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RNDC Indicted On Federal Smuggling Charges, But CEO Proclaims Company’s Innocence

May 25, 2016

Republic National Distributing Co. (RNDC), the country’s second-largest spirits and wine wholesaler, has been indicted on federal liquor smuggling charges, but RNDC president and CEO Tom Cole insists the company—and the three employees who were also indicted—are innocent.

Yesterday, the U.S. Attorney for the District of Maryland charged RNDC and three of its employees—Eugene Gerzsenyi, Jason Lockerman and Lisa Robbins—in what prosecutors say was a scheme to transport liquor to New York from Maryland in order to take advantage of the huge tax disparity. Liquor taxes in New York are roughly five times as high as Maryland’s.

According to WBAL-1090 in Baltimore, the 23-count indictment alleges that, from 2009 to 2012, several New York liquor stores made contact with establishments in Maryland’s Cecil County, who then passed the New York retailers’ orders to RNDC, which operates in Maryland—but is not registered as a distributor in New York.

The indictment maintains that RNDC and Robbins, Gerzsenyi and Lockerman “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, 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. The Cecil County retailers then paid RNDC by check.” The indictment says that New York liquor taxes weren’t paid by RNDC or retailers.

Additionally, prosecutors charge that the distributor filed false reports with the Maryland State Comptroller’s Office that claimed the liquor sold to the Cecil County retailers was intended to be sold in Maryland.

“RNDC is extremely disappointed to learn that the U.S. Attorney for the District of Maryland has chosen to take this action,” said Cole in a statement. “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.”

The indictment seeks forfeiture of all proceeds related to the scheme, which prosecutors say is more than $9 million. Additionally, if convicted, RNDC and Robbins, Gerzsenyi and Lockerman face a $250,000 fine, while the individual defendants also face a maximum sentence of 20 years in prison, for several counts of wire fraud and wire fraud conspiracy.

But Cole is confident RNDC will prevail in court. “With over 100 years of exemplary business on our side, we expect complete exoneration,” he said.

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