Liquor Control Board Wants Fine Refund

OCEAN CITY — Questions about who has authority over the Worcester County Liquor Control Board (LCB) has the beleaguered agency looking for a refund of the $16,000 settlement it paid in lieu of a suspension last fall, but the state comptroller has essentially told the LCB not to expect a check in the mail any time soon.

Following a state audit and an investigation by the Comptroller’s Office Field Enforcement Division through much of last summer, the Worcester County LCB paid the settlement rather than face a possible suspension. The money was accepted and a possible eight-day suspension was avoided, but the LCB now wants the money returned, citing the Comptroller’s Office lacked the authority to suspend or revoke its license, or issue and collect fines.

Worcester County LCB attorney John Phoebus last week sent a letter to Maryland Attorney General Doug Gansler seeking an opinion on the question. Essentially, Gansler is asked in the letter “whether the Comptroller of Maryland has the power to suspend or revoke the authority of a Liquor Control Board to sell alcoholic beverages or to accept payment of a fine in lieu of such a suspension?”

According to Phoebus, the comptroller can only suspend or revoke licenses or permits that are issued by the Comptroller. LCBs derive their authority to purchase and sell alcohol not from a license or permit, but from an act of the General Assembly, according to his letter to Gansler.

“None of these provisions give the Comptroller the authority to take enforcement action against an LCB, including the authority to accept an offer on money as a compromise,” the letter reads. “The Comptroller’s authority to accept money as a compromise is dependent upon his authority to suspend or revoke a license in the first place. Because the LCB is not the holder of a license or permit, the Comptroller had no authority to seek and no authority to accept a monetary offer in compromise from the LCB.”

Phoebus essentially asserts the Comptroller’s office usurped its authority when it accepted the “offer of compromise” from the LCB and is now, pending an opinion from the Attorney General, demanding the money be returned.

“My client was unrepresented by counsel at the time of your investigation, but the Liquor Control Board had the right to expect that the Field Enforcement Division of your office would adhere to the law of the state of Maryland, including any constraints that are placed on its authority by the settled law of the state,” the letter to Francot reads. “On behalf of the Liquor Control Board for Worcester County, I respectfully demand that you direct the Field Enforcement Division to return to the Liquor Control Board for Worcester County the sum of $16,000.”

However, Comptroller Peter Francot said this week during an interview with Bryan Russo on his “Coastal Connection” program on Ocean City’s National Public Radio (NPR) affiliate 88.3 FM his office has no intention of paying back the $16,000 fine the LCB paid to his office last fall. A fired-up Franchot said Article 2B of the state’s code explicitly gives the Comptroller’s Office the authority to regulate LCBs, complete with the ability to suspend or revoke licenses and to levy fines.

“We aren’t going to pay it back because they broke the law, they paid the fine voluntarily and somebody has to be in charge,” he said. “Under their logic, no one would be in charge. Under their logic, if we aren’t in charge and not able to charge them, then nobody is, and somebody has to regulate the liquor business and it’s been tasked to us under Article 2B.”

However, Phoebus pointed out Article 2B, which covers the distribution and sales of alcohol in Maryland, vests the authority in the Comptroller’s Office, the Boards of License Commissioners and the LCBs.

“State law is very clear about the governing authority in Maryland with the responsibility shared by these three agencies,” he said. “The LCB is treated like the junior varsity, but if you look up the law, you can see we’re right up there with them.”

During the same interview, Franchot expressed displeasure with the current bills in the General Assembly that, if passed, would abolish the LCB in Worcester County and replace it with similar agency under the control of the County Commissioners.

“The citizens of Worcester County need to make a decision about whether they want their government in the liquor business,” he said. “Worcester County shouldn’t be, because they aren’t good at it. Government is not good at certain things. Government is not good at the liquor business. Like I said, if we aren’t in charge, then nobody is in charge, and wouldn’t that be a fine day in Worcester County if no one was looking over the shoulder of this renamed county Liquor Control Board.”

Franchot called out the LCB for its arrogant request for a refund and said replacing the existing LCB with a similar operation run by the county is not the appropriate solution.

“The LCB is somewhat of a rogue operation that did whatever it felt it wanted to do,” he said. “It had this unbelievable sense of entitlement, discriminated against businesses down there in Ocean City and it just amazes me that they would ask for the money back. That takes arrogance right there, but the fact the County Commissioners would decide to go in the direction of getting more involved is even more outlandish considering the general direction of the county right now.”

Meanwhile, the LCB is waiting for an opinion from the Attorney General on its assertion the Comptroller lacked the authority to levy and accept the $16,000 fine.

“I have prepared the following outline of the LCB’s position, which is that the Comptroller neither has the general power to suspend or revoke the license of any Liquor Control Board, nor does he gain the power to take such action as a result of any alleged violation of various, specific provisions of Article 2B,” Phoebus’ letter to Gansler reads. “The LCB paid to the Comptroller the sum of $16,000 as an ‘offer of compromise’ which the Comptroller accepted. A ‘suspension’ was imposed, but the LCB was permitted to sell alcoholic beverages during this period of suspension.”

Franchot’s office also received the letter sent by Phoebus to Gansler’s office and responded with a letter of its own reiterating the Comptroller has not intention at this point in paying back the $16,000.

“In as much as we disagree with your premise that the Comptroller was not authorized to enforce the violations of law and regulation committed by the LCB, and given that you have requested an opinion by the Attorney General, it would seem inappropriate to return the offer of compromise of $16,000 at this time,” wrote Field Enforcement Division Director Jeffrey A. Kelly.

Phoebus said this week he is confident the Attorney General will agree with his assertions, but like everybody else involved is waiting for Gansler to respond.