Cecil stores part of huge booze-smuggling indictment
— A federal grand jury has indicted three employees of a Marylandbased liquor distributor that allegedly used Cecil County liquor stores as go-betweens to sell huge orders of booze to New York wholesalers — defrauding the state and city of New York out of approximately $9 million in excise taxes, according to the U.S. Attorney’s Office.
The 23-count indictment identifies Republic National Distribution Company, LLC, of Jessup, and its employees
Eugene Gerzsenyi, 52, of Glen Burnie; Jason Lockerman, 38, of Bel Air; and Lisa Robbins, 55, of Woodbine, as the defendants.
It further identifies Gerzsenyi as RNDC’s assistant director of operations, Lockerman as a RNDC salesman and Robbins as an accounting manager at the time that they allegedly committed the offenses, approximately from June 2009 through June 2012.
In the wake of the indictment, which USAO officials announced earlier this week, RNDC company officials denounced federal prosecutors for seeking the indictment and maintained the innocence of the three employees and the business itself.
Noting that RNDC has a more than 100-year history dating back to 1898 and that it is the nation’s second largest “premium wine and spirits” distributor, Tom Cole, the company’s president and CEO, wrote, “RNDC is extremely disappointed to learn that the U.S. Attorney for the District of Maryland has chosen to take this
action,” in statement leased Tuesday.
Cole also contended, “We have worked diligently with the U.S. Attorney’s Office since first learning about the investigation in 2012, and have seen no evidence to support their version of the facts. RNDC emphatically denies these allegations and looks forward to our day in court where we will demonstrate that the prosecutors’ accusations are based on erroneous assumptions, unsubstantiated theories, and represent an unprecedented attempt at federal government overreach.”
In his conclusion, Cole wrote, “In addition to not being supported by facts, today’s (Tuesday’s) action is a rogue effort by a federal agency to seize control of the state regulation of liquor sales in violation of longstanding law.”
The indictment contains the names of several Cecil County liquor retailers that were allegedly involved,
listing them as Northside Liquors in Elkton, Happy 40 Liquors in Elkton, North East Liquors in North East and the now-defunct Chesapeake Wine and Spirits near Chesapeake City.
Names include Nilesh Patel and Tushar Patel, who owned Northside Liquors at the time of the protracted liquor smuggling scheme, which ran from June 2009 through June 2012. The indictment also names Anil Patel, who, at the time, owned Happy 40 Liquors, and Jatin Patel, who, at the time, owned North East Liquors. In addition, the charging document names Dilip Patel, former owner of the closed Chesapeake Wine and Spirits.
Earl Bradford, who is Cecil County’s chief alcohol beverage inspector, reported Thursday that those named owners are “no longer the licensees” of those named stores.
Moreover, in the case of Nilesh and Tushar Patel, their liquor license for Northside Liquors expired and then it came under different ownership, which now trades under Bridge
“It has new owners and new people,” Bradford noted.
All of those former liquor store owners named in the indictment had been charged for their roles and all had been convicted, said Marcia Murphy, a USAO spokeswoman, adding that she believed some are still awaiting sentencing. Information on their case dispositions was unavailable, as of Thursday afternoon.
In September, according to the most recent USAO press release on the multidefendant, liquor smuggling case, Dilip Patel — a 49-year-old Wilmington, Del., resident who owned Chesapeake Wine and Spirits in the 2700 block of Augustine Herman Highway at the time of his crime — was facing up to 20 years in prison after pleading guilty to wire fraud for his role.
Patel also owed New York City $673,992 in restitution to cover the city’s lost excise tax revenue, according to federal prosecutors, who also reported that the federal government seized $11,000 from the liquor store’s operating account.
Prosecutors said several smugglers from New York City ordered bulk liquor from Patel’s store by phone from January 2011 through June 2012. Then the smugglers drove to the store, paid cash for the bulk liquor, loaded the liquor into their vehicles and drove back to New York City, where it was sold, prosecutors added.
In doing so, according to prosecutors, the smugglers evaded the payment of excise taxes by failing to file reports with the state of New York describing the transportation of the liquor into the state. The excise tax on distilled spirits is a $1.50 per gallon in Maryland, while it is $7.44 per gallon of liquor in New York City. So, purchasing liquor in Maryland for sale in New York City defrauds the city of the tax due on that booze.
RNDC and its three employees are accused of allowing New York wholesalers to circumvent that New York excise tax by allowing them to buy tens of thousands of dollars worth of booze per order “out the back door” of the Cecil County liquor retailers, before smuggling the booze up to New York — saving almost $6 in excise tax per gallon.
The indictment, which includes charges of wire fraud, money laundering, wire fraud conspiracy and aiding and abetting, alleges that Gerzsenyi, Lockerman and Robbins “facilitated the payment to RNDC for liquor that was moved from RNDC, through the Cecil County retailers to the New York retailers and their agents.”
Specifically, according to the federal court document, RNDC submitted invoices to the Cecil County retailers that included the amounts owed to RNDC for the liquor that had been delivered to the New York retailers and their agents.
The New York retailers paid the Cecil County retailers in cash, which the Cecil County retailers deposited into their business accounts, prosecutors said. The Cecil County retailers then paid RNDC by check, prosecutors added.
alleges that “Lockerman and the other RNDC salesmen knew that the liquor was intended for retail sale in New York, and they transmitted those orders to RNDC to be filled.”
It also alleges that RNDC, the New York retailers and the Maryland retailers did not register as liquor wholesalers or distributors in New York; did not provide monthly reports of the quantities of liquor shipped into New York for retail sale; and did not pay New York excise taxes.
In addition, RNDC allegedly filed false reports to the Maryland State Comptroller’s Office, indicating that all liquor sold to the Cecil County retailers was intended for resale in Maryland.
The indictment seeks forfeiture of all proceeds traceable to the scheme, including a money judgment of at least $9 million.
If convicted, the company and the individual defendants face a $250,000 fine, and the individual defendants also face a maximum sentence of 20 years in prison.
The former owner of Chesapeake Wine and Spirits recently pleaded guilty to wire fraud in federal court, admitting to defrauding New York City of more than $670,000 in taxes.