owen said the appeal process could take as long as two years and that the Blomgrens would be allowed to operate their stores during the appeal process.