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Exclusive: Federal Prosecutors Dismiss Indictment Against RNDC In Alleged Smuggling Scheme

October 31, 2016

Five months after indicting Republic National Distributing Co. (RNDC) and three of its employees on federal charges of interstate liquor smuggling, the U.S. District Court for the District of Maryland has fully dismissed the indictment.

“RNDC and our three employees violated no law and should never have been charged. We’re certainly happy that the U.S. Attorney in Maryland realized that fact—before the needless expenditure of more time and resources—and decided to drop the case,” said RNDC president and CEO Tom Cole in a statement following the withdrawal of the indictment late last week. “This is a good day for RNDC and we are grateful to all of our customers, suppliers and employees nationwide who have stood by us through this challenging time.”

The court previously returned to RNDC $50 million that it seized relating to the indictment.

In May, the U.S. Attorney for the District of Maryland charged RNDC and three of the employees at its Maryland operation—Eugene Gerzsenyi, Jason Lockerman and Lisa Robbins—in what prosecutors said 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.

At the time, as he has since, Cole strongly proclaimed the innocence of RNDC—the country’s second-largest spirits and wine distributor—and Gerzsenyi, Lockerman and Robbins. As Cole said then, “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.” He added, “With over 100 years of exemplary business on our side, we expect complete exoneration.”

The indictment against RNDC was dismissed as charges of another alleged Maryland-to-New York smuggling scheme have rocked the drinks industry in recent months. In September, Empire Merchants, New York’s largest distributor, sued co-owner Charlie Merinoff and Breakthru Beverage CEO Greg Baird in federal court in New York, claiming the two men—and others—were involved in smuggling activity. The RNDC case was frequently mentioned in Empire’s complaint, even though the company wasn’t named as a defendant. Breakthru has denied the charges against Merinoff (a Breakthru co-chairman) and Baird, and last week its attorneys advised the judge in their case that they were planning to file a motion to dismiss.

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