State Liquor Authority Fines Three Liquor Stores $300,000

On May 24, 2017, the State Liquor Authority accepted Conditional No Contest offers totaling $300,000 from three liquor stores; Henry Street Liquors in Hempstead, owned by Peter Capizzi, Cappy’s Warehouse Wine & Spirits in Lynbrook, owned by Joseph Viscomi, and Wheatley Hills Discount Wine and Spirits in Westbury, owned by Roseann Kalb.

The licensees were charged in connection with an arrangement between the stores involving illegal loans, undisclosed interests, and for providing false material statements both to SLA Investigators and on documents provided to the Authority. Additionally, Henry Street Liquors was charged with engaging in illicit sales to other retailers.

The Alcoholic Beverage Control (ABC) law requires that liquor stores are independently owned and operated, prohibits loans between stores, and forbids a retailer from selling to other retailers. These provisions were enacted to ensure independence, protect New York consumers and businesses from anti-competitive market behavior, and to maintain a level playing field where all licensed retailers are able to purchase products from wholesalers at the same prices.

Henry Street Liquors: Henry Street Liquors was charged on May 13, 2016 with making 44 illegal sales of alcoholic beverages to other liquor stores. Under the ABC law, the only permissible discount a wholesaler may offer a retailer is for quantity purchased. The business model employed by Henry Street was based on the ability to make large quantity purchases from wholesalers at deep discounts and resell the products to other retailers. By engaging in sales to other retailers, Henry Street unlawfully expanded their customer base and was able to purchase from wholesalers at heavily discounted prices, thereby illegally undercutting their competition.

During a review of Henry Street’s books and records, SLA Investigators discovered the licensee had engaged in illicit loans to both Cappy’s Warehouse and to Wheatley Liquors. Henry Street Liquors plead no contest to two counts of providing loans totaling $220,000 to Cappy’s Warehouse and one charge for providing a loan to Wheatley Hills with an outstanding balance of $607,255 as of January 31, 2015. In addition to mandating liquor stores remain independent, the ABC law explicitly prohibits liquor stores from making loans to any other businesses engaged in the sale of alcoholic beverages at retail.

Henry Street Liquors submitted a conditional no contest offer of $200,000 in satisfaction of the pending charges, and the Members of the SLA accepted the licensees offer.

Cappy’s Warehouse Wine & Spirits: On May 27, 2015, the SLA charged Cappy’s Warehouse with seven violations of the ABC law, including four violations for providing false material statements, two violations of aiding and abetting an illicit loan, and for holding an interest in Henry Street Liquors.

In addition to providing a false material statement in his license application and failing to disclose loans of $220,000 from Henry Street Liquors, SLA Investigators found that the owner of Cappy’s was on the payroll of Henry Street, with an annual salary of approximately $120,000 that the licensee had failed to disclose. Additionally, SLA investigators found the owner of Cappy’s has signature authority over an account owned by Henry Street liquors, after initially stating to investigators that he had no involvement with Henry Street. The ABC law prohibits liquor store owners from having any direct or indirect interest in another liquor store.

Cappy’s Warehouse Wine & Spirits submitted a conditional no contest offer of $50,000 in satisfaction of the pending charges, and the Members of the SLA accepted the licensees offer.

Wheatley Hills Discount Wine and Spirits: On August 19, 2015, the SLA charged Wheatley Hills with seven violations of the ABC law, including four violations for providing false material statements, two violations of aiding and abetting an illicit loan, and for holding an interest in Henry Street Liquors. In addition to failing to disclose a loan from Henry Street totaling over $600,000, SLA investigators discovered during an inspection of the premises that shipping labels on each box of liquor and wine in the licensees’ storage area had been removed, presumably to deceive investigators as to the source of the alcoholic beverages. Under the ABC law, liquor stores may only purchase alcoholic beverages from wholesalers licensed in New York.

Wheatley Hills submitted a conditional no contest offer of $50,000, in satisfaction of the pending charges, and the Members of the SLA accepted the licensees offer.

SLA Chairman Vincent Bradley said, “The Authority has made a resounding statement today, by concluding one of our largest retail cases in recent memory. The conduct of these licensees is exceedingly troubling, striking at the heart of the SLA’s primary responsibility to enforce the law and maintain a level playing field for all retailers.”

This investigation was conducted by State Liquor Authority Associate General Counsel William Brennan, Beverage Control Investigator Ethan Manning, Beverage Control Investigator Brain McLean and Beverage Control Investigator Martin Liepshutz.

The SLA regulates and controls the manufacture, sale and distribution of alcoholic beverages within the state. The Authority works with local law enforcement agencies and localities across to ensure compliance with the Alcoholic Beverage Control Law. In addition, the Authority issues and renews licenses and permits to manufacturers, distributors, wholesalers and retailers of alcoholic beverages.