A complaint was filed September 20, 2016, in the United States District Court for the Eastern District of New York involving two of the larger wine and spirit distributors in New York and Maryland.
The Plaintiff, Empire Merchants LLC (“Empire”), part of the Charmer Sunbelt group, is suing its Maryland distributorship, Reliable Churchill LLLP, as well as, Breakthru Beverage’s co-chairman Charles Merinoff and President & CEO, Gregory L. Baird, and multiple retailers in New York and Maryland.
Empire alleges through its complaint that from 2009 to 2016, the Defendants collectively conspired to smuggle wine and spirits, worth millions of dollars, into New York to avoid New York’s high excise taxes and circumvent Empire’s distribution rights within New York.
According to Empire, the Maryland-based wholesaler delivered millions of dollars of alcohol to Cecil County retailers, who then sold the alcohol to complicit New York retailers, who, in turn, secretly smuggled the alcohol in trucks across state lines to New York. The Maryland wholesalers also obtained substantial indirect financial and reputational benefits by selling millions of dollars worth of extra liquor and wine to consumers in New York. The complaint states:
“Specifically, by unlawfully smuggling and selling millions of dollars’ worth of extra liquor and wine to consumers in New York, the Maryland Wholesalers received additional bonuses, and avoided penalties, from certain liquor suppliers in return for far exceeding sales targets in supplier contracts. (These bonuses and corresponding penalties are typically based on the number of liquor cases sold, also referred to as “depletions”). Based on industry custom and practice, it is likely that these bonuses amounted to millions of dollars.”
For more information or a copy of the complaint, please contact Malkin Law.
By: Oren Cytrynbaum