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In Re: Walter Joseph Conti, : File Docket: 12-028
Respondent : X-ref: Order No. 1627
: Date Decided: 2/6/14
: Date Mailed: 2/12/14
Before: John J. Bolger, Chair
Nicholas A. Colafella, Vice Chair
Raquel K. Bergen
Mark R. Corrigan
Roger Nick
Kathryn Streeter Lewis
This is a final adjudication of the State Ethics Commission.
Procedurally, the Investigative Division of the State Ethics Commission conducted
an investigation regarding possible violation(s) of the Public Official and Employee Ethics
Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq., by the above-named Respondent. At the
commencement of its investigation, the Investigative Division served upon Respondent
written notice of the specific allegations. Upon completion of its investigation, the
Investigative Division issued and served upon Respondent a Findings Report identified as
an “Investigative Complaint.” A Stipulation of Findings and a Consent Agreement were
subsequently submitted by the parties to the Commission for consideration. The
Stipulated Findings are set forth as the Findings in this Order. The Consent Agreement
has been approved.
I.ALLEGATIONS:
That Walter Joseph Conti, a public official/public employee in his capacity as Chief
Executive Officer of the Pennsylvania Liquor Control Board (“PLCB”), violated Sections
1103(a) and 1105(b) of the State Ethics Act (Act 93 of 1998) when he used the authority of
his public position for a private pecuniary benefit of himself and/or members of his
immediate family, when he accepted gifts, transportation, lodging, and/or hospitality from
vendors of the PLCB, at a time when those vendors had an ongoing business/contractual
relationship with the PLCB; and when he failed to disclose on Statements of Financial
Interests his receipt of gifts, transportation, lodging and/or hospitality on Statements of
Financial Interests filed for the 2009 through 2011 calendar years.
II.FINDINGS:
1. Walter Joseph Conti served as the CEO of the PLCB from December 16, 2006, to
February 2, 2013.
a. Conti was appointed CEO of the PLCB on December 16, 2006, at the
direction of Governor Edward Rendell.
1. The position was a newly created position to help manage the
operations of the PLCB.
b. Conti served as the CEO until retiring effective February 2, 2013.
Conti, 12-028
Page 2
1. Conti continued as an annuitant with the PLCB in 2013 to assist with
the transition for a time period not to exceed ninety-five (95) days.
2. Conti also served as an elected Member of the Pennsylvania General Assembly
from 1993 to 2006.
a. Conti was a State Representative from 1993 until 1997.
b. Conti was a State Senator from 1997 until 2006.
c. As a Member of the Pennsylvania House of Representatives, Conti served
on the House Liquor Control Committee.
d. Conti was a Member of the Senate Law and Justice Committee.
e. Both committees had purview over the PLCB.
3. Conti, as the CEO of the PLCB, was responsible for the following duties:
a. Directing and coordinating all administrative and business operations of the
PLCB in accordance with applicable laws and Commonwealth and Board
policies.
b. Directing, through subordinate senior level managers, the agency’s
Commonwealth-wide activities related to procurement, marketing and sales,
distribution, and control of alcoholic beverages and alcohol related
education.
c. Directing the development and implementation of policies and procedures
affecting the education, control, or distribution and sale of alcoholic
beverages across the Commonwealth, to include directing the study, review
and improvement of the board’s financial activities.
d. Managing the agency’s administrative functions, including human resources,
information technology, and budget and fiscal management.
e. Daily communication directly with Board Members, Governor’s Office staff,
elected officials, prominent industry representatives, or other high ranking
entities.
f. A significant aspect of Conti’s duties was his authority to direct and
implement broad agency-wide policies and procedures.
g. Conti’s work was performed with considerable independence and was
subject to review through conferences and reported to the Board for
effectiveness and adherence to policy.
4. Conti’s specific duties include, but were not limited to the following:
a. Holding approval authority for policies and procedures affecting the
distribution, marketing, sale control and education for all alcoholic beverages
sold within the Commonwealth.
b. Directing the formulation for a strategic business plan for the agency.
Conti, 12-028
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c. Directing the development, review, and implementation of policies,
procedures, and programs in order to achieve identified goals and
objectives.
d. Directing the agency’s administrative functions including budget and
financial management, policy and planning, licensing, human resources,
information technology, alcohol education and equal employment opportunity
efforts.
e. Directing the agency’s business operations including logistics, product
management, store operations, and consumer affairs.
f. Directing the study and analysis of agency-wide profit and loss statements
and determining financial policy resulting from program area
recommendations.
g. Directing the analysis and review of all budgetary activities to develop
agency-wide policies.
h. Directing the review, reengineering, implementation, and follow-up analysis
of new and existing business processes and procedures.
i. Directing the study and analysis of immediate and projected agency-wide
complement needs, staffing structure, and human resource trends to develop
human resource strategies and policies.
j. Directing the study of efficient, effective and profitable procurement over
both store inventory and agency-wide consumable items and implementing
policies resulting from program area recommendations.
k. Approving agency-wide information technology strategic direction and
supporting technology initiatives.
l. Directing the study, review, and analysis of real estate activities affecting the
Board and overseeing the implementation of real estate related policy
recommendations.
m. Directing the review and analysis of store operations and developing
improved policies and procedures.
n. Coordinating agency events with other high ranking government or private
sector officials to promote agency initiatives.
o. Participating in the performance of subordinates’ work consistent with
operational or organizational requirements.
p. Performing the full range of supervisory duties.
5. The PLCB was created by state law on November 29, 1933, following the end of
prohibition.
a. Prohibition was repealed on December 5, 1933, with the ratification of the
st
21 Amendment to the U.S. Constitution.
b. Pennsylvania is one of eighteen (18) states and two (2) Maryland counties
that actively participate in the distribution process to control the sale of
alcohol.
Conti, 12-028
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6. The PLCB is governed by a three (3) Member Board, appointed by the Governor
and confirmed by a two-thirds vote of the State Senate.
a. The Board appoints a Chief Executive Officer.
7. The PLCB is responsible for regulating the sale of alcohol, educating consumers on
the responsible use of alcohol, and working to prevent underage use of alcoholic
beverages.
8. The PLCB accomplishes its responsibilities through marketing and merchandising a
retail operation of approximately 608 stores with sales of approximately $2.1 billion
in 2011-2012.
a. The PLCB also oversees:
1. Regulation of 17,000 licenses.
2. Administration of alcohol education and awareness programs.
b. The current employment complement of the PLCB is approximately 4,500
people with four (4) labor associations.
9. Between December 6, 1933, and April 1934, the PLCB commenced operation by
initiating the following:
a. More than 600 licenses were approved, giving the new license holders, such
as bars and restaurants, the right to legally sell alcohol for on-premises
consumption in Pennsylvania.
b. The PLCB opened sixty-three (63) state stores and five (5) warehouses in
the Commonwealth.
c. The PLCB established four (4) district offices in Philadelphia, Harrisburg,
Pittsburgh, and Wilkes-Barre.
1. Since 1939, the PLCB has maintained its headquarters at the
Northwest Office Building.
10. On April 12, 1951, the Pennsylvania General Assembly combined existing beer and
liquor laws into one statute, entitled the “Liquor Code.”
11. On July 1, 1987, the Pennsylvania General Assembly reenacted the Liquor Code
and created the Bureau of Liquor Control Enforcement (“BLCE”), within the
Pennsylvania State Police, which is responsible for enforcing the Liquor Code and
the Board’s regulations; and the Office of Administrative Law Judge, an
autonomous office within the PLCB, which is responsible for presiding over citation
and enforcement hearings.
12. The PLCB provides products and services through seven (7) dedicated
departments designed to meet the specific needs of PLCB customers and
licensees.
a. [The] seven (7) dedicated offices have specific deputies in charge of them.
b. Dedicated offices are: Finance, Supply Chain, Marketing & Merchandising,
Retail Operations, Administration, Regulatory Affairs, and External Affairs.
Conti, 12-028
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13. The PLCB is a high volume purchaser of wine and spirits in the United States.
a. The PLCB currently operates approximately 608 stores, which are leased
from private landlords.
b. The PLCB outsources warehousing services for three (3) distribution centers
in Pennsylvania.
c. There currently are approximately 25,595 beverage alcohol licenses and
permits throughout Pennsylvania and 5,391 registered malt and brewed
beverage brands granted by the PLCB.
14. Products that are sold by the PLCB are categorized as either regular items, luxury
items, or special order items.
a. Regular items are products that are routinely stocked in the distribution
centers.
b. Luxury items are products that are purchased intermittently or as one-time
purchases.
c. Special order products are items that are not stocked in the PLCB
distribution centers but may be special ordered by either licensees or by
consumers.
d. The PLCB also operates the Chairman’s Selection Program, which offers
wine at premium collection stores.
15. As a Control State, the PLCB is the only retail seller of wine/spirits in the
Commonwealth.
a. The PLCB may grant licenses to entities/establishments for the sale of
alcoholic beverages for on-site consumption as well as for vendors who sell
products for off-site consumption.
b. In order for an alcoholic beverage to be sold in Pennsylvania, it must be
authorized for sale by the PLCB.
1. If a product is “listed” it is authorized for sale and stocked as a
product in PLCB retail stores.
16. In order to have a product sold by the PLCB, a manufacturer/supplier of alcoholic
beverage products may employ several different methods to have its product
represented within the Commonwealth of Pennsylvania.
a. A manufacturer/supplier may market its product directly to the PLCB for the
listing/delisting process as well as for sales and distribution.
b. A manufacturer/supplier may market its product through a vendor.
1. For all sales/distribution, a vendor of record must be identified with
the PLCB.
2. A manufacturer/supplier may also be a vendor/vendor of record.
c. A manufacturer/supplier may enlist the services of a broker, who then in turn
Conti, 12-028
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represents the manufacturer/supplier and its products before the PLCB.
1. Any broker may represent multiple manufacturers/suppliers and/or
multiple products before the PLCB.
2. A broker may also serve as a vendor/vendor of record.
17. Once a product is manufactured, if a manufacturer/supplier is utilizing a
vendor/vendor of record, product is then shipped to the custody of the
vendor/vendor of record.
a. The vendor takes physical custody of the product for delivery to the PLCB.
b. Payment for the product is made between the PLCB and the vendor/vendor
of record.
c. If a manufacturer/supplier is serving as its own vendor/vendor of record,
product is shipped directly from the manufacturer/supplier to the PLCB.
18. If a manufacturer/supplier is utilizing a broker, product is still distributed from the
vendor/vendor of record to the PLCB.
a. Where a broker is utilized, payment is made from the PLCB to the broker.
b. A broker may also serve as a vendor/vendor of record.
19. The PLCB periodically reviews all products currently sold in PLCB retail stores to
evaluate their profitability, and, at or about the same time, considers new products
for placement in PLCB retail stores through a process known as “listing” and
“delisting.”
a. Listing/delisting occurs twice a year, usually in the fall and spring of each
year.
b. The goal of listing/delisting is to achieve a 1:1 ratio, [such that] for each
product listed, one product is delisted, due to the limited amount of shelf
space available at each PLCB retail store.
20. The process to present a new product for listing is regulated through the PLCB.
a. Only individuals/entities with a Pennsylvania Vendor Permit may present
items for listing.
b. A fee of $150.00 (per item/per size) for each proposed new product listing is
required.
c. Appropriate paperwork as well as two (2) product samples for wine and one
(1) product sample for spirits is required to be submitted.
d. Once the appropriate application has been submitted, a date/time specific
will be scheduled for a vendor/broker to present new product to [staff]
members of the PLCB.
e. Generally two (2) bottles of a product are provided for sampling.
i. One (1) bottle for tasting and another for label review are submitted.
Conti, 12-028
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f. PLCB staff [members] usually responsible for evaluating new products are:
Director of Marketing and Merchandising
Chief Product Management and Pricing Division
Merchandising Pricing Coordinator(s).
g. Presentation time is limited to forty-five to ninety minutes (45-90) minutes per
vendor/broker regardless of the number of items being presented for new
listing.
1. Sampling is to occur at PLCB headquarters in a room called the
Retail Education Center or the REC Room.
h. Once a new product presentation has been made, a recommendation will be
made as to whether the new product should be listed (sold in PLCB retail
stores).
1. A report of products to be listed is forwarded to the Commissioners
for approval.
2. The Commissioners do not participate in the new product review
process.
3. Commissioners vote on the entire recommended new product list,
without any independent review of the product/support data.
4. The Director of Marketing and Merchandising along with the Chief of
the Product Management and Pricing Division make the final
recommendation to the Commission as to what product(s) should be
listed for sale.
5. Luxury wines and one-time buys, including the Chairman’s Selection
Program, are not subject to the listing/delisting process.
i. Conti asserts that he did not participate in any listing or delisting meetings.
1. Board approval of the listing or delisting bypassed Conti in his
position.
21. Delisting occurs simultaneously with the listing process.
a. The delisting process is formally termed “category management,” but is
commonly described as “bucketing” or “filtration” process.
1. Products of like type are placed into categories; i.e. wines of a similar
vintage, type, style, price, etc., are grouped together.
2. Items are categorized by length of time listed: items listed for less
than one year are not eligible for delisting; items listed for between
eighteen to twenty-four (18-24) months are reviewed separately from
those items listed twenty-four (24) months or more.
3. After each item is reviewed, it is placed into a “bucket” if it passes the
“filtering” criteria. For example, if a product meets the threshold
criteria, it is “bucketed” to the next area of review.
Conti, 12-028
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4. Items are reviewed for their profitability with special attention being
placed on: how much profit [was] generated; how many stores
stocked the item; percentage of profit growth (20% growth is viewed
by PLCB as a “good product.”)
b. If a product is to be delisted, the vendor is notified and provided an
opportunity to avoid a delisting.
1. Actions such as an advertising campaign, discounts, [and] product
sampling [are] used to promote sales and possibly avoid a delisting.
c. Recommendations for delisting are similar to listings, where the Director of
Marketing and Merchandising along with the Chief of the Product
Management and Pricing Division make the final recommendation to the
Board as to what product(s) should be delisted.
22. Prior to sometime in 2012, the PLCB purchased all product and warehoused it in a
PLCB facility until distribution to PLCB retail stores.
a. PLCB was responsible for payment of the product once it was within its
possession.
b. PLCB assumed responsibility for loss of the product due to theft, spoilage,
damage, etc., once in the physical custody of PLCB.
23. During calendar 2012, the PLCB initiated a purchasing/inventory system of
bailment.
a. Through the PLCB’s bailment system, product is shipped to PLCB
warehouses from the vendor, as occurred pre-2012.
b. PLCB does not transfer payment of funds nor ownership of the product until
it is to be shipped to the PLCB retail stores.
c. The PLCB system of bailment allows for greater control over inventory and
also limits the risk/exposure the PLCB may have regarding product loss.
1. Through the bailment process, PLCB maintains no more than three
(3) to five (5) weeks’ worth of inventory within its warehouses.
2. Currently twenty seven (27) vendors are under bailment with the
PLCB, which represents approximately 80% of the cash value of
PLCB products sold.
d. Prior to initiating a bailment process, PLCB staff was responsible for
predicting the market for a particular product; if sales were not as expected,
the PLCB would suffer a financial loss through spoilage of product if an
excessive amount of product remained unsold.
24. The primary vendors providing products to the PLCB are:
Southern Wine and Spirits
Capital Wine and Spirits
Allied Beverage (Majestic).
Conti, 12-028
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25. Southern Wine and Spirits of America, Inc. (“Southern”), [claims] to be the nation’s
largest wine and spirits distributor.
a. Since its creation/formation in 1968, Southern has maintained its corporate
office in Miami, Florida.
b. Currently, Southern represents clients in no less than thirty-five (35) states
including “Control States” and “Open States.”
1. An “Open State” refers to a state/jurisdiction where wine, spirits, and
beer sales are conducted through an independent beverage
distributor/retailer.
2. A “Control State” is where a state or county “controls” or regulates the
distribution and/or the sale of wine, spirits, and/or beer.
3. Pennsylvania is the largest Control State operation in the United
States.
26. Southern Wine & Spirits of Pennsylvania operates as a licensed wine and spirits
broker-marketer.
a. Southern expanded its operations into Pennsylvania in 1995.
b. Southern employs approximately two-hundred twenty-five (225) sales and
support staff statewide in Pennsylvania.
c. Southern maintains two (2) offices within Pennsylvania, one in the King of
Prussia area, and the other in the Greater Pittsburgh geographic area.
1. These employees are responsible for marketing and merchandising
alcoholic beverages to the more than 600 PLCB state stores, as well
as Pennsylvania’s 14,500 on-premise accounts.
2. The PLCB is Southern’s only off-premise customer.
27. Brad M. Waxman (“Waxman”) is the Executive Vice President, General Manager of
Southern Wine & Spirits of Pennsylvania.
a. In January 1999, Waxman initiated his employment with Southern.
1. In 2002, Waxman was named Executive Vice President, General
Sales Manager of Southern’s Pennsylvania operations.
b. Mark Sweeney is the former Vice President and General Manager of North
American Wine and Spirits, a division of Southern Wine and Spirits.
1. Sweeney also made sales calls to PLCB officials and employees.
2. In 2008, Waxman was promoted to the position of Executive Vice
President/General Manager of Southern’s Pennsylvania operations.
28. Southern is a broker and vendor/vendor of record for a number of wines and/or
spirits sold to the PLCB.
a. Waxman serves as a broker for a number of the products before the PLCB.
Conti, 12-028
Page 10
b. Products for which Southern serves as broker and/or vendor/vendor of
record account for between approximately 6.43% to 6.85% of PLCB total
Cost of Goods Sold (“COGS”) during the last five (5) years.
c. A list of Southern’s business with the PLCB is detailed below:
Fiscal Year Percent of
Supplier Name Fiscal Year
Payment COGS
SOUTHERN WINE & SPIRITS
2007-2008 $ 62,051,980.00 6.60%
OF PA
SOUTHERN WINE & SPIRITS
2008-2009 $ 67,340,276.96 6.64%
OF PA
SOUTHERN WINE & SPIRITS
2009-2010 $ 72,529,178.51 6.85%
OF PA
SOUTHERN WINE & SPIRITS
2010-2011 $ 69,482,807.78 6.43%
OF PA
SOUTHERN WINE & SPIRITS
2011-2012 $ 77,641,059.78 6.78%
OF PA
* The spreadsheet above is only able to detail approximately 86% of PLCB inventory, as the remaining
percentage is made up of small purchases.
29. In addition to Brad Waxman, Mark Sweeney also markets products to the PLCB on
behalf of Southern.
30. Capital Wine & Spirits, LLC (“Capital”) claims to be one of the largest
wholesalers/brokers of wine and spirits in Pennsylvania.
a. Capital is a member of the Charmer Sunbelt Group, a nationwide distributor
of wine, spirits, beer, and other beverages.
b. The Charmer Sunbelt Group is a collection of privately held companies and
operates distributor/brokerage houses in no less than fifteen (15) states,
including Pennsylvania.
c. Capital employs more than two-hundred (200) employees and reports to sell
in excess of four million cases of wine and spirit throughout the
Commonwealth.
d. The reported 4 million cases of wine/spirit sales include sales to the PLCB.
31. Capital is a broker and vendor/vendor of record for a number of wines and/or spirits
sold to the PLCB.
a. Products brokered by Capital account for a total of between approximately
19.11% to 22.03% of PLCB total Cost of Goods Sold during the last five (5)
years.
b. A list of Capital’s business with the PLCB is detailed below:
Fiscal Year Percent of
Supplier Name Fiscal Year
Payment COGS
1
BACARDI USA INC. 2007-2008 $ 65,399,563.92 6.96%
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Page 11
1
BROWN FORMAN 2007-2008 $ 50,057,434.25 5.33%
REMY COINTREAU USA
2007-2008 $ 8,306,486.83 0.88%
1
INC.
CAPITAL WINE & SPIRITS 2007-2008 $ 40,178,158.61 4.28%
WHITE ROCK
2
DISTILLERIES 2007-2008 $ 18,931,222.63 2.01%
BANFI PRODUCTS
2
CORPORATION 2007-2008 $ 12,874,577.00 1.37%
SUTTER HOME WINERY 2
2007-2008 $ 11,305,649.31 1.20%
Fiscal Year Percent of
Supplier Name Fiscal Year
Payment COGS
BACARDI USA INC. 2008-2009 $ 62,721,532.75 6.19%
BROWN FORMAN 2008-2009 $ 46,707,019.90 4.61%
REMY COINTREAU USA
2008-2009 $ 7,032,821.38 0.69%
INC.
CAPITAL WINE &
2008-2009 $ 37,819,784.20 3.73%
SPIRITS
WHITE ROCK
2008-2009 $ 15,925,879.32 1.57%
DISTILLERIES
BANFI PRODUCTS
2008-2009 $ 14,124,707.82 1.39%
CORPORATION
SUTTER HOME WINERY 2008-2009 $ 14,381,248.01 1.42%
Fiscal Year Percent of
Supplier Name Fiscal Year
Payment COGS
BACARDI USA INC. 2009-2010 $ 67,263,103.22 6.35%
BROWN FORMAN 2009-2010 $ 50,613,490.40 4.78%
REMY COINTREAU USA
2009-2010 $ 7,911,959.34 0.75%
INC.
CAPITAL WINE &
2009-2010 $ 38,317,957.26 3.62%
SPIRITS
WHITE ROCK
2009-2010 $ 21,435,297.82 2.02%
DISTILLERIES
BANFI PRODUCTS
2009-2010 $ 16,606,904.35 1.57%
CORPORATION
Conti, 12-028
Page 12
SUTTER HOME WINERY 2009-2010 $ 15,255,869.66 1.44%
Fiscal Year Percent of
Supplier Name Fiscal Year
Payment COGS
BACARDI USA INC. 2010-2011 $ 61,685,074.98 5.71%
BROWN FORMAN 2010-2011 $ 47,563,997.04 4.40%
REMY COINTREAU USA
2010-2011 $ 7,305,972.37 0.68%
INC.
CAPITAL WINE &
2010-2011 $ 39,033,604.40 3.61%
SPIRITS
WHITE ROCK
2010-2011 $ 19,421,875.69 1.80%
DISTILLERIES
BANFI PRODUCTS
2010-2011 $ 16,521,319.81 1.53%
CORPORATION
SUTTER HOME WINERY 2010-2011 $ 14,909,694.70 1.38%
Fiscal Year Percent of
Supplier Name Fiscal Year
Payment COGS
BACARDI USA INC. 2011-2012 $ 60,866,013.23 5.31%
BROWN FORMAN 2011-2012 $ 48,337,155.48 4.22%
REMY COINTREAU USA
2011-2012 $ 9,765,846.17 0.85%
INC.
CAPITAL WINE &
2011-2012 $ 42,274,675.76 3.69%
SPIRITS
WHITE ROCK
2011-2012 $ 25,582,535.77 2.23%
DISTILLERIES
BANFI PRODUCTS
2011-2012 $ 16,385,912.23 1.43%
CORPORATION
SUTTER HOME WINERY 2011-2012 $ 18,394,480.35 1.61%
1.
Members of TheAlliance
2
Manufacturers represented by Capital in Pennsylvania
* The spreadsheet above is only able to detail approximately 86% of PLCB inventory, as the remaining
percentage is made up of small purchases.
Conti, 12-028
Page 13
32. In an effort to condense marketing efforts and maximize sales and product
exposure, several manufacturers/producers of wines, spirits and malt/brewed
beverages have formed partnerships for marketing purposes; one such partnership
is “The Alliance.”
a. The Alliance is comprised of wine/spirit suppliers: Bacardi USA (“Bacardi”);
Brown Forman; and Remy Cointreau (“Remy”).
b. The Alliance was established by Bacardi, Brown Forman, and Remy to “re-
shape” their route to market in order to provide greater service and access to
the consumer.
c. The goal of The Alliance was/is to create a way for Bacardi, Brown Forman,
and Remy to leverage their scale and profitability in order to secure
dedicated resources.
33. The Alliance is a United States program and is focused on distribution and a
combined portfolio in an effort to compete with other suppliers.
a. The Alliance covers twenty-six (26) markets, which includes the state of
Pennsylvania.
b. Within Pennsylvania, The Alliance is represented by Capital Wine &
Spirits/Charmer Sunbelt Group.
34. Bacardi was founded in 1862, with Bacardi USA being established in New York City
in 1944; Bacardi USA relocated to Miami in 1964.
a. Bacardi reports worldwide sales of $5.5 billion; Bacardi fiscal year recap for
Pennsylvania included a PLCB Rolling 12 Market Profit of $113,127,361.00.
b. The total Bacardi portfolio cases sold in Pennsylvania was reported at
642,870.00.
c. Bacardi’s total Pennsylvania marketing budget was $5.4 million.
35. Brown Forman was founded in 1870 and is one of the largest American owned wine
and spirit companies in the world, and is among the top ten largest global spirits
companies.
a. Brown Forman reported $3.2 billion annual net spirit and wine sales for
Fiscal Year 2009.
b. Brown Forman reported PLCB Rolling 12 Market Profit of $77,066,137.00.
c. The total Brown Forman portfolio cases sold in Pennsylvania was 390,415.
d. Brown Forman’s total Pennsylvania marketing budget was $2,582,120.00.
36. Remy is a two-hundred eighty-eight (288) year old company based in Paris, France,
with global sales reported of over $1 Billion.
a. Remy USA is headquartered in New York, and it was established in 1981.
b. Remy USA reports to have spent approximately $983,500.00 in SPA support
for sales programs during the 2011-2012 fiscal year; and an additional
Conti, 12-028
Page 14
$400,000.00 in marketing support for the Pennsylvania marketplace
annually.
c. Total estimated expenditures for marketing in Pennsylvania total
$1,383,500.00 or approximately $23.00 on every case of beverage sold in
the State of Pennsylvania.
37. Capital Wine and Spirits representatives interacting most often with PLCB officials
include the following:
Mark Littles, former President, Capital Wine and Spirits
Christina Desmond, Director of Marketing and Business Analytics
Rob Sirota, General Manager, Alliance Division of Capital Wine and
Spirits
Kevin McCarty, Vice-President of Compliance and Administration of
Capital Wine and Spirits
Tim Kilcullen, Vice-President of Wine and Education, Capital Wine and
Spirits.
38. Allied Beverage Group, LLC (“Allied”) was created by the mergers of The Baxter
Group, Inc., F&A Distributing Company and The Jaydor Corporation.
a. Allied reports to be New Jersey’s largest and most comprehensive wine and
spirits distributor and ranks among the ten largest distributors in the United
States.
b. Allied also operates subsidiary Majestic Wine & Spirits, USA, LLC
(“Majestic”), which is a Pennsylvania brokerage and vendor/vendor of record
for products sold to the PLCB.
1. As a broker/vendor, Majestic provides merchandising and promotional
services for several major suppliers of alcoholic beverages.
2. Majestic reports to be the PLCB’s highest volume distributor of
“special liquor orders.”
39. As a broker and vendor/vendor of record for products sold to the PLCB, Allied’s
and/or Majestic’s sales account for between approximately 1.51% to 2.18% of PLCB
total Cost of Goods Sold during the last five (5) years.
a. A detailed list of Majestic’s business with the PLCB is detailed below:
Fiscal Year Percent of
Supplier Name Fiscal Year
Payment COGS
MAJESTIC WINE AND
2007-2008 $15,623,508.91 1.66%
SPIRITS
MAJESTIC WINE AND
2008-2009 $15,267,768.10 1.51%
SPIRITS
MAJESTIC WINE AND
2009-2010 $16,454,785.45 1.55%
SPIRITS
MAJESTIC WINE AND
2010-2011 $16,973,020.65 1.57%
SPIRITS
MAJESTIC WINE AND
2011-2012 $25,000,032.79 2.18%
SPIRITS
Conti, 12-028
Page 15
40. Majestic’s primary contacts with PLCB officials and employees are Chris Papariello
and Edward Murray.
a. Papariello is Executive Vice-President of Majestic.
b. Murray serves as Majestic’s Eastern Regional Manager.
41. Executives and marketing representatives from vendors supplying products to the
PLCB would meet with PLCB employees to market products.
a. Those representatives offered gifts, transportation, lodging, and hospitality to
PLCB employees, including Conti.
b. These items including golf events, meals, alcoholic beverages, and gift cards
were offered when listing/delisting of [products] was occurring.
c. Items of value were routinely provided to PLCB officials who were in
discussion [sic] making positions regarding product selection and placement.
42 As the CEO of the PLCB, Conti interacted and met with suppliers and brokers of
wine and spirits for the PLCB, including representatives of Capital, Southern,
Majestic (Allied Beverage), and White Rock Distilleries, a vendor represented by
Capital.
a. Conti would meet with suppliers/brokers at the offices of the PLCB, store
openings, golf outings, and dinner meetings at restaurants.
b. Individuals that Conti had specific dealings with as the CEO from the above
listed entities included: Mark Littles, President of Capital Wine & Spirits;
Tricia Brungo, Control State Manager for White Rock Distilleries; and Mark
Sweeney, Vice President of Sales in Pennsylvania for Diageo.
THE FOLLOWING FINDINGS RELATE TO CONTI’S PARTICIPATION IN A PRO-AM
GOLF EVENT SPONSORED AND PAID BY A PLCB BROKER AND A PLCB SUPPLIER.
43. In 2010 and 2011, Capital Wine and Spirits invited Conti and Members of the PLCB
to participate in Pro-Am golf events occurring at the Aronimink Golf Club.
a. Aronimink Golf Club is a private country club located at 3600 St. David
Road, Newtown Square, Pennsylvania 19073.
b. Aronimink has a top rated championship golf course.
44. The AT&T National Golf Tournament (“AT&T Tournament”) was held at Aronimink
Golf Club during 2010 and 2011.
a. The AT&T Tournament was part of the Professional Golf Association (“PGA”)
Tour, in which weekly tournaments are held across the country.
b. The AT&T Tournament at Aronimink Golf Club was managed and organized
by the Tiger Woods Foundation for the PGA.
1. The Tiger Woods Foundation was established in 1996 by Tiger
Woods and his father, Earl Woods, to create and support community-
based programs that improve the health, education and welfare of all
children in America.
Conti, 12-028
Page 16
2. One of programs it supported was the AT&T Tournament.
45. The AT&T Tournament is normally held from Monday through Sunday.
a. From Monday through Wednesday, Pro-Am Tournaments are held, in which
amateurs will play along with a professional golfer for a fee.
b. The actual PGA golf tournament is held from Thursday through Sunday.
c. As part of the AT&T Tournament held at Aronimink Golf Club in 2010 and
2011, Pro-Am Tournaments were held Monday through Wednesday.
46. Costs in association with playing in a PGA Pro-Am event varied depending on
whether or not a golfer was sponsored.
a. Sponsors of Pro-Am events are generally provided with passes to participate
in the Pro-Am event.
b. The fees to play in Pro-Am events varied by day of week and accompanying
professional golfer.
c. The fees could range from $1,200.00 to $9,500.00.
47. When the AT&T Tournament was held at Aronimink Golf Club in 2010 and 2011,
the Tiger Woods Foundation, in conjunction with the PGA Tour, organized and
managed the tournament.
a. Neither Aronimink Golf Club nor its members played any role in the
tournament, nor were they given the opportunity for any discounts that
included playing in the Pro-Am.
48. As part of managing and organizing the AT&T Tournament held at Aronimink Golf
Club in 2010, the Tiger Woods Foundation offered sponsorships to various
corporations and businesses.
a. One of the sponsors of the Tournament was Bacardi, USA.
49. Bacardi, USA is a division of Bacardi Limited, the largest privately held family
owned spirits company in the world.
a. Capital Wine and Spirits serves as a broker for Bacardi in Pennsylvania.
50. In 2010, Bacardi, USA donated approximately $140,000.00 to sponsor multiple
Tiger Woods Charity Golf Events in the United States, which included the AT&T
Tournament held at Aronimink Golf Club.
a. As part of being a sponsor for events involving the Tiger Woods Foundation
in 2010, three (3) tickets were provided by Bacardi, USA to its broker in
Pennsylvania (Capital Wine & Spirits) to participate in the AT&T Pro-Am
held at Aronimink Golf Club.
51. As a vendor of the PLCB, Capital Wine & Spirits--broker for Bacardi, USA--invited
Conti, along with PLCB Board Members Patrick Stapleton and Robert Marcus, to
participate in the 2010 AT&T Pro-Am held at Aronimink Golf Club.
Conti, 12-028
Page 17
a. Capital’s President, Mark Littles, provided the invitation to Conti, Marcus,
and Stapleton at a time when Capital Wine & Spirits served as broker for
multiple products listed/pending listing before the PLCB.
b. Littles, Conti, Stapleton and Marcus are all experienced golfers, with golf
handicaps established by the United States Golf Association.
52. Both Conti and Stapleton played in the Pro-Am at the AT&T Tournament on June
28, 2010, at Aronimink Golf Club.
53. The following packaged benefits were made available to each golfer and were
included in the 2010 Pro-Am tickets:
Package Benefits
One (1) playing spot in the Aronimink, Pro-Am on Monday, June 28, 2010,
with a PGA Tour Pro on the tournament course (1 professional, 4 amateurs);
One (1) Pro-Am gift package;
Food and beverage throughout the Monday Pro-Am event, including
breakfast and a reception to follow play;
One (1) Aronimink Pro-Am Badge (good for admission all week to the
clubhouse/grounds/locker room access on Monday Only);
One (1) Aronimink Pro-Am guest badge (good for admission all week into
clubhouse/grounds)
One (1) clubhouse parking credential (valid Monday only)
.
54The packaged benefits of playing in the 2010 AT&T Pro-Am included Golf Bag gifts
that included the following items:
2010 Monday Pro-Am Price
$60.00
Photo book by Kodak
$4.60
Bag tag
$45.63
Peter Millar Polo
$5.39
Ladies Shirt
$22.00
Breakfast
$32.00
Lunch
$28.00
Bar
Total $197.62
55. Capital Wine & Spirits records detailing cash receipts for the month of July 2010
document cash deposits from Stapleton, Conti, and Marcus for participation in the
2010 AT&T Pro-Am as shown in the chart below:
Date Name Description Payment Method Amount
07/08/2010 Stapleton PLCB Donation Cash $160.00
07/08/2010 Conti PLCB Donation Cash $200.00
07/08/2010 Marcus PLCB Donation Cash $100.00
a. The payments received by Capital Wine & Spirits were subsequently
donated to the American Diabetes Association.
b. Conti provided Littles with a $200.00 cash payment that he believed was to
Conti, 12-028
Page 18
be applied for greens fees and/or caddy fees.
56. Conti accepted an all-expense paid golf package from a PLCB vendor at a time
when that vendor had an ongoing business relationship with the PLCB.
57. Conti did not participate in the 2011 AT&T Pro-Am golf event.
THE FOLLOWING FINDINGS RELATE TO CONTI’S PARTICIPATION IN ALLIANCE
GOLF OUTINGS AND OTHER HOSPITALITY FROM PLCB VENDORS.
58. Between 2009 and 2011, Capital Wine and Spirits/Alliance organized golf outings
which included officials and management employees of the PLCB.
a. Conti was one of the PLCB employees/officials invited to these events.
59. Robert Sirota is employed as the General Manager, Alliance Division, for Capital
Wine and Spirits.
a. As General Manager, Sirota serves as the direct liaison between the Alliance
suppliers and Capital Wine and Spirits.
b. Sirota reports directly to Mark Littles, President, Capital Wine and Spirits.
60. In or about 2009, the concept for an Alliance Golf Open was conceived as a
collaborative effort between Sirota and members of the Alliance.
a. The golf outing was organized as a means by which Capital Wine and Spirits
and the Alliance suppliers could strengthen their relationship with the PLCB
and to allow various Alliance senior management officials to have “face time”
with PLCB officials.
61. Sirota served as the Capital Wine and Spirits lead/point of contact in relation to
organization of the Alliance Golf Open.
a. Although Sirota served as the event lead, individuals to be invited from the
PLCB were determined through a collaboration between Sirota, Littles,
Christine Desmond (Director of Marketing and Business Analytics, Capital
Wine and Spirits), and/or the Alliance suppliers.
b. Actual invitations to PLCB officials for the event were made by Littles and/or
Desmond.
62. Alliance Golf Open events were held in 2009, 2010, and 2011.
a. Sirota served as the Capital Wine and Spirits organizer for the event
organization each year.
b. Invitees to the 2010 and 2011 events were identified in the same manner as
in 2009.
63. An Alliance Golf Open was initially planned for the 2012 calendar year but
ultimately was not held.
a. The 2012 Alliance Golf Open was cancelled as a result of the ongoing State
Ethics Commission investigations and published media accounts of . . . items
of value received by PLCB officials from PLCB vendors.
Conti, 12-028
Page 19
b. The decision to cancel the event was made jointly among Littles, Desmond,
and Sirota.
64. The 2009, 2010, and 2011 Alliance Open were one-day events consisting of
morning travel (if necessary), a warm up session, lunch, a round of golf (eighteen
holes), and dinner in the evening.
a. Sirota developed the itinerary for each respective Alliance Open.
b. The event was intended to be social in nature.
65. The costs associated with the 2009, 2010, and 2011 Alliance Golf Open were borne
by the Alliance suppliers and Capital Wine and Spirits.
a. The total costs of the events were divided into four equal amounts to be paid
by Capital Wine and Spirits, Bacardi, Brown Forman, and Remy.
66. The 2009 Alliance Golf Open was held at the West Shore County Club (“WSCC”),
100 Brentwater Road, Camp Hill, PA 17011, on Wednesday, August 19, 2009.
a. The roster for the 2009 Alliance Open identified the individuals participating
as shown below:
Group No. Player Affiliation
#1 Joe Conti PLCB, Chief Executive Officer
Mike Remitz Remy Cointreau USA, VP/Division Manager
Bart Pio Capital Wines & Spirits, Chairman
WS Member* -
*WS=West Shore member to play as host member
Group No. Player Affiliation
#2 Matt Symanski Brown-Foreman, Territory Sales Manager
Scott Pickford Bacardi USA
Kevin McCarty Capital Wine & Spirits: The Charmer Sunbelt
Group, VP Compliance & Administration
WS Member* -
*WS=West Shore member to play as host member
Group No. Player Affiliation
#3 Jim Short PLCB, Director of Marketing and Merchandising
Dave Franke Brown-Forman, State Manager PA/DE
Al Bruni Bacardi USA
Mark Littles Capital Wine & Spirits: The Charmer Sunbelt
Group, President
Group No. Player Affiliation
#4 Matt Schwenk PLCB, Director of Product Selection
Brad Moser Remy Cointreau USA, Regional Sales Manager
Rob Sirota Capital Wine & Spirits: The Charmer Sunbelt
Group, General Manager of the Alliance Division
Christina Godfrey Capital Wine & Spirits: The Charmer Sunbelt
(Desmond) Group, Director of Marketing and Business
Analytics
b. The roster identified the start time of the event as 10:30 a.m.
1. The actual event itinerary was not provided by Capital Wine and
Spirits/Alliance.
67. In addition to Conti, PLCB attendees at the event included James Short and
Matthew Schwenk.
Conti, 12-028
Page 20
a. In 2009, Short served as the PLCB Director of Marketing and Merchandising
while Schwenk was the PLCB’s Director of Product Selection.
68. Sirota was invoiced by the West Shore Country Club for the August 19, 2009,
Alliance Golf Open in the amount of $1,324.06.
a. The invoice did not document a date or invoice number.
b. The invoice documented the client/organization as Capital Wine and Spirits.
c. The following charges were outlined on the bill:
Golf: $1,136.80
Food/Beverage: $ 187.26
Total: $1,324.06
69. Additional purchases totaling approximately $147.17 were made by Sirota and
Desmond for refreshments in association with the 2009 Alliance Open.
a. Sirota’s expense report documented a purchase in the amount of $67.17 for
the golf outing.
b. Desmond’s expense report documented a purchase of $80.00 for the golf
outing.
70. Expenses associated with the 2009 Alliance Golf Open totaled at least $1,471.23.
a. The value of the golf outing based on a maximum of fourteen (14) individuals
in attendance totaled approximately $105.09 per individual.
1. Costs of greens fees for WSCC members are not included as
members were not assessed greens fees.
71. A second Alliance Golf Open was held July 15, 2010, at the River Crest Golf Club.
a. Conti did not participate in this event.
72. A third Alliance Open was arranged by Capital Wine & Spirits for officials of the
PLCB in 2011.
a. Mark Littles, Capital President extended an invitation to Conti and PLCB
Chairman Patrick Stapleton.
73. Mark Littles of Capital Wine & Spirits sent an email to Conti and Stapleton on March
30, 2011, at 10:53 a.m. in which James Short, Marketing Director of the PLCB, was
copied along with Capital employees Robert Sirota, Cristina Desmond and Kevin
McCarty. The subject of the e-mail was Alliance Meeting and included the
following:
PJ/Joe,
On behalf of our Alliance partners, Bacardi, Brown Forman and Remy, I would like to extend
an invite to the PLCB Board, Joe, Jim and members of Jim’s team, to an Alliance Outdoor
meeting at Philadelphia CC. We would like to see if either 7/14 or 7/21 would Work for you.
The days [sic] agenda would be:
Lunch 12-1
Outdoor Meeting 1-5
Conti, 12-028
Page 21
Dinner 6-8
This would all take place at Philadelphia CC.
We could secure rooms at Marriott Conshohocken for anyone wanting to stay overnight.
Please let us know which date works best for you and we can start setting up the details.
Thank you,
Mark
74. Sirota forwarded an e-mail on June 27, 2011, at 10:26 a.m. to Capital officials
including Littles, Desmond, and McCarty regarding the third Alliance Open which
included confirming the date of July 14, 2011, at the Philadelphia County Club.
a. Desmond responded on June 27 at 11:00 a.m., as follows:
“I have communicated this information to Jim (Short) and Matt (Schwenk).
Kevin (McCarty) and Mark (Littles) should handle Joe (Conti), PJ
(Stapleton), and Hitz.”
1. Doug Hitz is the PLCB Director of Planning and Procurement.
75. Littles sent another e-mail to Conti on June 27, 2011, 11:44 a.m. with the subject
matter “Third Alliance Open – July 14” along with attachments, and included as
follows:
“Joe, here are the details on the Alliance meeting for 7/14. Thanks Mark”
76. The 2011 Alliance Golf Open was held at the Philadelphia Country Club, 1601
Spring Mill Road, Gladwyne, PA 19035 on July 14, 2011.
a. The roster/itinerary for the 2011 Alliance Open identified the individuals
participating as shown below:
Group No. Player Affiliation
#1 PJ Stapleton PLCB, Board Member/Chairman
Mike Leibick
Mark Brown-Forman, Vice President/Director Central States &
Satterthwaite Canada
Mark Littles Capital Wine & Spirits: The Charmer Sunbelt Group, President
Group No. Player Affiliation
#2 Joe Conti PLCB, Chief Executive Officer
Mike Remitz Remy Cointreau USA, VP/Division Manager
Todd Pemble Bacardi USA, Regional Director
Matt Symanski Brown-Forman, Territory Sales Manager
Group No. Player Affiliation
#3 Jim Short PLCB, Director of Marketing
Guillermo Bacardi, V.P./Managing Director - East Commercial Business
Rodriguez Unit
John Higgins Wirtz Beverage Nevada, Sales Manager
Rob Sirota Capital Wine & Spirits: The Charmer Sunbelt Group, Director
of Alliance Brands
Group No. Player Affiliation
#4 Matt Schwenk PLCB, Director of Product Selection
Scott Pickford Bacardi USA
Cristina Capital Wine & Spirits: The Charmer Sunbelt Group, Director
Desmond of Marketing and Business Analytics
Brad Moser Remy Cointreau USA, Regional Sales Manager
Group No. Player Affiliation
Conti, 12-028
Page 22
Group No. Player Affiliation
#5 Doug Hitz PLCB, Bureau Director
Kevin McCarty Capital Wine & Spirits: The Charmer Sunbelt Group, VP
Compliance & Administration
Dave Franke Brown-Forman, State Manager PA/DE
Rich Byrne Remy Cointreau, Field Marketing Director
1. Twenty (20) individuals participated in the 2011 Alliance Open.
b. The itinerary for the event documented the following activities:
11:00 a.m. Warm up/Range-PCC
11:30 a.m. Lunch-The Terrace
12:40 p.m. First Group Tee Time
12:50 p.m. Second Group Tee Time
1:00 p.m. Third Group Tee Time
1:10 p.m. Fourth Group Tee Time
1:20 p.m. Fifth Group Tee Time
5:00p-6:30 p.m. Cocktails on the Terrace
5:00p-6:30 p.m. Hotel Check In-Conshohocken Marriot
7:00 p.m. Dinner at Philadelphia Country Club on the Terrace
c. The itinerary for the event documented hotel accommodations available at
the Marriott, 111 Crawford Ave, West Conshohocken, PA 19428.
77. PLCB attendees at the event included Short, Conti, Schwenk, Stapleton, and Doug
Hitz, PLCB Bureau Director for Planning and Procurement.
78. The 2011 Alliance Open was a business event and social gathering arranged by
Capital Wine and Spirits, and the Alliance.
a. Activities taking place at the 2011 Alliance Open included lunch,
presentations, eighteen (18) holes of golf, cocktails, and dinner.
79. Records of Capital Wine and Spirits in reference to the July 14, 2011, Alliance Golf
Open documented expenses incurred at the Philadelphia Country Club in the
amount of $9,487.96.
a. The banquet invoice generated by the Philadelphia Country Club (Booking
No. 017299) documented a billing date of July 14, 2011.
b. The invoice documented the expense breakdown as:
Recap & Total Costs
Services $2,691.55
Resources $6,037.00
Service Chg $592.14
Sales Tax $167.27
Total $9,487.96
1. Included within the event cost were golf hats, shirts, and golf gift bags
with miscellaneous items for the participants.
80. Expenses associated with the 2011 Alliance Golf Open per attendee, including
Conti were $474.40.
a. This amount was determined by dividing the cost of the event ($9,487.96) by
the number of attendees (20).
Conti, 12-028
Page 23
81. Between 2009 and 2012, Conti, as the CEO of the PLCB, was a dinner guest of
Mark Littles.
a. One dinner also included golf.
b. Littles was reimbursed for these expenses by Capital.
82. Littles, as the President of Capital Wine & Spirits, would submit business expense
reports through Capital Wine & Spirits to claim reimbursement for any expenses
that Littles claimed he incurred entertaining PLCB Officials.
a. Claimed expenses would include any Littles incurred entertaining Conti as
the CEO of the PLCB.
83. Littles, in his capacity as the President of Capital Wine & Spirits, claimed and was
reimbursed by Capital for the following business expenses which included meals
and golf during which Conti attended:
Activity Date Net Amount Text Additional Text
08/26/2009 $111.16 PLCB Meeting/Dinner Spring House
B Pio, J Conte [sic]
07/22/2010 $1,354.33 Lunch/Dinner Meeting New Hope PLCB New Store Opening
PLCB New Store Opening PJ Stapleton, Joe Conti, Tom Goldsmith,
Bob Marcus, CWS Managers
Golf Lunch/Dinner
05/07/2011 $1,050.16 PLCB Wine Festival Dinner Barclay Prime
w PLCB Board Members Tom Goldsmith and Wife, Joe Conti and Wife,
B Pio and Wife, L Sutow and Wife
08/19/2011 $196.26 Dinner Redstone Grill Dinner
Joe Conti, Wife, PLCB Joe Conti, K McCarty and Wives
03/09/2012 $95.21 Lunch Meeting Savona, Gulph Mills, PA
Joe Conti, PLCB
a. Between August 2009 and March 2012, Littles’ expenses reflect Joe Conti as
being present at the events listed above.
1. Conti asserts that he was not present at the 8/26/2009, 7/22/2010,
5/7/2011, or 8/19/2011 meetings.
b. Conti accepted hospitality from Mark Littles, in his capacity as CEO for the
PLCB, at a time when Capital Wine & Spirits supplied product to PLCB.
c. Conti’s log detailed in Finding No. 112 reflects he paid his portion of the
March 9, 2012 lunch bill.
84. The costs per year for hospitality paid by Littles (Capital), as reflected in Little’s
expense reports, attributed to Conti, were calculated as follows:
2009: 08/26/09 Dinner
1/3 of $111.16 $37.05
Alliance Golf $105.09
Total: $142.14
2010: 07/22/10 Greens Fees
Lookaway Golf Club $100.00
Total: $100.00
Conti, 12-028
Page 24
2011: 5/7/11 Dinner
2/10 [sic] of $1,050.16 $105.01
8/19/11 Dinner $78.50
2011 Alliance Golf $474.40
Total: $657.91
a. Conti asserts the he was not present and did not receive any hospitality for
events occurring on 8/26/2009, 7/22/2010, 5/7/2011, or 8/19/2011.
THE FOLLOWING FINDINGS RELATE TO CONTI’S RECEIPT OF HOSPITALITY FROM
PLCB VENDOR WHITE ROCK DISTILLERIES.
85. White Rock Distilleries (“White Rock”) is/was a manufacturer/supplier of spirits and
liqueurs, headquartered in Lewiston, Maine.
a. White Rock owned six (6) bottling lines and more than one-hundred (100)
brands of alcoholic beverage/spirit products.
b. White Rock produced in excess of five million cases of alcoholic product
annually.
c. Capital serves as a broker for White Rock.
86. Conti, as the CEO of the PLCB, on occasion had dinner and played golf with Tricia
Brungo, Control State Manager of Wine and Spirits for White Rock Distilleries
which included the State of Pennsylvania.
a. Brungo incurred expenses entertaining Conti while White Rock Distilleries
was doing business with the PLCB.
87. Brungo, as a Control State Manager for White Rock Distilleries, would submit
expense reports and claim expenses for entertaining PLCB Officials while
marketing White Rock products.
88. Between 2010 and 2012, Brungo, as a Control State Manager for White Rock
Distilleries, claimed the following business expenses that included expenses she
incurred on behalf of Joe Conti, CEO of the PLCB:
Date Location Persons Entertained Business Purpose Amount
2/18/2010 Rock Bass Tracey/Joe-PLCB Dinner $220.93
Harrisburg Cristina-Capital
4/21/2010 Cap Grill Joe Conti- PLCB Dinner- Market Visit $245.96
Pittsburgh
5/6/2010 Habitat Jim Short, Joe Conti-PLCB Cocktails $42.82
Pittsburgh
5/6/2010 Treesdale Jim Short, Joe Conti-PLCB Golf $169.96
Pittsburgh
5/6/2010 Habitat Jim Short, Joe Conti-PLCB Dinner $297.01
Pittsburgh
Conti, 12-028
Page 25
8/24/2010 Hershey CC Joe Conti, Sue Hobart-PLCB Dinner $85.50
Hershey
2/21/2012 The Carlton Joe Conti- PLCB Dinner meeting $333.34
Pittsburgh
a. Brungo’s expense records reflect Conti as being present at the events listed
above.
1. Conti asserts that he did not attend the 2/18/2010 or 5/6/2012
meetings.
2. Conti asserts that the greens fees paid by him on 8/24/2010
exceeded the meal expenses incurred by Brungo.
89. As part of the dinner expense that Brungo incurred with Conti on February 21,
2012, a series of emails leading up to the dinner included the following:
Conti to Brungo
January 31, 2012 5:38 PM
Tricia…I am going to be in Pittsburgh Monday February 20 through Wednesday
February 22. Any chance of getting together for dinner?
Brungo to Conti
February 1, 2012, 11:01 a.m.
Hi Joe!
I was just thinking about you this week! It has been a long time! I would love to
catch up and I am in town on Tuesday, Feb 21st if you would like to have dinner
that night? Let me know what your schedule looks like in the afternoon as well if you
want to visit stores or any on premise accounts, I would be more than happy to
drive…OR, let you drive!!
Conti to Brungo
February 1, 2012, 6:27 p.m.
Trish…Great news. I am in meetings with the press and radio until around 4 PM on
Tuesday so store visits may not work. Let’s get dinner on our schedules and we can
work out the details later. I can come out your way for dinner if that is better for you.
I’ll be in touch.
Brungo to Conti
February 2, 2012, 8:43 a.m.
Sounds great! Let’s meet in the city!
Talk soon! My cell is 412-xxx-xxxx.
Have a great day,
Conti, 12-028
Page 26
Trish
90. The costs per year for hospitality provided by year to Conti by Brungo/White Rock,
as reflected in Brungo’s expense reports, are as follows:
2010: 2/18/10 Dinner
1/3 of $220.93 $73.64
4/21/10 Dinner
1/2 of $245.96 $122.98
5/6/10 Cocktails
1/3 of $42.82 $14.27
5/6/10 Dinner
1/3 of $297.01 $99.00
8/24/10 Dinner
1/3 of $85.50 $28.50
Total: $338.39
2012: 2/21/12 Dinner
1/2 of $333.34 $166.67
Total: $166.67
a. Conti’s log reflects for August 24, 2010, that he paid for rounds of golf for
Sue Holt, Tricia Brungo, and James Short.
b. Conti asserts that he was not present and did not receive any hospitality for
events occurring on 2/18/2010, as reflected in Brungo’s expense reports.
91. Conti accepted dinners and drinks from Brungo/White Rock at a time when White
Rock was marketing products to the PLCB.
92. Diageo (“Diageo”) is a producer of alcoholic beverages both within the continental
United States and globally.
a. Diageo is the largest producer of whisky, owning twenty-eight (28) malt
distilleries and two (2) grain distilleries.
b. Diageo products include, but are not limited to: Johnnie Walker, Crown
Royal, J&B, Windsor, Buchanan's and Bushmills whiskies, Smirnoff, Ciroc
and Ketel One vodkas, Baileys, Captain Morgan, Tanqueray, and Guinness.
93. Diageo is a broker and vendor/vendor of record for a number of wines and/or spirits
sold to the PLCB.
a. Products brokered by Diageo account for approximately 13.07% to 15.85%
of PLCB total Cost of Goods Sold during the last five (5) years.
b. A detailed list of Diageo’s business with the PLCB is detailed below:
Supplier Name Fiscal Year Fiscal Year Payment Percent of COGS
DIAGEO NORTH 2007-2008 $141,169,067.70 15.02%
AMERICA INC.
DIAGEO CHATEAU & 2007-2008 $7,750.154.60 0.82%
ESTATES
DIAGEO NORTH 2008-2009 $141,821.933.63 13.99%
Conti, 12-028
Page 27
AMERICA INC.
DIAGEO CHATEAU & 2008-2009 $7,542,461.98 0.74%
ESTATES
DIAGEO NORTH 2009-2010 $143,026,966.71 13.51%
AMERICA INC.
DIAGEO CHATEAU & 2009-2010 $7,785,032.83 0.74%
ESTATES
DIAGEO NORTH 2010-2011 $144,472,794.88 13.37%
AMERICA INC.
DIAGEO CHATEAU & 2010-2011 $5,849,281.30 0.54%
ESTATES
DIAGEO NORTH 2011-2012 $144,425,918.21 12.61%
AMERICA INC.
DIAGEO CHATEAU & 2011-2012 $5,311,526.91 0.46%
ESTATES
* The spreadsheet above is only able to detail approximately 86% of PLCB inventory, as the remaining
percentage is made up of small purchases.
94. Conti, as the CEO of the PLCB, interacted with Mark Sweeney, Vice President and
Sales with Diageo for the State of Pennsylvania.
a. Sweeney was employed by Diageo prior to his current employment with
Southern.
95. In 2009, while Diageo was doing business with the PLCB, Sweeney made
arrangements to provide Conti with an engraved bottle of Johnnie Walker Blue, a
liquor product marketed by Diageo.
a. Conti did not solicit or request the bottle be provided.
96. An e-mail from Sweeney to Mark Little of US Concepts dated October 2, 2009, at
11:35 a.m. documents Sweeney’s request for a JW Blue Engraved Bottle as
follows:
Mark
I need an engraved JW Bottle ASAP. I would like the inscription to be:
Super CEO
Joe Conti
From Team Diageo
Please advise the earliest you can get it done if the message works
Thanks Mark
97. On October 9, 2009, at 8:01 p.m. Mark Sweeney sent an email to Diageo officials
advising as follows:
FYI
I presented Joe with a sample of Johnnie Walker Blue engraved 750ML. The
inspection [sic] read “Super CEO, Joe Conti, from Team Diageo.
I enclosed a note stating: On behalf of Mark, Seena, Mark, and the Diageo Team…
Just in case you run into Joe. He seemed very appreciative.
98. The retail value of a bottle of Johnnie Walker Blue is approximately $229.99.
a. The price does not include engraving costs.
b. The bottle was provided to Conti at a time when Diageo was doing business
with the PLCB.
Conti, 12-028
Page 28
99. As a Member of the Pennsylvania General Assembly, Conti began keeping an
internal log which documented meetings, dinners, and/or items received from
various sources.
a. Conti continued this practice when he became the CEO of the PLCB.
b. The log included the date of the event, the location, the attendees, and
documented who paid expenses.
100. The following information in part reflects highlights of Conti’s log from 2008 through
2012 when he had dinner, played golf, or attended sports events with various
officials that involved PLCB business:
DateReason for Meeting
1/22/2008 Dinner at Chris with Rita Valois and Jim West from
Deloitte. I paid for my share receipt provided
2/6/2008 Dinner at Bricco's with Deloitte. I paid for dinner
2/20/2008 Dinner at Tavern on the Hill w/Deloitte. I paid for my dinner
3/5/2008 Dinner at Bricco's with Rita Valois from Deloitte. Separate
checks - I paid for my dinner
6/15/2008 Breakfast w/Marc Rayfield CBS Radio and Chairman
Stapleton. PJ paid for breakfast
8/10-12/08 PLCB Marketing conference at Hershey Hotel, Dinner
Night. I paid $115 to event
8/18/2008 Guest speaker at Deloitte. Quarterly meeting to give remarks
on PLCB vision and renaissance - West Shore Country Club
9/30/2008 Golf at Hershey Country Club with Bart Pio, Bicardi
Executives. I paid for my golf
10/2/2008 Golf at Hershey Country Club with Marc Goodrich, Villa Banfi.
I paid for his and my golf
11/18/2008 Dinner with Diageo Executives, PJ Tom and Bob. I paid for
PJ, Tom, Bob and my dinner.
12/12/2008 PWSA Luncheon, King of Prussia. PWSA paid for lunch.
2/20/2009 Lunch with Howard Eskin, Jim Short and Kate Paine. Jim paid
for lunch.
2/27/2009 Lunch with Kate Phillips at Capital Grille. I paid for lunch.
5/29/2009 Lunch with Sky Cooper, Kevin O'Brien (Jacquin) and PJ Stapleton.
PJ paid for lunch.
6/5/2009 Lunch with Kelly Boyd, Andi Pearson at Capital Grille
I paid for lunch
6/24/2009 Working lunch with Lender at Mangia Qui. Lender paid for lunch.
Conti, 12-028
Page 29
7/21/2009 Lunch with John Dubois at Mangia Qui John paid for lunch with
my coupon.
7/29/2009 Dinner with Alan Cohen - Reel Bell Grill. Alan paid for lunch
10/28/2009 Lunch at Aronimick [sic] CC with Jim Short and PJ Stapleton. PJ paid
for lunch.
11/25/2009 Convention Bureau Luncheon, Marriott Philadelphia
PWSA paid for ticket
3/3/2010 Lunch with Chris Papariello (Majestic) and Steve Dicarlo V.P.,
Deutsch
at Mangia Qui, I paid $15 for my lunch
4/15/2010 Dinner with David Sweet and Kevin O'Brien, Table 31 to discuss
Jacquins. I paid for half of the lunch. Invoice included
6/28/2010 Played golf in ATT National Tournament at Aronimink. I paid
$140 cash for greens fee
7/9/2010 Played golf at Merion with Dennis CEO of Lincoln Financial. I paid for
golf.
7/21/2010 Dinner at (Itchie) Restaurant in (Lockerbie) before New Hope
store opening. I paid for dinner of 14 people
7/30/2010 Played Philly Cricket with Sal Scott and Jay Craclkore. I paid for Scott
and I golf.
8/24/2010 Golf Hershey with Jim Short and Trish Brungo and Sue Hobart.
I paid for all the golf
9/28/2010 Working lunch provided UFCW 1776 at AFSCME Bldg.
12/8/2010 Lunch at Chickie & Pete's with (Carselehan) Executives. I paid cash
for PJ and mine lunch
2/11/2011 Lunch with Rob Cassell at Philly Distillery at Sansom Street House.
I paid for my lunch.
3/2/2011 Lunch with Sazerac Executives and PJ at Mangia Qui. I PLCB paid
for lunch
4/29/2011 Lunch with Marne Olde and Brad Waxman, Southern & BWSA
Groves trading Post. I paid for lunch - not reimbursed
6/22/2011 Philly Union Soccer. Gone meeting with Justin Somers. Harmelin
Media provides tickets
6/28/2011 Lunch with Phil (Herv not legible) at the Cellar. Preoccupied at the
Arts
Phillip paid for dinner.
6/29/2011 Phillies game with John Rooney (not legible) John paid for ticket.
7/7/2011 Lunch with Lew Klein at McCormack & Schmick. Lew paid for lunch.
Conti, 12-028
Page 30
7/28/2011 Phillies game with Rob Cassell. I paid for ticket and dinner at
Tony Luke's.
7/29/2011 Phillies game with Harmelin/Channel 17 (not legible)
Harmelin provided ticket
8/18/2011 Phillies game with Howard Eskin. Tickets from Modell Sports.
I paid for our dinner.
9/21/2011 Phillies game with Marc Rayfield. I paid for ticket and dinner.
3/2/2012 Lunch at Mangia Qui and Bob Everitt of Flourtown Hotel
I paid for our lunches
3/9/2012 Lunch with Mark Little at Bar Savaona. I paid for my lunch
4/9/2012 Dinner at Bricco with NABCA Industry Steering Committee.
NABCA paid for dinner.
5/2/2012 PLCB - Deloitte seminar in Deloitte Philly office.
Working seminar with lunch provided
101. Conti’s log was not all-inclusive of all dinners, lunches, and travel related to his
position of CEO with the PLCB.
a. Conti identified that he played at the AT&T Pro-Am in 2010 and claimed
paying $140.00 for participating in the event.
1. CWS President Mark Littles’ records reflect a donation of $200.00
made by Conti.
b. Conti did not list on the log that he played golf at the Alliance Open in 2009
and 2011 sponsored by Capital Wine & Spirits/Alliance.
c. Conti’s log did not identify that he received an engraved Johnnie Walker
Blue Bottle from Diageo in 2009.
102. As the CEO of the PLCB and as identified by his ethics log, Conti was provided with
tickets to sporting events from vendors of the PLCB.
a. This included but was not limited to Harmelin Media, Deloitte Consulting and
Philadelphia Distilling.
103. Harmelin Media was founded in 1982 by Joanne Harmelin and it was one of [the]
Philadelphia area’s first agencies solely dedicated to media planning and buying.
a. Harmelin Media is one of the largest media services firms in the United
States.
104. In or around 2011, the PLCB spent approximately $474,600.00 with Harmelin Media
to place ads for its private brands.
a. In or around 2011, the PLCB and Harmelin Media were working together to
establish a business relationship with the Philadelphia Union.
Conti, 12-028
Page 31
105. Pursuant to that relationship, Joe Conti was provided tickets to the Philadelphia
Union Soccer Match along with his wife on June 22, 2011.
a. The purpose of the offer was to encourage Conti to authorize the PLCB to
advertise at Union Soccer games.
106. The following email exchange was made on June 24, 2011, between Nick
Sakiewicz, CEO & Operating Partner of the Philadelphia Union and Joe Conti
documents discussions regarding Conti attending a soccer match:
June 24, 2011, 2:49 p.m.
Joe,
It was really great finally meeting you and Molly Wednesday in my suite. I wish we
could have spent more time together and perhaps we can do that in the near future.
We had a packed house and I it was a little crazy but I was really enjoying our brief
conversation. It was very impressive to hear your high level of knowledge on the
growth of our sport and what is truly happening out in the marketplace with regards
to the explosive growth of soccer fans in the U.S. I find that refreshing and fortunate
that all our partners know what the real truth is behind the explosive growth of
soccer. The companies that understand the trends have the most success
marketing to this new emerging market. The opportunities are tremendous and, if
possible I would love to get together with you again and explore some of them
together. Have a great weekend. With a win tomorrow we take sole possession of
first place so it’s going to be another packed house and hopefully a memorable
night at PPL Park.
Best Regards
June 24, 2011, 8:09 p.m.
Nick…. Thanks again for your gracious hospitality at the game. I enjoyed meeting
you. A night at the Union is quite an event. I am becoming a fan of the real Carlos
Ruiz. I have asked our marketing folks and Harmelin to revisit working with your fine
organization. All the best for a victory tomorrow and a first place standing!.....
Joe
THE FOLLOWING FINDINGS RELATE TO THE ALLEGATION(S) THAT WALTER
JOSEPH CONTI, AS THE CEO OF THE PLCB, FAILED TO DISCLOSE ON
STATEMENTS OF FINANCIAL INTERESTS ALL GIFTS AND TRANSPORTATION,
LODGING AND HOSPITALITY.
107. Conti in his official capacity as CEO of the PLCB was annually required to file a
Statement of Financial Interests (“SFI”) [disclosing] information for the prior
calendar year.
a. Conti was required to file an SFI for each year he held the CEO position.
b. Conti served as the CEO from December 2006 until February 2013.
108. Statements of Financial Interests on file with the State Ethics Commission include
the following filings by Conti covering the calendar years 2007 through 2012:
Calendar Year:2012
Filed: 1/17/2013 on SEC-1 REV. 01/13
Calendar Year: 2011
Filed: 1/20/2012 on SEC-1 REV. 01/12
Conti, 12-028
Page 32
Calendar Year: 2010
Filed: 2/1/2011 on SEC-1 REV. 01/11
Calendar Year: 2009
Filed: 3/25/2010 on SEC-1 REV. 01/10
Calendar Year: 2008
Filed: 3/9/2009 on SEC-1 REV. 01/09
109. Conti did not disclose gifts or transportation, lodging and hospitality received from
vendors of the PLCB on his SFI for calendar year 2010 as follows:
a. In 2010, Conti failed to disclose transportation, lodging, and hospitality
provided by Capital Wine and Spirits for the AT&T Pro-Am Tournament held
at Aronimink Golf Club.
b. In 2009, Conti was not required to report his receipt of an engraved bottle of
Johnnie Walker Blue from PLCB Broker Diageo, as the value was less than
the . . . reporting limit of the Ethics Act.
110. Joe Conti realized a private pecuniary benefit of $2,388.51 as a result of golf
outings, sporting tickets, and gifts that were provided to Conti as the CEO by
suppliers, brokers, and vendors doing business with the PLCB as well as failing to
disclose the value of the AT&T Tournament, Philadelphia Union Soccer tickets and
*
an engraved bottle of wine.
a. Value of playing in the 2010 AT&T Pro-am
(Less $200.00 donation by Conti) $1,000.00
b. Value of playing in the 2009 Alliance Open $105.09
c. Value of playing in the 2011 Alliance Open $474.40
*
d. Cost of engraved Bottle of Johnnie Walker Blue $229.99
e. White Rock Distilleries 2010-2011 $431.42
f. 2010 Greens Fees (Lookaway) CWS $100.00
g. 2011 Hospitality CWS $47.61
Total$ 2,388.51
*
[The engraved bottle of Johnnie Walker Blue was not required to be reported because its
value was less than the applicable reporting threshold of the Ethics Act.]
III.DISCUSSION:
As Chief Executive Officer (“CEO”) of the Pennsylvania Liquor Control Board
(“PLCB”) from December 16, 2006, to February 2, 2013, Respondent Walter Joseph Conti,
hereinafter also referred to as “Respondent,” “Respondent Conti,” and “Conti,” was a
public official/public employee subject to the provisions of the Public Official and Employee
Ethics Act (“Ethics Act”), 65 Pa.C.S. § 1101 et seq.
The allegations are that Respondent Conti violated Sections 1103(a) and 1105(b) of
the Ethics Act when he: (1) used the authority of his public position for the private
pecuniary benefit of himself and/or members of his immediate family when he accepted
Conti, 12-028
Page 33
gifts, transportation, lodging, and/or hospitality from vendors of the PLCB at a time when
those vendors had an ongoing business/contractual relationship with the PLCB; and (2)
failed to disclose his receipt of gifts, transportation, lodging and/or hospitality on
Statements of Financial Interests (“SFIs”) filed for the 2009 through 2011 calendar years.
Pursuant to Section 1103(a) of the Ethics Act, a public official/public employee is
prohibited from engaging in conduct that constitutes a conflict of interest:
§ 1103. Restricted activities
(a)Conflict of interest.—
No public official or public
employee shall engage in conduct that constitutes a conflict of
interest.
65 Pa.C.S. § 1103(a).
The term "conflict of interest" is defined in the Ethics Act as follows:
§ 1102. Definitions
"Conflict" or "conflict of interest."
Use by a public
official or public employee of the authority of his office or
employment or any confidential information received through
his holding public office or employment for the private
pecuniary benefit of himself, a member of his immediate family
or a business with which he or a member of his immediate
family is associated. The term does not include an action
having a de minimis economic impact or which affects to the
same degree a class consisting of the general public or a
subclass consisting of an industry, occupation or other group
which includes the public official or public employee, a
member of his immediate family or a business with which he or
a member of his immediate family is associated.
65 Pa.C.S. § 1102.
Section 1103(a) of the Ethics Act prohibits a public official/public employee from
using the authority of public office/employment or confidential information received by
holding such a public position for the private pecuniary benefit of the public official/public
employee himself, any member of his immediate family, or a business with which he or a
member of his immediate family is associated.
Section 1105(b) of the Ethics Act and its subsections detail the financial disclosure
that a person required to file the SFI form must provide.
Subject to certain statutory exceptions not applicable to this matter, Section
1105(b)(6) of the Ethics Act requires the filer to disclose on the SFI the name and address
of the source and the amount of any gift or gifts valued in the aggregate at $250 or more
and the circumstances of each gift.
Subject to certain statutory exceptions not applicable to this matter, Section
1105(b)(7) of the Ethics Act requires the filer to disclose on the SFI the name and address
of the source and the amount of any payment for or reimbursement of actual expenses for
transportation and lodging or hospitality received in connection with public office or
employment where such actual expenses exceed $650 in an aggregate amount per year.
Conti, 12-028
Page 34
As noted above, the parties have submitted a Consent Agreement and Stipulation of
Findings. The parties' Stipulated Findings are set forth above as the Findings of this
Commission. We shall now summarize the relevant facts as contained therein.
Following his service as a Member of the Pennsylvania General Assembly,
Respondent Conti served as CEO of the PLCB from December 16, 2006, until his
retirement effective February 2, 2013. Following his retirement, Conti continued as an
annuitant with the PLCB in 2013 to assist with the transition.
The PLCB is governed by a three-Member Board. The PLCB regulates the sale of
alcohol in Pennsylvania. In order for an alcoholic beverage to be sold in Pennsylvania, it
must be authorized for sale by the PLCB. The PLCB is the only retail seller of wine/spirits
in the Commonwealth.
As CEO of the PLCB, Conti’s responsibilities and duties included, inter alia: (1)
directing/managing the agency’s administrative functions, including human resources and
budget and fiscal management; (2) directing the agency’s business operations, including
product management and store operations; (3) holding approval authority for policies and
procedures affecting the distribution and marketing as to all alcoholic beverages sold
within the Commonwealth; and (4) directing, through subordinate senior level managers,
the PLCB’s Commonwealth-wide activities related to procurement, marketing and sales,
and distribution of alcoholic beverages.
The PLCB adds and removes products sold in PLCB retail stores through a process
known as “listing” and “delisting.” The parties have stipulated that the PLCB Director of
Marketing and Merchandising, Chief of the Product Management and Pricing Division, and
Merchandising Pricing Coordinator(s) are usually responsible for evaluating new products.
The Director of Marketing and Merchandising and the Chief of the Product Management
and Pricing Division make the final recommendation to the PLCB Board Members as to
what product(s) should be listed or delisted. PLCB Board Members vote on the entire
recommended new product list without any independent review of the product/support
data. Conti asserts that he did not participate in any listing or delisting meetings. Board
approval of the listing or delisting bypassed Conti in his position.
A manufacturer/supplier of alcoholic beverage products may market its products to
the PLCB directly or through a vendor or broker. The primary vendors providing products
to the PLCB are: (1) Southern Wine and Spirits (“Southern”); (2) Capital Wine and Spirits
(“Capital”); and (3) Allied Beverage Group, LLC (“Allied”), which has a subsidiary named
“Majestic Wine & Spirits, USA, LLC” (“Majestic”).
Products for which Southern serves as broker and/or vendor/vendor of record
account for approximately 6.43% to 6.85% of the PLCB total Cost of Goods Sold during the
last five (5) years. A list of Southern’s business with the PLCB is detailed in Fact Finding
28 c.
Capital is a member of the “Charmer Sunbelt Group,” a nationwide distributor of
wine, spirits, beer, and other beverages. Products brokered by Capital account for a total
of approximately 19.11% to 22.03% of the PLCB total Cost of Goods Sold during the last
five (5) years. A list of Capital’s business with the PLCB is detailed in Fact Finding 31 b.
In Pennsylvania, Capital/Charmer Sunbelt Group represents a marketing partnership
named “the Alliance,” which is comprised of wine/spirit suppliers Bacardi USA (“Bacardi”),
Brown Forman, and Remy Cointreau (“Remy”). Capital also serves as a broker for White
Rock Distilleries, a manufacturer/supplier of spirits and liqueurs.
Allied was created by the mergers of The Baxter Group, Inc., F&A Distributing
Company and The Jaydor Corporation. Allied ranks among the ten largest wine and spirits
distributors in the United States. Allied subsidiary Majestic is a Pennsylvania brokerage
Conti, 12-028
Page 35
and vendor/vendor of record for products sold to the PLCB. Allied’s and/or Majestic’s
sales account for approximately 1.51% to 2.18% of PLCB total Cost of Goods Sold during
the last five (5) years. A list of Majestic’s business with the PLCB is detailed in Fact
Finding 39 a.
Diageo (“Diageo”) is a producer of alcoholic beverages both within the continental
United States and globally. Products brokered by Diageo account for approximately
13.07% to 15.85% of PLCB total Cost of Goods Sold during the last five (5) years. A
detailed list of Diageo’s business with the PLCB is detailed at Fact Finding 93 b.
Executives and marketing representatives from vendors supplying products to the
PLCB would meet with PLCB employees to market products. Those representatives
offered gifts, transportation, lodging, and hospitality to PLCB employees, including Conti.
These items, including golf events, meals, alcoholic beverages, and gift cards, were
offered when listing/delisting of products was occurring. Items of value were routinely
provided to PLCB officials involved with product selection and placement.
As CEO of the PLCB, Conti interacted, met, and had dealings with representatives
of vendors, suppliers and brokers of wine and spirits for the PLCB, including
representatives of Capital, Southern, Allied/Majestic, White Rock Distilleries and Diageo.
Conti would meet with suppliers/brokers at the offices of the PLCB, store openings, golf
outings, and dinner meetings at restaurants. Individuals that Conti as CEO had specific
dealings with from the above listed entities included: Mark Littles (“Littles”), President of
Capital; Tricia Brungo (“Brungo”), Control State Manager for White Rock Distilleries; and
Mark Sweeney (“Sweeney”), who was Vice President of Sales in Pennsylvania for Diageo
prior to his current employment with Southern.
As a vendor of the PLCB, Capital invited Conti and PLCB Board Members Patrick
Stapleton (“Stapleton”) and Robert Marcus (“Marcus”) to participate in the 2010 AT&T Pro-
Am Tournament (“2010 Pro-Am Tournament”) held as part of The AT&T National Golf
Tournament (“AT&T Tournament”) at Aronimink Golf Club. Littles provided the invitation to
Conti, Stapleton and Marcus at a time when Capital had an ongoing business relationship
with the PLCB as a broker for multiple products listed/pending listing before the PLCB. The
ticket used by Conti was provided by Bacardi, USA, a sponsor of the AT&T Tournament.
Capital serves as a broker for Bacardi in Pennsylvania.
Conti played in the 2010 Pro-Am Tournament on June 28, 2010. The packaged
benefits made available to each golfer are detailed in Fact Findings 53 and 54. In addition
to a photo book, bag tag, and shirts valued at a total of $115.62, the packaged benefits
included food, beverages, and recreation/entertainment. Fact Findings 53 and 54. Conti
provided Littles with a $200.00 cash payment that he believed was to be applied for greens
fees and/or caddy fees. Such payment received by Capital was subsequently donated to
the American Diabetes Association. The parties have stipulated that the value that Conti
received by playing in the 2010 Pro-Am Tournament was $1,000.00, calculated as
$1,200.00 less the $200.00 donation made by Conti. Fact Findings 46 c, 110.
Conti did not participate in the 2011 AT&T Pro-Am golf event.
In 2009, 2010, and 2011, Capital/Alliance held golf outings referred to as the
“Alliance Golf Open,” which included officials and management employees of the PLCB.
Conti was one of the PLCB employees/officials invited to these events. The Alliance Golf
Open was organized as a means by which Capital and the Alliance suppliers could
strengthen their relationship with the PLCB and to allow various Alliance senior
management officials to have “face time” with PLCB officials. The costs associated with
the 2009, 2010, and 2011 Alliance Golf Open were borne by the Alliance suppliers and
Capital. The total costs of the events were divided into four equal amounts to be paid by
Capital, Bacardi, Brown Foreman, and Remy.
Conti, 12-028
Page 36
The 2009, 2010, and 2011 Alliance Golf Open included morning travel (if
necessary), a warm up session, lunch, a round of golf (eighteen holes), and dinner in the
evening.
The 2009 Alliance Golf Open was held at the West Shore County Club in Camp Hill,
Pennsylvania, on Wednesday, August 19, 2009. In addition to Conti, PLCB attendees at
the event included James Short (“Short”) and Matthew Schwenk (“Schwenk”). In 2009,
Short served as the PLCB Director of Marketing and Merchandising while Schwenk was
the PLCB’s Director of Product Selection. The value of the golf outing totaled
approximately $105.09 per individual.
Conti did not participate in the 2010 Alliance Golf Open.
The 2011 Alliance Golf Open was held at the Philadelphia Country Club in
Gladwyne, Pennsylvania, on July 14, 2011. PLCB attendees at the event included Short,
Conti, Schwenk, Stapleton, and Doug Hitz, PLCB Bureau Director for Planning and
Procurement. The expenses of the golf outing totaled $474.40 per attendee.
In his capacity as CEO for the PLCB, Conti accepted hospitality from Littles at a
time when Capital supplied product to the PLCB. Littles’ expense reports reflect the
following costs per year for hospitality provided to Conti by Littles/Capital:
2009: 08/26/09 Dinner
1/3 of $111.16 $37.05
Alliance Golf $105.09
Total: $142.14
2010: 07/22/10 Greens Fees
Lookaway Golf Club $100.00
Total: $100.00
2011: 5/7/11 Dinner
part of $1,050.16 $105.01
8/19/11 Dinner $78.50
2011 Alliance Golf $474.40
Total: $657.91
Conti—who has maintained his own log of meetings, dinners, and/or items received
from various sources—asserts the he was not present and did not receive any hospitality
for events occurring on 8/26/2009, 7/22/2010, 5/7/2011, or 8/19/2011.
As CEO of the PLCB, Conti accepted dinners and drinks from Brungo/White Rock
Distilleries at a time when White Rock Distilleries was marketing products to the PLCB.
Brungo’s expense reports reflect the following costs per year for hospitality provided to
Conti by Brungo/White Rock Distilleries:
2010: 2/18/10 Dinner
1/3 of $220.93 $73.64
4/21/10 Dinner
1/2 of $245.96 $122.98
5/6/10 Cocktails
1/3 of $42.82 $14.27
5/6/10 Dinner
Conti, 12-028
Page 37
1/3 of $297.01 $99.00
8/24/10 Dinner
1/3 of $85.50 $28.50
Total: $338.39
2012: 2/21/12 Dinner
1/2 of $333.34 $166.67
Total: $166.67
Conti asserts that he did not attend the 2/18/2010 event.
Conti, as CEO of the PLCB, interacted with Sweeney of Diageo. In 2009, while
Diageo was doing business with the PLCB, Sweeney/Diagio provided Conti with an
engraved bottle of Johnnie Walker Blue, a liquor product marketed by Diageo. Conti did
not solicit or request that the bottle be provided. The retail value of a bottle of Johnnie
Walker Blue is approximately $229.99, which does not include engraving costs.
In addition to the above, as CEO of the PLCB, Conti was provided with tickets to
sporting events from vendors of the PLCB including, but not limited to, Harmelin Media,
Deloitte Consulting and Philadelphia Distilling.
The parties have stipulated that Conti realized a private pecuniary benefit of
$2,388.51 as a result of golf outings, sporting tickets, and gifts that were provided to Conti
as the PLCB CEO by suppliers, brokers, and vendors doing business with the PLCB.
The parties have further stipulated that Conti failed to disclose on his SFI form for
calendar year 2010 the transportation, lodging, and hospitality provided by Capital in
relation to the 2010 AT&T Pro-Am Tournament held at Aronimink Golf Club. Conti was not
required to report his receipt in 2009 of an engraved bottle of Johnnie Walker Blue from
Diageo, as the value was less than the reporting threshold.
Having highlighted the Stipulated Findings and issues before us, we shall now apply
the Ethics Act to determine the proper disposition of this case.
The parties' Consent Agreement sets forth a proposed resolution of the allegations
as follows:
3. The Investigative Division will recommend the following in
relation to the above allegations:
a. That a transgression of Section 1103(a) of the
Public Official and Employee Ethics Act, 65
Pa.C.S. § 1103(a), occurred in relation to Conti’s
acceptance of gifts and hospitality (meals, golf
outings, beverages) provided by various vendors
who had ongoing contractual relationships with
the PLCB, at a time when Conti was the CEO of
the PLCB;
b. That a violation of Section 1105(b) of the Public
Official and Employee Ethics Act, 65 Pa.C.S. §
1105(b), occurred in relation to Conti’s omission
to report receipt of hospitality, namely his
attendance [at] the 2010 AT&T Pro-Am, which
was provided by a vendor of the PLCB, upon
Conti, 12-028
Page 38
Statements of Financial Interests filed for the
2010 calendar year;
c. No violation of Section 1105(b) of the Public
Official and Employee Ethics Act, 65 Pa.C.S. §
1105(b), occurred in relation to Conti’s omission
to report receipt of gifts and/or hospitality upon
Statements of Financial Interests filed for the
2009 and 2011 calendar years, as items
received did not meet a reportable threshold.
4. Conti agrees to make payment in the amount of $2,388.51 in
settlement of this matter payable to the Commonwealth of
Pennsylvania and forwarded to the Pennsylvania State Ethics
Commission within thirty (30) days of the issuance of the final
adjudication in this matter.
5. Conti agrees to file amended complete and accurate
Statements of Financial Interests with the Pennsylvania Liquor
Control Board through the Pennsylvania State Ethics
Commission, for the 2010 calendar year within thirty (30) days
of the issuance of the final adjudication in this matter.
6. Conti agrees to not accept any reimbursement, compensation
or other payment from the Pennsylvania Liquor Control Board
representing a full or partial reimbursement of the amount paid
in settlement of this matter.
7. The Investigative Division will recommend that the State Ethics
Commission take no further action in this matter; and make no
specific recommendations to any law enforcement or other
authority to take action in this matter. Such, however, does
not prohibit the Commission from initiating appropriate
enforcement actions in the event of Respondent's failure to
comply with this agreement or the Commission's order or
cooperating with any other authority who may so choose to
review this matter further.
Consent Agreement, at 1-2.
In considering the Consent Agreement, we accept the recommendation of the
parties for a finding that a transgression of Section 1103(a) of the Ethics Act, 65 Pa.C.S. §
1103(a), occurred in relation to Conti’s acceptance of gifts and hospitality (meals, golf
outings, beverages) provided by various vendors who had ongoing contractual
relationships with the PLCB, at a time when Conti was the CEO of the PLCB.
The acceptance of gifts, transportation, lodging or hospitality from donor(s) with
which a public official/public employee has involvement in his public capacity can form the
basis for a conflict of interest under Section 1103(a) of the Ethics Act. See, Cohen,
Opinion 03-006 (regarding a PLCB Hearing Examiner’s prospective acceptance of item(s)
from licensees); see, e.g., Haldeman, Order 1443; Munford, Order 1390; Espenshade,
Order 1387.
In this case, the parties have stipulated that Conti realized a private pecuniary
benefit of $2,388.51 as a result of golf outings, sporting tickets, and gifts that were
provided to Conti as the PLCB CEO by suppliers, brokers, and vendors doing business
with the PLCB. The particular suppliers, brokers, and vendors that provided the private
Conti, 12-028
Page 39
pecuniary benefit forming the basis for the recommended finding of a transgression of
Section 1103(a) were: (1) Capital and the Alliance suppliers represented by Capital
(Bacardi USA, Brown Forman, and Remy Cointreau); (2) White Rock Distilleries; and (3)
Diageo. (Fact Finding 110).
With regard to the element of use of authority of office, Conti’s job duties included
directing, through subordinate senior level managers, the PLCB’s Commonwealth-wide
activities related to procurement, marketing and sales of alcohol. The Stipulated Findings
establish that Conti interacted, met, and had dealings with representatives of vendors,
suppliers and brokers of wine and spirits for the PLCB, including representatives of
Capital, White Rock Distilleries and Diageo. Conti met with suppliers/brokers at the offices
of the PLCB, store openings, golf outings, and dinner meetings at restaurants. The
parties are in agreement that the finding of a transgression of Section 1103(a) of the Ethics
Act would be appropriate as part of an overall settlement of this case.
Based upon the Stipulated Findings and Consent Agreement of the parties, we hold
that a transgression of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred in
relation to Conti’s acceptance of gifts and hospitality (meals, golf outings, beverages)
provided by various vendors who had ongoing contractual relationships with the PLCB, at
a time when Conti was the CEO of the PLCB.
We agree with the parties that a violation of Section 1105(b) of the Ethics Act, 65
Pa.C.S. § 1105(b), occurred when Conti omitted from his SFI filed for the 2010 calendar
year reportable information as to his receipt of hospitality from a PLCB vendor in relation to
Conti’s attendance at the 2010 AT&T Pro-Am Tournament.
Source for source, a filer is required to disclose on the SFI the name and address of
the source and the amount of any payment for or reimbursement of actual expenses for
transportation and lodging or hospitality received in connection with public office or
employment where such actual expenses exceed $650 in an aggregate amount per year.
65 Pa.C.S. § 1105(b)(7). Based upon the Stipulated Findings, the hospitality that Conti
received at the 2010 AT&T Pro-Am Tournament exceeded $650.
Accordingly, we hold that a violation of Section 1105(b) of the Ethics Act, 65 Pa.C.S.
§ 1105(b), occurred when Conti omitted from his SFI filed for the 2010 calendar year
reportable information as to his receipt of hospitality from a PLCB vendor in relation to
Conti’s attendance at the 2010 AT&T Pro-Am Tournament.
We agree with the parties, and we hold, that no violation of Section 1105(b) of the
Ethics Act, 65 Pa.C.S. § 1105(b), occurred in relation to Conti’s omission from his SFIs
filed for the 2009 and 2011 calendar years of his receipt of gifts and/or hospitality, as items
received did not meet a reportable threshold.
As part of the Consent Agreement, Conti has agreed to make payment in the
amount of $2,388.51 payable to the Commonwealth of Pennsylvania and forwarded to this
Commission within thirty (30) days of the issuance of the final adjudication in this matter.
Conti has also agreed to not accept any reimbursement, compensation or other payment
from the PLCB representing a full or partial reimbursement of the amount paid in
settlement of this matter. Conti has further agreed to file an amended, complete and
accurate SFI for calendar year 2010 with the PLCB, through this Commission, within thirty
(30) days of the issuance of the final adjudication in this matter.
We determine that the Consent Agreement submitted by the parties sets forth a
proper disposition for this case, based upon our review as reflected in the above analysis
and the totality of the facts and circumstances.
Conti, 12-028
Page 40
Accordingly, per the Consent Agreement of the parties, Conti is directed to make
payment in the amount of $2,388.51 payable to the Commonwealth of Pennsylvania and
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forwarded to this Commission by no later than the thirtieth (30) day after the mailing date
of this adjudication and Order.
Per the Consent Agreement of the parties, Conti is further directed to not accept any
reimbursement, compensation or other payment from the PLCB representing a full or
partial reimbursement of the amount paid in settlement of this matter.
To the extent he has not already done so, Conti is directed to file an amended,
complete and accurate SFI for calendar year 2010 with the PLCB, through this
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Commission, by no later than the thirtieth (30) day after the mailing date of this
adjudication and Order.
Compliance with the foregoing will result in the closing of this case with no further
action by this Commission. Noncompliance will result in the institution of an order
enforcement action.
IV.CONCLUSIONS OF LAW:
1. As Chief Executive Officer (“CEO”) of the Pennsylvania Liquor Control Board
(“PLCB”) from December 16, 2006, to February 2, 2013, Respondent Walter
Joseph Conti (“Conti”) was a public official/public employee subject to the
provisions of the Public Official and Employee Ethics Act (“Ethics Act”), 65 Pa.C.S.
§ 1101 et seq.
2. A transgression of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a),
occurred in relation to Conti’s acceptance of gifts and hospitality (meals, golf
outings, beverages) provided by various vendors who had ongoing contractual
relationships with the PLCB, at a time when Conti was the CEO of the PLCB.
3. A violation of Section 1105(b) of the Ethics Act, 65 Pa.C.S. § 1105(b), occurred
when Conti omitted from his Statement of Financial Interests filed for the 2010
calendar year reportable information as to his receipt of hospitality from a PLCB
vendor in relation to Conti’s attendance at the 2010 AT&T Pro-Am Tournament held
at Aronimink Golf Club.
4. No violation of Section 1105(b) of the Ethics Act, 65 Pa.C.S. § 1105(b), occurred in
relation to Conti’s omission from his Statements of Financial Interests filed for the
2009 and 2011 calendar years of his receipt of gifts and/or hospitality, as items
received did not meet a reportable threshold.
In Re: Walter Joseph Conti, : File Docket: 12-028
Respondent : Date Decided: 2/6/14
: Date Mailed: 2/12/14
ORDER NO. 1627
1. A transgression of Section 1103(a) of the Public Official and Employee Ethics Act
(“Ethics Act”), 65 Pa.C.S. § 1103(a), occurred in relation to the acceptance by
Walter Joseph Conti (“Conti”) of gifts and hospitality (meals, golf outings,
beverages) provided by various vendors who had ongoing contractual relationships
with the Pennsylvania Liquor Control Board (“PLCB”), at a time when Conti was the
Chief Executive Officer of the PLCB.
2. A violation of Section 1105(b) of the Ethics Act, 65 Pa.C.S. § 1105(b), occurred
when Conti omitted from his Statement of Financial Interests filed for the 2010
calendar year reportable information as to his receipt of hospitality from a PLCB
vendor in relation to Conti’s attendance at the 2010 AT&T Pro-Am Tournament held
at Aronimink Golf Club.
3. No violation of Section 1105(b) of the Ethics Act, 65 Pa.C.S. § 1105(b), occurred in
relation to Conti’s omission from his Statements of Financial Interests filed for the
2009 and 2011 calendar years of his receipt of gifts and/or hospitality, as items
received did not meet a reportable threshold.
4. P er the Consent Agreement of the parties, Conti is directed to make payment in the
amount of $2,388.51 payable to the Commonwealth of Pennsylvania and forwarded
th
to the Pennsylvania State Ethics Commission by no later than the thirtieth (30) day
after the mailing date of this Order.
5. Per the Consent Agreement of the parties, Conti is further directed to not accept
any reimbursement, compensation or other payment from the PLCB representing a
full or partial reimbursement of the amount paid in settlement of this matter.
6. To the extent he has not already done so, Conti is directed to file an amended,
complete and accurate Statement of Financial Interests for calendar year 2010 with
the PLCB, through the Pennsylvania State Ethics Commission, by no later than the
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thirtieth (30) day after the mailing date of this Order.
7. Compliance with Paragraphs 4, 5 and 6 of this Order will result in the closing of this
case with no further action by this Commission.
a. Non-compliance will result in the institution of an order enforcement action.
BY THE COMMISSION,
___________________________
John J. Bolger, Chair