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In Re: Carl Jolly,
Respondent
STATE ETHICS COMMISSION
FINANCE BUILDING
613 NOR-m STREET, ROOM 309
I1ARRISB(,JRG, PA 17120-0400
File Docket:
X-ref.,
Date Decided:
Date Mailed:
FAGS IMI[�E: 7,17-787-0806
WEBSITE: wwwethics. a. ov
21-004
Order No. 1804
6/28/22
6/29/22
Before: Mark R. Corrigan, Acting Chair
Roger Nick
Melanie DePalma
Michael A. Schwartz
Shelley Y. Simms
Rhonda Hill Wilson
Paul Parsells
"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 allegation. 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.
That Carl Jolly, a public official/public employee in his capacity as the Director of Retail
Operations for the Pennsylvania Liquor Control Board, violated Section I I 03(a) of the Ethics Act
when he used the authority of his public position and/or confidential information obtained tbrough
his public position for the private pecuniary benefit of himself and/or a member of his immediate
family, when he obtained information not obtainable from reviewing a public document or making
inquiry to a publicly available source of information as a result of his public position, and used
that information to purchase, at a price significantly below market value, alcohol that was limited
in quantity and not available to the public when said purchase was made.
11. FINDINGS:
.lolly, 21-004
Page 2
1. Carl Jolly ("Jolly") was employed by the Pennsylvania Liquor Control Board ("PLCB")
from September 8, 1984, until he retired on December 11, 2020.
a. Jolly began his career with the PLCB as a store clerk and was promoted to General
Manager II on May 13, 2000.
b. On October 26, 2014, Jolly was promoted to PLCB Retail Operations Manager II.
c. Jolly was promoted to Director of Retail Operations on July 5, 2016.
2. Jolly's duties and responsibilities as PLCB Director of Retail Operations included the
following:
a. Make recommendations to the Chief Operating Officer (COO) regarding the
formulation and revision of policies and procedures to improve operations,
profitability, and customer service;
b. Research and review programs and legislation to develop executive policy
recommendations;
C. Serve as the primary administrator providing guidance, leadership, and vision for
retail operations within the PLCB;
d. Oversee and directed property management;
e. Plan and oversee the implementation and monitoring of retailing, wholesaling, and
in-store storage of all wine and spirits sold in PLCB stores;
f. Meet with public and private organizations, industry representatives, vendors and
licensees, government officials and the public in order to interpret, clarify, or
promote PLCB policies; and
g. Oversee the implementation of statewide retail customer service programs.
3. As the PLCB Director of Retail Operations, Jolly was a "public employee" as defined in
the Ethics Act.
4. The PLCB is governed by a three -Member Board appointed by the Governor and
confirmed by two-thirds of the Pennsylvania Senate.
a. The Board appoints a Chief Executive Officer.
5. The mission of the PLCB is to responsibly sell wine and spirits as a retailer and wholesaler,
regulate Pennsylvania's alcohol industry, promote alcohol education and social
responsibility, and maximize financial returns for the benefit of all Pennsylvanians.
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6. The PLCB regulates the manufacture, importation, sale, distribution and disposition of
liquor, alcohol, and malt or brewed beverages in the Commonwealth.
7. As a control state, the PLCB is the only retail seller of 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 to 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.
THE FOLLOWING FINDINGS PERTAIN TO THE PLCB'S LIMITED -RELEASE
LOTTERY OF WINES AND SPIRITS.
S. The PLCB is statutorily -mandated by the Pennsylvania Legislature to ensure the equitable
distribution of alcoholic beverages to licensed businesses and consumers within the
Commonwealth.
9. As part of this statutory mandate, the PLCB conducts allocated spirit lotteries, also known
as Limited -Release Lotteries.
a. The PLCB has been conducting Limited -Release Lotteries since October 2015.
10. The purpose of the Limited -Release Lotteries is to fairly and equitably distribute the ability
to purchase high -end, limited quantity wine and spirits to both individuals and licensees
within the Commonwealth.
11. All PLCB customers, both individuals and licensees, may enter Limited -Release Lotteries
for an opportunity to purchase limited quantity products including highly sought after
bourbons such as the Pappy Van Winkle Collection and the Buffalo Trace Antique
Collection.
12. In order to enter the Limited -Release Lotteries, Commonwealth citizens must register on
the PLCB's fnewineandgoodspirits.com website ("FW&GS website") and agree to and
accept the terms and conditions.
a. Limited -Release Lottery items are highly sought after because of limited allocation
and availability for purchase in the Commonwealth only through the Limited -
Release Lottery process or from a licensed seller (such as a restaurant or bar).
13. The PLCB posts the Limited -Release Lottery terms and conditions on the FW&GS
website.
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a. The PLCB Limited -Release Lottery Terms and Conditions for Participation by
Individual Customers ("Limited -Release Lottery Terms and Conditions") were last
updated on October 31, 2019.
b. The Limited -Release Lottery Terms and Conditions provide for the following:
1. To enter the PLCB Limited -Release Lottery, an individual customer must
enter on the FW&GS website and have an FW&GS account;
2. Limited -Release Lottery winners are selected randomly through a computer
algorithm;
Limited -Release Lottery winners must be Pennsylvania residents and be
twenty-one years of age to enter; and
4. Limited -Release Lottery winners are permitted to purchase no more than
one Limited -Release Lottery item per individual customer or household.
14. The PLCB does not prohibit PLCB employees or officials from entering Limited -Release
Lotteries or from purchasing items if they are selected as a Limited -Release Lottery winner.
a. The Limited -Release Lottery Terms and Conditions do not exempt PLCB officials
and employees from the Limited -Release Lottery Terms and Conditions.
15. Prior to each Limited -Release Lottery, the PLCB issues press releases that detail the entry
period, rules to enter, items available, the cost for each item, and the total quantity made
available to both individual customers and licensees.
16. A Limited -Release Lottery winner is contacted by email and given the opportunity to
purchase the Limited -Release Lottery item through the FW&GS website.
17. The Limited -Release Lottery item is shipped to the winner's address or designated
FW&GS store from the PLCB Fulfillment Center (East Greenville Business Center, 668
Gravel Pike, Suite 500, East Greenville, PA 18041) after receipt of payment.
18. The quantity of items that remain in inventory following a Limited -Release Lottery is not
released to the public through press releases or any other method of communication.
19. The Limited -Release Lottery Terms and Conditions, "Second Drawings and General Sale,"
reflect that remaining items are to be made available during a second drawing, made
available on the E-Commerce website, or otherwise sold by the PLCB in the manner it
deems most appropriate.
a. "If a winning entrant's order is unable to be processed because of payment issues,
or if the entry of a winning entrant is determined to no longer be eligible for any
other reason, the time associated with that order or entry may be subject to a second
Jolly, 21-004
Page 5
drawing, to the extent that any other eligible entries remain in the applicable
individual consumer drawing pool for that product code. If a second drawing is not
conducted, then any remaining items of any product code will be released for
general sale on the FW&GS website on a first -come, first -served basis, or will
otherwise be sold by the PLCB in the manner it deems most appropriate based on
operational needs. The one -bottle -per -individual consumer and one battle -per -
household or billing -address restrictions will continue to apply to the general sale
or any other sales offers. Entrants selected as winners during a Lottery will not be
eligible to purchase products through the general sale or any other sales offers."
20. The total number of Limited -Release Lotteries varies from year to year.
a. The PLCB has typically conducted one Pappy Van Winkle Collection Limited -
Release Lottery and one Buffalo Trace Antique Collection Limited -Release Lottery
each year and has made other highly sought after bourbons available through
additional Limited -Release Lotteries.
b. The PLCB has no formal policy or lists as to what qualifies as an item to be sold
via a Limited -Release Lottery.
21. Prior to July 2019, Dale Horst ("Horst"), the PLCB Director of Marketing and
Merchandising, recommended to the PLCB and PLCB Executives to forgo a second
Limited -Release Lottery drawing.
a. Horst made the recommendation based on operational needs and to save money.
1. Horst informed the PLCB and PLCB executives that due to the cost and
time to conduct a second drawing for a few items, it made the most business
sense to discontinue it.
2. Instead of a second drawing, the remaining Limited -Release Lottery items
were to be made available on a first -come, first -served basis on the FW&GS
website or otherwise sold by the PLCB in the manner it deemed most
appropriate based on operational needs.
b. The PLCB agreed to forgo a second drawing based on Horst's recommendation.
C. No official vote was taken by the PLCB to discontinue a second drawing.
d. The Limited -Release Lottery Terms and Conditions were never amended by the
PLCB to include the decision to discontinue a second drawing.
The Limited -Release Lottery Terms and Conditions under Second
Drawings and General Sale state: "If a winning entrant's order is unable to
be processed because of payment issues, or if the entry of a winning entrant
is determined to no longer be eligible for any other reason, the time
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associated with that order or entry may be subject to a second drawing, to
the extent that any other eligible entries remain in the applicable individual
consumer drawing pool for that product code. If a second drawing is not
conducted, then any remaining items of any product code will be released
for general sale on the FW&GS website on a first -come, first -served basis,
or will otherwise be sold by the PLCB in the manner it deems most
appropriate based on operational needs. The one -bottle -per -individual
consumer and one -bottle -per -household or billing -address restrictions will
continue to apply to the general sale or any other sale offers. Entrants
selected as winners during a Lottery will not be eligible to purchase
products through the general sale or any other sales offers."
22. The first Limited -Release Lottery where a second drawing was not conducted by the PLCB
was the July 10, 2019, Limited -Release Lottery.
a. This was the first Limited -Release Lottery where allocated Limited -Release
Lottery items were made available for PLCB employees and officials to purchase
outside of the Limited -Release Lottery process.
b. Multiple PLCB employees and officials, including Jolly, made purchases outside
of the Limited -Release Lottery process.
THE FOLLOWING FINDINGS RELATE TO JOLLY'S PURCHASE OF LIMITED -
RELEASE LOTTERY ITEMS
23. Jolly, through communications with Horst, requested Limited -Release Lottery items,
including Weller 12 Year Reserve Bourbon, Pappy Van Winkle Special Reserve 12 Year
Bourbon, and Pappy Van Winkle's Family Reserve 15 Year Bourbon, which were
transferred to the Northwest Office Building for him to purchase.
a. Jolly was able to purchase items only available through Limited -Release Lotteries
even though Jolly never registered for a Limited -Release Lottery.
b. Jolly learned of the availability of Limited -Release Lottery items during
interactions with Horst.
C. This information was not available to the public.
24. In July 2019 and February 2020, Jolly was told by Horst during PLCB executive meetings
and informal conversations that Limited -Release Lottery items were available for purchase.
25. In July 2019, Horst told Jolly that Weller 12 Year Reserve Bourbon, a Limited -Release
Lottery item, was available for purchase.
26. In February 2020, Horst came to Jolly's office and informed him of available bottles of
Pappy Van Winkle bourbon that were "left over" from the Limited -Release Lottery.
Jolly, 21-004
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a. The information provided by Horst was not available to the public or Limited -
Release Lottery entrants.
b. Jolly informed Horst that he was interested in purchasing Pappy Van Winkle
bourbon, and Horst provided him with options to choose from.
C. After informing Horst of his selections, several days later Jolly purchased the items
at the Northwest Office Building second floor Cost Center register.
d. Jolly purchased three bottles of Pappy Van Winkle bourbon for personal use.
e. The availability of "leftover" Limited -Release Lottery items was never made
known to the general public.
27. In the Commonwealth, the only lawful way an individual customer or licensee can
purchase Limited -Release Lottery items is through the Limited -Release Lottery.
a. Limited Release Lottery items are not readily available for sale in FW&GS stores
or even on the E-Commerce website.
b. Limited -Release Lottery items are highly coveted and in limited supply.
28. Jolly never entered a Limited -Release Lottery.
29. PLCB transfer records confirm that Horst transferred three bottles of Weller 12 Year
Reserve Bourbon (Product 74658) from the Fulfillment Center (Store 4650) to the
Northwest Office Building (Store 2298) on July 26, 2019.
a. Horst transferred one bottle for Jolly to purchase at his request.
b. The remaining two bottles were transferred for PLCB Member Michael Negra
("Negra").
30. At Jolly's request, Horst brought the Weller 12 Year Reserve Bourbon and the Pappy Van
Winkle bourbon to Jolly's office in the Northwest Office Building.
31. On July 29, 2019, Jolly purchased one bottle of Weller 12 Year Reserve Bourbon at the
Northwest Office Building second floor Cost Center register for $39.99.
a. Jolly purchased the Weller 12 Year Reserve Bourbon with his personal Visa credit
card.
b. Jolly purchased the Weller 12 Year Reserve Bourbon for the same price as that paid
by Limited -Release Lottery winners.
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32. Approximately 8,290 eligible individual PLCB customers entered the July 10, 2019,
Limited -Release Lottery for an opportunity to purchase one bottle of Weller 12 Year
Reserve Bourbon.
a. Of the 8,290 Commonwealth citizens who entered to win a chance to purchase a
bottle of Weller 12 Year Reserve Bourbon, only 180 winners were selected.
33. Four bottles of Weller 12 Year Reserve Bourbon remained after the July 10, 2019, Limited -
Release Lottery.
a. The four bottles were available due to Limited -Release Lottery winners not
completing the purchase.
b. No members of the public were made aware of remaining bottles available to be
purchased or given an opportunity to make a purchase.
34. On February 10, 2020, Horst emailed PLCB Ecommerce Category Manager Dirk Peterson
("Peterson") regarding obtaining the number of bottles that remained in inventory
following the January 29, 2020, Pappy Van Winkle Collection Limited -Release Lottery.
a. Horst wrote, "Dirk, once Pappy is completed, let isle know what is left over."
b. On February 11, 2020, Peterson emailed Horst regarding 22 remaining Pappy Van
Winkle Limited -Release Lottery items.
c. Peterson wrote, "Dale Here's what my report shows re: Pappy products. I sent this
to Dave and also to 4650, once they confirm that counts I'll let you know."
Item
Item Description
Pack
Base
Store SOH
Store on
Size
Retail
order
9530
Van Winkle Special Reserve Straight Bourbon 12 Year Old 90 Proof
3
99.99
17
0
9532
Pappy Van Winkle's Family Reserve Straight Bourbon 20 Year Old 90
3
249.99
12
3
Proof
10849
Pappy Van Winkle's Family Reserve Straight Bourbon 23 Year Old 95
3
39M9
5
0
Proof
14280
Van Winkle Straight Whiskey 6050 mL Library Set
1
2199.99
1
0
14362
Van Winkle Straight Whiskey 4050 mL Library Set
1
1199.99
1
0
14467
Van Winkle Straight Whiskey 3050 mL Library Set
1
999.99
2
0
30591
Old Rip Van Winkle Special Reserve Straight Bourbon 10 Year Old 107
3
89.99
15
9
Proof
30744
Van Winkle Family Reserve Straight Rye Whiskey 13 Year Old 95 Proof
3
159.99
3
0
34155
Pappy Van Winkle's Family Reserve Straight Bourbon 15 Year Old 107
3
149.99
15
6
Proof
99000
Van Winkle Straight Whiskey 5x750 mI. Library Set
1
1899.99
0
0
35. Horst forwarded by email the Pappy Van Winkle bourbon spreadsheet sent by Peterson, to
Negra, PLCB Chairman Timothy Holden ("Holden"), and PLCB Executive Director
Charles Mooney ("Mooney") on February 11, 2020.
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a. PLCB Member Mary Isenhour was not included on the email.
36. Horst completed the transfer of one bottle of Pappy Van Winkle Special Reserve 12 Year
Bourbon and three bottles of Pappy Van Winkle's Family Reserve 15 Year Bourbon to the
Northwest Office Building (Store 2298) on Monday, February 24, 2020.
a. Horst transferred one bottle of Pappy Van Winkle Special Reserve 12 Year
Bourbon and two bottles of Pappy Van Winkle's Family Reserve 15 Year Bourbon
for Jolly to purchase.
b. Horst transferred one bottle of Pappy Van Winkle's Family Reserve 15 Year
Bourbon for Negra to purchase.
37. Jolly initially purchased one bottle of Pappy Van Winkle Special Reserve 12 Year Bourbon
and two bottles of Pappy Van Winkle's Family Reserve 15 Year Bourbon on February 24,
2020, at the Northwest Office Building second floor Cost Center register.
a. Jolly received a $40.00 Iicensee discount on the purchase and paid $381.57 for all
three bottles of Pappy Van Winkle bourbon.
b. After realizing he received the discount by mistake, Jolly returned the Pappy Van
Winkle he purchased on February 26, 2020.
C. To complete the return, Jolly provided PLCB salesclerk Jo -Ann Perry Woods with
his driver's license
d. Jolly's name and phone number are included on the sales journal for the return.
Jolly repurchased the bottle of Pappy Van Winkle Special Reserve 12 Year
Bourbon and two bottles of Pappy Van Winkle's Family Reserve 15 Year Bourbon
for $410.17 after he completed the return using a Visa credit card.
38. The PLCB allocated 145 bottles of Pappy Van Winkle's Family Reserve 15 Year Bourbon
for the Limited -Release Lottery, including 109 bottles for individual customers and 36
bottles for licensees.
39. Approximately 17,876 eligible PLCB individual customers entered the January 29, 2020,
Limited -Release Lottery for an opportunity to purchase one bottle of Pappy Van Winkle
Special Reserve 12 Year Bourbon.
a. Of the 17,876 eligible individual customers who entered to purchase one bottle of
Pappy Van Winkle Special Reserve 12 Year Bourbon, 999 winners were selected.
Jolty, 21-004
Page 10
40. Approximately 18,678 eligible PLCB individual customers entered the January 29, 2020,
Limited -Release Lottery for a chance to purchase one bottle of Pappy Van Winkle's Family
Reserve 15 Year Bourbon.
a. Of the 18,678 eligible individual customers who entered to purchase one bottle of
Pappy Van Winkle's Family Reserve 15 Year Bourbon, 109 winners were selected.
41. There were 24 bottles of Pappy Van Winkle Special Reserve 12 Year Bourbon available
following the January 29, 2020, Limited -Release Lottery.
a. The bottles were available due to Limited -Release Lottery winners failing to
complete the purchase.
b. The public was not made aware of remaining bottles available to be purchased.
C. Based on Horst's recommendation to the PLCB, no second drawing was scheduled,
nor were the leftover items made available for sale to the general public.
42. There were five bottles of Pappy Van Winkle's Family Reserve 15 Year Bourbon available
following the January 29, 2020, Limited -Release Lottery.
a. The bottles were available due to Limited -Release Lottery winners failing to
complete the purchase.
b. The public was not made aware of remaining bottles available to be purchased.
43. The PLCB listed the price to purchase the Pappy Van Winkle's Family Reserve 15 Year
Bourbon at $149.99 per bottle.
44. The PLCB listed the price to purchase the Pappy Van Winkle Special Reserve 12 Year
Bourbon at $99.99 per bottle.
45. Jolly paid the PLCB listed amount for the two bottles of Pappy Van Winkle's Family
Reserve 15 Year Bourbon and one bottle of Pappy Van Winkle Special Reserve 12 Year
Bourbon.
46. Jolly, in his capacity as a public employee, used the confidential information he obtained
due to his position to request Horst to transfer Limited -Release Lottery bottles to the
Northwest Office Building.
a. In this instance, PLCB individual customers or licensees were not afforded the
opportunity to purchase a Limited -Release Lottery item if they failed to win the
Limited -Release Lottery as they were not informed by Horst as to what items were
available to be purchased. Jolly had no knowledge of the extent to which Horst
shared information about the availability of the items and of whether Horst shared
such information with PLCB individual customers or licensees.
Jolly, 21-004
Page i 1
b. A PLCB individual customer or licensee can only wait until the next available
Limited -Release Lottery or for the PLCB to release the items for general sale for
an opportunity to purchase an item.
THE FOLLOWING FINDINGS RELATE TO INVESTIGATIONS COMPLETED BY
THE COMMONWEALTH OFFICE OF THE BUDGET BUREAU OF AUDITS AND THE
PLCB.
47. The Commonwealth Office of the Budget Bureau of Audits ("BOA") acts as an
independent observer for all Limited -Release Lotteries.
a. The BOA observes the Limited -Release Lotteries at the request of the PLCB.
b. BOA Auditor III Pamela Richards ("Richards") is responsible for observing each
Limited -Release Lottery to ensure it is conducted in a fair and equitable manner.
The BOA provides the PLCB with a report of observations following each Limited -
Release Lottery and identifies irregularities.
48. Richards is responsible for reviewing and reconciling the inventory of Limited -Release
Lottery items post -lottery to ensure the items were correctly distributed.
49. After completing a review of the January 29, 2020, Pappy Van Winkle Limited -Release
Lottery, Richards found that inventory counts were not matching the transfer of items
designated for the Limited -Release Lottery.
50. Richards discovered that eight units of Pappy Van Winkle bourbon were transferred from
the PLCB Fulfillment Center (East Greenville Business Center, 668 Gravel Pike, Suite 500,
East Greenville, PA 18041) to the Northwest Office Building second floor Cost Center
(2298) on February 21, 2020.
a. The transfers were made after the Limited -Release Lottery occurred on January 29,
2020.
51. Richards initiated a review of prior years' Limited -Release Lotteries and found that another
twelve Limited -Release Lottery items, including Weller 12 Year Reserve Bourbon, Buffalo
Trace 9 Year Bourbon, Eagle Rare 17 Year Bourbon, and George T. Stagg Bourbon, were
transferred from the PLCB Fulfillment Center to the Northwest Office Building Cost
Center.
a. The transfers were made between July 2019 and February 2020.
52. Richards identified the following transfers of Limited -Release Lottery items from the
PLCB Fulfillment Center to the Northwest Office Building from July 2019 until February
2020:
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a. Following the July 10, 2019, Limited -Release Lottery, six bottles of Weller 12 Year
Reserve Bourbon, one bottle of Buffalo Trace Experimental Collection 11-48
Month Whiskey, and one bottle of Buffalo Trace Experimental Collection 11-36
Month Whiskey were transferred from the PLCB Fulfillment Center (Store 4650)
to the Northwest Office Building (Store 2298).
b. Following the December 4, 2019, Limited -Release Lottery, two bottles of George
T. Stagg Bourbon and two bottles of Eagle Rare 17 Year Bourbon were transferred
from the PLCB Fulfillment Center (Store 4650) to the Northwest Office Building
(Store 2298).
C. Following the January 29, 2020, Pappy Van Winkle Limited -Release Lottery, one
bottle of Pappy Van Winkle Special Reserve 12 Year Bourbon, five bottles of
Pappy Van Winkle's Family Reserve 15 Year Bourbon, and two bottles of Pappy
Van Winkle's Family Reserve 20 Year Bourbon were transferred from the PLCB
Fulfillment Center (Store 4650) to the Northwest Office Building (Store 2298).
53. Richards identified a total of twenty Limited -Release Lottery items that were transferred
from the PLCB Fulfillment Center to the Northwest Office Building.
a. Of the twenty items that were transferred, eighteen were sold at the Northwest
Office Building second floor Cost Center register.
1. The PLCB is headquartered at the Northwest Office Building.
2. The second floor Cost Center register is primarily used to process gift cards,
specials orders, and celebrity bottle signing purchases for PLCB employees.
3. The second floor Cost Center register is not open to the public to purchase
wine and spirits.
4. The second floor Cost Center is set up as an office with cubicles and is not
an actual FW&GS store.
54. Jolly was the only PLCB employee who Richards identified as purchasing Limited -Release
Lottery items because he provided a driver's license when he completed a return of Pappy
Van Winkle bourbon on February 26, 2020.
a. The PLCB requires a driver's license to complete a return.
55. On May 1, 2020, and May 11, 2020, BOA Assistant Director Michael Blinn ("Blinn")
contacted Horst to discuss irregularities identified by Richards.
a. Blinn contacted Horst due to the possible negative public perception the issue could
create.
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Page 13
b. Specifically, Blinn contacted Horst regarding Limited -Release Lottery items
purchased by PLCB employees in violation of the Limited -Release Lottery Terms
and Conditions.
C. Horst informed Blinn that he would notify his superior, Mooney, of the
irregularities noted by Richards.
56. On May 22, 2020, William Canfield ("Canfield"), Director of the BOA, memorialized his
agency's PLCB Allocated Lottery Observations regarding the Limited -Release Lottery
conducted on January 29, 2020, in a Memorandum to Horst.
a. The report states that the drawing itself was fairly conducted.
b. The executive summary in the report included "An additional item outside the
scope of this engagement was discussed with PLCB management."
C. The following was noted in the Conclusion of the Memorandum:
1. "The reconciliation between information received from Marketing and the
transactional data at the E-Commerce center revealed two (2) unexplained
physical inventory differences which could be indicative of not tracking the
units accurately."
2. "An additional item outside the scope of this engagement was discussed
with PLCB management."
d. The "additional item" mentioned in the BOA Memorandum pertained to the
irregularities found by Richards and follow-up discussions with Horst.
57. Horst failed to follow up with the BOA after conversations with Blinn regarding
irregularities identified by Richards.
a. Horst failed to inform Mooney or the Members of the PLCB about the irregularities
found by Richards.
58. The BOA became concerned that Horst and the PLCB were unresponsive to the report of
the Limited -Release Lottery observations.
a. The BOA was concerned that no control measures were implemented to prevent
future sales of Limited -Release Lottery items to PLCB employees and officials.
59. PLCB Chairman Holden was contacted on June 28, 2020, by Pennsylvania Secretary of
Administration Michael Newsome ("Newsome").
a. Newsome contacted Holden to inquire if the PLCB had changed policies regarding
Jolly, 21-004
Page 14
the sale of Limited -Release Lottery items outside of the Limited -Release Lottery.
1. Newsome served as a Member of the PLCB from April 2016 until January
2019,
2. Newsome was not aware of any changes made regarding permitting the sale
of Limited -Release Lottery items to PLCB employees and officials outside
of the Limited -Release Lottery.
b. Newsome learned about the sale of Limited -Release Lottery items to PLCB
employees during a June 2020 Audit Committee meeting.
The Audit Committee is an advisory committee of cabinet -level officials
that helps to establish the direction of the BOA's efforts.
C. BOA Director Canfield addressed concerns before the Audit Committee pertaining
to the lack of response from the PLCB and the sale of Limited -Release Lottery
items to PLCB employees at the Northwest Office Building.
d. Newsome informed Holden that he was aware that a BOA audit had uncovered
irregular transactions pertaining to the sale of Limited -Release Lottery items at the
Northwest Office Building.
60. After Holden was informed that PLCB executives had purchased Limited -Release Lottery
items, he instructed PLCB Assistant Counsel Jason Worley, PLCB Chief Counsel Rodrigo
Diaz, and PLCB Executive Director Michael Demko to complete an internal investigation
into the matter.
61. The internal investigation identified five PLCB employees who were able to purchase
Limited -Release Lottery items only by virtue of their public employment.
a. These employees were:
1. Jolly;
2. Tom Bowman, PLCB Director of Product Selection;
3. Bryan Kelleher, PLCB Director of Business Development for Wholesale
Operations;
4. Cliff McFarland, PLCB Director of Supply Chain; and
5. Nick Melnick, PLCB Chief Information Officer.
b. These PLCB employees used personal credit cards to purchase the Limited -Release
Lottery items at the Northwest Office Building second floor Cost Center register.
Jolly, 21-004
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111. DISCUSSION:
As the Director of Retail Operations for the Pennsylvania Liquor Control Board ("PLCB")
from July 5, 2016, to December 11, 2020, Respondent Carl Jolly ("Jolly") was a public employee
subject to the provisions of the Public Official and Employee Ethics Act ("Ethics Act"), 65 Pa.C.S.
§ 1101 et semc .
The allegation is that Jolly violated Section 1103(a) of the Ethics Act when he used the
authority of his public position and/or confidential information obtained through his public
position for the private pecuniary benefit of himself and/or a member of his immediate family,
when he obtained information not obtainable from reviewing a public document or making inquiry
to a publicly available source of information as a result of his public position, and used that
information to purchase, at a price significantly below market value, alcohol that was limited in
quantity and not available to the public when said purchase was made.
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. § 110
Subject to the statutory exclusions to the Ethics Act's definition of the term "conflict" or
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Page 16
"conflict of interest," 65 Pa.C.S. § 1102, pursuant to Section 1103(a) of the Ethics Act, a public
official/public employee is prohibited 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.
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.
.lolly began employment with the PLCB on September 8, 1984. Jolly was employed as the
Director of Retail Operations for the PLCB from July 5, 2016, until December 11, 2020, when he
retired from his Commonwealth employment.
The PLCB regulates the manufacture, importation, sale, distribution and disposition of
liquor, alcohol, and malt or brewed beverages in the Commonwealth. The PLCB is the only retail
seller of spirits in the Commonwealth.
The PLCB is statutorily -mandated by the Pennsylvania Legislature to ensure the equitable
distribution of alcoholic beverages to consumers and licensed businesses within the
Commonwealth. As part of this statutory mandate, the PLCB conducts Limited -Release Lotteries.
The purpose of the Limited -Release Lotteries is to fairly and equitably distribute the ability to
purchase high -end, limited quantity wines and spirits to both individual customers and licensees
within the Commonwealth. Bottles of wines and spirits offered for sale through the Limited -
Release Lottery process are highly sought after because they have limited allocation and may only
be purchased through the Limited -Release Lottery process.
The PLCB has been conducting Limited -Release Lotteries since October 2015. The total
number of Limited -Release Lotteries conducted each year varies from year to year.
All PLCB customers, including individual customers and licensees, may enter Limited -
Release Lotteries for an opportunity to purchase limited quantity products, including highly
sought-after bourbons such as the Pappy Van Winkle Collection and the Buffalo Trace Antique
Collection. The PLCB has typically conducted one Pappy Van Winkle Collection Limited -Release
Lottery and one Buffalo Trace Antique Collection Limited -Release Lottery each year and has
made other highly sought-after bourbons available through additional Limited -Release Lotteries.
Prior to each Limited -Release Lottery, the PLCB issues press releases that detail the entry
period, rules to enter, items available, the cost for each item, and the quantities available for
purchase by individual customers and licensees. In order to enter a Limited -Release Lottery, a
Commonwealth citizen must register on the PLCB's finewineandgoodspirits.com website
("FW&GS website") and agree to and accept the PLCB Limited -Release Lottery Terms and
Conditions for Participation by Individual Customers ("Limited -Release Lottery Terms and
Conditions") that are posted on the FW&GS website. The Limited -Release Lottery Terms and
Conditions provide, in pertinent part, that: (1) a Limited -Release Lottery must be entered into
through the FW&GS website; (2) Limited -Release Lottery winners are selected randomly through
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a computer algorithm; (3) Limited -Release Lottery winners must be Pennsylvania residents and
be twenty-one years of age to enter; and (4) Limited -Release Lottery winners are permitted to
purchase no more than one Limited -Release Lottery item per individual customer or household.
The PLCB does not prohibit PLCB employees or officials from entering Limited -Release
Lotteries or purchasing an item if selected as a Limited -Release Lottery winner. PLCB officials
and employees are not exempt from the Limited -Release Lottery Terms and Conditions.
A Limited -Release Lottery winner is contacted by email and given the opportunity to
purchase the Limited -Release Lottery item through the FW&GS website. The Limited -Release
Lottery item is shipped to the winner's address or a designated FW&GS store from the PLCB
Fulfillment Center after payment is received for the item.
The quantity of items that remain in inventory following a Limited -Release Lottery is not
released to the public through press releases or any other method of communication. The Limited -
Release Lottery Terms and Conditions, under "Second Drawings and General Sale," reflect that
remaining items may be made available through a second drawing to the extent that any eligible
entries remain in the applicable drawing pool. The Limited -Release Lottery Terms and Conditions
further provide that if a second drawing is not conducted, any remaining items will be released for
general sale on the FW&GS website on a first -come, first -served basis or will otherwise be sold
by the PLCB in the manner it deems most appropriate based on operational needs.
Prior to July 2019, Dale Horst ("Horst"), the PLCB Director of Marketing and
Merchandising, recommended to the Members of the PLCB and PLCB executives to forgo holding
a second drawing for a Limited -Release Lottery. Horst informed the Members of the PLCB and
PLCB executives that due to the cost and time required to conduct a second drawing for a few
items, it made the most business sense to discontinue holding a second drawing. Based upon
Horst's recommendation, the Members of the PLCB agreed to forgo holding a second drawing.
Instead of conducting a second drawing, remaining Limited -Release Lottery items were to be made
available on a first -come, first -served basis on the FW&GS website or otherwise sold by the PLCB
in the manner it deemed most appropriate based on operational needs. The PLCB did not amend
the Limited -Release Lottery Terms and Conditions to reflect the decision to discontinue holding a
second drawing.
The July 10, 2019, Limited -Release Lottery was the first Limited -Release Lottery where a
second drawing was not conducted by the PLCB. Approximately 8,290 individual customers
entered this Limited -Release Lottery for an opportunity to purchase a bottle of Weller 12 Year
Reserve Bourbon at the cost of $39,99. Four bottles of Weller 12 Year Reserve Bourbon remained
after the Limited -Release Lottery as a result of purchases not being completed by winners of the
Limited -Release Lottery.
Following the July 10, 2019, Limited -Release Lottery, Horst informed Jolly that bottles of
Weller 12 Year Reserve Bourbon were left over from the Limited -Release Lottery and available
to be purchased. This information was not disseminated to the public.
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At Jolly's request, Horst transferred a bottle of Weller 12 Year Reserve Bourbon from the
PLCB Fulfillment Center to the PLCB's headquarters at the Northwest Office Building in
Harrisburg, Pennsylvania, for Jolly to purchase. On July 29, 2019, Jolly used his personal Visa
credit card to purchase the bottle of Weller 12 Year Reserve Bourbon at the second floor Cost
Center register in the Northwest Office Building. Jolly paid the PLCB the same amount that a
Limited -Release Lottery winner paid to purchase a bottle of Weller 12 Year Reserve Bourbon (i.e.,
$3999).
For the January 29, 2020, Pappy Van Winkle Collection Limited -Release Lottery, the
PLCB allocated various types of Pappy Van Winkle bourbon, including at least 999 bottles of
Pappy Van Winkle Special Reserve 12 Year Bourbon and 145 bottles of Pappy Van Winkle's
Family Reserve 15 Year Bourbon, for individual customers to purchase through the Limited -
Release Lottery. Approximately 17,876 individual customers entered the Limited -Release Lottery
for an opportunity to purchase a bottle of Pappy Van Winkle Special Reserve 12 Year Bourbon at
the cost of $99.99. Approximately 18,768 individual customers entered the Limited -Release
Lottery for an opportunity to purchase a bottle of Pappy Van Winkle's Family Reserve 15 Year
Bourbon at the cost of $149.99. Additional bottles of Pappy Van Winkle's Family Reserve 15
Year Bourbon were allocated for licensees to purchase. Twenty-four bottles of Pappy Van Winkle
Special Reserve 12 Year Bourbon and five bottles of Pappy Van Winkle's Family Reserve 15 Year
Bourbon remained after the Limited -Release Lottery as a result of purchases not being completed
by winners of the Limited -Release Lottery.
In February 2020, Horst came to Jolly's office and told him that bottles of various types of
Pappy Van Winkle bourbon were left over from the January 29, 2020, Pappy Van Winkle
Collection Limited -Release Lottery. When Jolly informed Horst of his interest in purchasing
Pappy Van Winkle bourbon, Horst provided Jolly with options to choose from. After Jolly
informed Horst of his selections, Horst transferred one bottle of Pappy Van Winkle Special
Reserve 12 Year Bourbon and two bottles of Pappy Van Winkle's Family Reserve 15 Year
Bourbon to the Northwest Office Building for Jolly to purchase.
On February 24, 2020, Jolly purchased the three bottles of Pappy Van Winkle bourbon at
the second floor Cost Center register in the Northwest Office Building. Jolly mistakenly received
a $40.00 licensee discount on the purchase. After Jolly realized that he had mistakenly received
the discount, he completed a return of the bottles of Pappy Van Winkle bourbon at the second floor
Cost Center register and repurchased the bottles without the discount. Jolly ultimately paid the
PLCB the same amounts that Limited -Release Lottery winners paid to purchase bottles of Pappy
Van Winkle bourbon (i.e., $99.99 for the bottle of Pappy Van Winkle Special Reserve 12 Year
Bourbon and $14999 for each bottle of Pappy Van Winkle's Family Reserve 15 Year Bourbon).
At the request of the PLCB, the Commonwealth Office of the Budget Bureau of Audits
("BOA") acts as an independent observer for all Limited -Release Lotteries. Pamela Richards
("Richards"), who is employed as an Auditor III for the BOA, is responsible for observing each
Limited -Release Lottery to ensure that it is conducted in a fair and equitable manner. Richards is
also responsible for reviewing and reconciling the inventory of Limited -Release Lottery items
post -lottery to ensure that the items were correctly distributed.
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After completing a review of the January 29, 2020, Pappy Van Winkle Collection Limited -
Release Lottery, Richards found that inventory counts were not matching the transfer of items
designated for that Limited -Release Lottery. Richards discovered that eight units of Pappy Van
Winkle bourbon were transferred from: the PLCB Fulfillment Center to the Northwest Office
Building on February 21, 2020. Richards initiated a review of prior Limited -Release Lotteries,
and she found that between July 2019 and February 2020, another twelve Limited -Release Lottery
items, including bottles of Weller 12 Year Reserve Bourbon, Buffalo Trace 9 Year Bourbon, Eagle
Rare 17 Year Bourbon, and George T. Stagg Bourbon, were transferred from the PLCB Fulfillment
Center to the Northwest Office Building. Eighteen of the twenty items that were transferred to the
Northwest Office Building were sold at the second floor Cost Center register.
On May 1, 2020, and May 11, 2020, BOA Assistant Director Michael Blinn ("Blinn")
contacted Horst to discuss the irregularities identified by Richards. Horst informed Blinn that he
would notify his superior, then-PLCB Executive Director Charles Mooney ("Mooney"), of the
irregularities noted by Richards. Horst failed to follow up with the BOA after the conversations
with Blinn, and he failed to inform Mooney or the Members of the PLCB about the irregularities
found by Richards.
Pennsylvania Secretary of Administration Michael Newsome ("Newsome") served as a
Member of the PLCB from April 2016 until January 2019. During a June 2020 meeting of the
Audit Committee, an advisory committee of cabinet -level officials that helps to establish the
direction of the BOA's efforts, Newsome learned about the BOA's concerns regarding the sale of
Limited -Release Lottery items to PLCB employees at the Northwest Office Building and the
PLCB's lack of response to the BOA's concerns.
On June 28, 2020, Newsome contacted PLCB Chairman Timothy Holden ("Holden") to
inquire whether the PLCB had changed policies regarding the sale of Limited -Release Lottery
items outside of the Limited -Release Lottery process. Newsome informed Holden that he was
aware that a BOA audit had uncovered irregular transactions pertaining to the sale of Limited -
Release Lottery items at the Northwest Office Building. After Holden was informed that PLCB
executives had purchased Limited -Release Lottery items, he instructed PLCB Assistant Counsel
Jason Worley, PLCB Chief Counsel Rodrigo Diaz, and PLCB Executive Director Michael Demko
to complete an internal investigation into the matter. The internal investigation identified the
following five PLCB employees who were able to purchase Limited -Release Lottery items only
by virtue of their public employment: (1) Jolly; (2) Tom Bowman, PLCB Director of Product
Selection; (3) Bryan Kelleher, PLCB Director of Business Development for Wholesale
Operations; (4) Cliff McFarland, PLCB Director of Supply Chain; and (5) Nick Melnick, PLCB
Chief Information Officer. These PLCB employees used personal credit cards to purchase the
Limited -Release Lottery items at the Northwest Office Building second floor Cost Center register.
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:
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3, The Investigative Division will recommend the following in relation
to the above allegations:
a. That no violation of Section 1103(a) of the Public
Official and Employee Ethics Act, 65 Pa.C.S. §
1103(a), occurred when Jolly used the authority of
his public position to obtain information not
available to the general public, and used that
information to purchase alcohol that was limited in
quantity and unavailable for purchase by the general
public, due to insufficient clear and convincing
evidence of a pecuniary benefit.
4. As there is insufficient evidence to support a violation, there is no
penalty.
5. Jolly agrees to not purchase any items offered by the Pennsylvania
Liquor Control Board (PLCB) outside of the process by which a
Commonwealth resident may purchase.
6. 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.
a. The Respondent has been advised that as a matter of
course, all orders from the Commission are provided
to the Attorney General, albeit without any specific
recommendations pursuant to paragraph 6 above.
b. The Respondent has been advised that all orders
become public records and may be acted upon by law
enforcement as they deem appropriate.
C. The non. -referral language contained in this
paragraph is considered an essential part of the
negotiated consent agreement.
Consent Agreement, at 1-2.
In considering the Consent Agreement, we accept the recommendation of the parties for a
finding of no violation as to the Section 1103(a) allegation.
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Page 21
Following the July 10, 2019, and January 29, 2020, Limited -Release Lotteries, Jolly was
informed by the PLCB Director of Marketing and Merchandising that items were left over from
the Limited -Release Lotteries and available to be purchased. Jolly received this information,
which was not shared with the general public, solely as a result of his employment as the Director
of Retail Operations for the PLCB. Although it is clear that Jolly was able to purchase a bottle of
Weller 12 Year Reserve Bourbon and three bottles of Pappy Van Winkle bourbon left over from
the Limited -Release Lotteries only because of his receipt of information not available to the
general public, the Stipulated Findings reflect that he paid the same prices that Limited -Release
Lottery winners would have paid to purchase the bottles (i.e,, $39.99 for the bottle of Weller 12
Year Reserve Bourbon, $99.99 for the bottle of Pappy Van Winkle Special Reserve 12 Year
Bourbon, and $149.99 for each of the two bottles of Pappy Van Winkle's Family Reserve 15 Year
Bourbon). Because the only way to legally purchase bottles of Weller 12 Year Reserve Bourbon
and Pappy Van Winkle bourbon in the Commonwealth is through Limited -Release Lotteries',
Bowman essentially paid the "market value" of those bottles in the Commonwealth. There is no
basis in the Stipulated Findings for concluding that Jolly realized a private pecuniary benefit as a
result of his purchase of the bottles of Weller 12 Year Reserve Bourbon and Pappy Van Winkle
bourbon left over from the Limited -Release Lottery process.2
Accordingly, based upon the parties' Stipulation of Findings and Consent Agreement, we
hold that no violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred when
Jolly used the authority of his public position to obtain information not available to the general
public, and used that information to purchase alcohol that was limited in quantity and unavailable
for purchase by the general public, due to insufficient clear and convincing evidence of a pecuniary
benefit.
As part of the Consent Agreement, Jolly has agreed to not purchase any items offered by
the PLCB outside of the process by which a Commonwealth resident may purchase such items.
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.
Accordingly, per the Consent Agreement of the parties, Jolly is ordered to fulfill his
agreement to not purchase any items offered by the PLCB outside of the process by which a
Commonwealth resident may purchase such items.
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.
1 Out-of-state distilleries and retailers cannot legally ship liquor directly to individual customers in the Commonwealth
see, 47 P.S. §§ 4-415, 4-488, 4-491(2), 5-505.2, 5-505.4). It would also generally be illegal to purchase bottles of
Weller 12 Year Reserve Bourbon and Pappy Van. Winkle bourbon in another state for consumption in the
Commonwealth because with certain limited exceptions, it is illegal to bring any liquor purchased in another state into
the Commonwealth see, 47 P.S. §§ 4-491(8), (11)).
2 Although, based on purchase prices in other states and on the internet, the bottles of Weller 12 Year Reserve Bourbon
and Pappy Van Winkle bourbon may have been valued at significantly more than the prices charged by the PLCB to
purchase the bottles, the bottles would have had no resale value because it is illegal to sell alcohol without a license.
Jolly, 21-004
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IV. CONCLUSIONS OF LAW:
As the Director of Retail Operations for the Pennsylvania Liquor Control Board from July
5, 2016, to December 11, 2020, Respondent Carl Jolly ("Jolly") was a public employee
subject to the provisions of the Public Official and Employee Ethics Act ("Ethics Act"), 65
Pa.C.S. § 1101 et M.
2. No violation of Section 1103(a) of the Ethics Act, 65 Pa.C.S. § 1103(a), occurred when
Jolly used the authority of his public position to obtain information not available to the
general public, and used that information to purchase alcohol that was limited in quantity
and unavailable for purchase by the general public, due to insufficient clear and convincing
evidence of a pecuniary benefit.
In Re: Carl Jolly, File Docket: 21-004
Respondent Date Decided: 6/28/22
Date Mailed: 6/29/22
ORDER NO. 1804
No violation of Section 1103(a) of the Public Official and Employee Ethics Act, 65 Pa.C.S.
§ 1103(a), occurred when Carl Jolly ("Jolly"), as the Director of Retail Operations for the
Pennsylvania Liquor Control Board, used the authority of his public position to obtain
information not available to the general public, and used that information to purchase
alcohol that was limited in quantity and unavailable for purchase by the general public, due
to insufficient clear and convincing evidence of a pecuniary benefit.
2. Jolly is ordered to fulfill his agreement to not purchase any items offered by the
Pennsylvania Liquor Control Board outside of the process by which a Commonwealth
resident may purchase such items.
3. Compliance with paragraph 2 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
ON,
Acting Chair