Empire-Breakthru Battle Heats Up As Retailers Reveal Details Of Alleged Smuggling SchemeDecember 15, 2016
The court battle between Empire Merchants and Breakthru Beverage—two of the U.S. market’s biggest spirits and wine distributors—continues to heat up.
Late last week, Empire amended its complaint against Breakthru and two of its top executives—co-chairman Charlie Merinoff and CEO Greg Baird. In the original complaint, filed in U.S. District Court in September, the Brooklyn-based Empire accused Merinoff and Baird of taking part in an interstate liquor smuggling scheme while they were executives at Charmer Sunbelt Group, which merged with Wirtz Beverage Group to form Breakthru earlier this year.
“We have amended our RICO lawsuit to include the testimony of Maryland retailers now cooperating with us who have provided direct evidence substantiating our claims against Reliable Churchill (formerly a division of Charmer Sunbelt and now part of Breakthru),” Empire attorney Randy Mastro told SND. “And we have added new claims against Reliable Churchill’s ultimate parent, Breakthru, for retaliating against Empire Merchants and its affiliate, Empire North, over the filing of this lawsuit by threatening to terminate service contracts, among other things.”
In the amended complaint, Empire includes affidavits from two Maryland retailers—Vlamis Liquors and Northeast Liquors—that describe how the alleged smuggling activity was carried out. According to the complaint, these and other Maryland retailers illicitly shipped liquor to New York retailers (where liquor taxes are some five times as high as Maryland’s) to sell in New York. The complaint states that New York retailers would purchase the liquor in large cash sums—as much as $20,000 at a time—and that the Maryland retailers would then launder the cash through their bank accounts, from which they would then pay the Maryland wholesalers.
Both Reliable Churchill and fellow Maryland wholesaler Republic National Distributing Co. (RNDC) are named in the complaint. Earlier this year, federal prosecutors in Maryland indicted RNDC on interstate smuggling charges. However, in October, they fully dismissed the indictment.
Breakthru attorneys told SND that Empire’s amended complaint lacks merit. In a letter to the court sent earlier this week, Breakthru attorney Sean O’Shea questions the veracity of the affidavits from the Maryland retailer employees, maintaining they are “chockful of hearsay and double hearsay” and “rest on pure conjecture by third parties as to what Reliable ‘must have known.’”
“In response to a sanctions warning and a chance to correct its legally and factually deficient complaint, Empire has filed an amendment which is as flawed and misguided as its initial complaint,” O’Shea told SND. “Breakthru and Reliable will shortly move to dismiss it in its entirety.”Subscribe to Shanken News Daily’s Email Newsletter, delivered to your inbox each morning.