ethics panel adjudication for james short

8/10/2019 Ethics Panel Adjudication for James Short

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In Re: amesH. Short,Jr., : File Docket: 12- 029Respond ent : X-ref: OrderNo. 1629

DateDecided: 2/ 6/ 14DateMailed: 2/ 12/ 14

Before: JohnJ. olger,ChairNicholasA. Colafella,Vice ChairRaquelK. BergenMarkR. CorriganRogerNickKathrynStreeterLewis

This is a final adjudicationof the StateEthicsCommission.Procedurally,the InvestigativeDivisionof the StateEthicsCommissionconducted

an investigationregardingpossibleviolation(s) fthe PublicOfficialandEmployeeEthicsAct (EthicsAct), 65 Pa. C.S. 101 et seq., by the above-namedRespondent.At thecommencementof its investigation,the InvestigativeDivisionserveduponRespondentwrittennotice of the specific allegations. Upon completionof its investigation,theInvestigativeDivisionissuedandserveduponRespondenta FindingsReportidentifiedasan nvestigativeComplaint.A Stipulationof Findingsand a ConsentAgreementweresubsequently submitted by the parties to the Commissionfor consideration. TheStipulatedFindingsare set forthas the Findingsin this Order. The ConsentAgreementhas beenapproved.

I. ALLEGATIONS:That JamesShort,a publicofficial/public employeein his capacityas Directorof

Marketingof the PennsylvaniaLiquorControlBoard (PLCB ),violatedSections1103(a)and 1105(b) of the StateEthicsAct (Act 93 of 1998) whenhe used the authorityof hispublicpositionto obtaina privatepecuniarybenefitfor himself,membersof his immediatefamily, and/ or a businesswith which he and/ or membersof his immediatefamilyareassociated,by solicitingand/ or acceptinggifts, ransportation,odging,and/ or hospitalityfrom vendorsof the PLCB at a time when he was participatingin and/ or makingfinalrecommend ations/decisionsregardingthe PLCBs purchaseof wineandspiritsfromthosevendors;andwhenhe failedto discloseon Statementsof FinancialInterestshis receiptofgifts, ransportation,odging,and/or hospitality,on Statementsof FinancialInterestsfiledfor the 2008through2011calendaryears.

II. FINDINGS:1. James Shorthas servedas the Directorof Marketingand Merchandisingfor the

PLCBfromapproximately2003to the present.

a. Short beganemploymentwith the PLCBin 1984, as a part- im eseasonalclerk.

b. Short held multiplepositionsduring his tenure with the PLCB includingClerk,AssistantStoreManager,StoreManager,etc.


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1. Short receivedmultiplepromotionsthroughouthis tenurewith thePLCB.

2. As the PLCBDirectorof MarketingandMerchandising,Shorthaddirectsupervisoryresponsibilityover multiple PLCB employeesincluding butnot limited to the

following:a. MatthewSchwenk,Directorof ProductSelection;

b. AnthonyJones,DivisionChiefof LuxuryWines;

c. TimothyFrigner,CategoryManagementDirector;

d. ChristineGerberich/Gail Chiavetta,Directorof MarketingPrograms;and

e. StephenPollack,Directorof the Chairmans SelectProgram.f All of these subordinateemployees,as well as Short,haveinteractedwith

PLCBvendors.

3. Shorts job descriptionin the positionof Directorof Marketingand Merchandisingfor the PLCB setsforth the position definition,examplesof work, andrequiredknowledge,skills and abilities.

a. The definitionfor the positionsets forth dutiesand responsibilitiesfor theindividualin the positionwhichinclude,n part, he following:

1. Strategicplanning,policy development,and administrationof thestatewideprogram for liquor and alcohol purchasing, productmarketing,and brandingand design of the statestore within thePLCB;

2. Servingas the principaladvisorto the ChiefExecutiveOfficer (CEO)andBoardon all matterspertainingto the purchaseandmarketingofliquorand alcoholthroughthe statestoresystem;

aa. Shortreporteddirectlyto WalterJosephConti,PLCBCEO, nhis positionas Directorof Marketingand Merchandising.

3. Development, mplementation,andadministrationof marketingplansand strategies;communicationand promotionof new productstoconsumers;andthe coordinationand administrationof all liquorandalcoholpurchasingconductedby the PLCB;and

4. Workingwith considerableindependencewithinthe frameworkofBoardpoliciesunderthe generaldirectionof the CEOwho reviewsworkthroughconferences,reports,and effectivenessof results.

b. Examplesof workto be performedby the individualin the positioninclude,npart, he following:

1. Direction,hroughsubordinatebureau directors,ofall liquor andalcoholmarketing,merchandising,and purchasingoperations;

2. Advisingthe CEOandBoardon mattersof purchasingandmarketingof alcohol;and


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3. Directionof the developmentand preparationof policies/proceduresrelatingto the purchaseof liquorand alcoholby the PLCB.

c. Requiredknowledge,skills, and abilitiesfor the individualin the positionwhichinclude,n part, he following:

1. Knowledgeof the principlesand practicesof productmarketing;

2. Knowledgeof behavioralpsychology;

3. Abilityto analyzeand interpretpoliciesand procedures;and

4. Abilityto establishand maintaineffectiveworkingrelationships.

4. The PLCBwas createdby state law on November29, 1933, ollowingthe end ofprohibition.

a. Prohibitionwas repealedon December5, 933,with the ratificationof thest21 Amendmentto the U.S. Constitution.

b. Pennsylvaniais one of eighteen (18) tatesand two ( 2) Marylandcountiesthat activelyparticipatein the distributionprocessto control the sale ofalcohol.

5. The PLCBis governedby a three (3) MemberBoard,appointedby the Governorand confirmedby two- hirdsof the StateSenate.

a. The Boardappointsa ChiefExecutiveOfficer.

6. The PLCBis responsiblefor regulatingthe saleof alcohol,educatingconsumersonthe responsibleuse of alcohol,and workingto preventunderageuse of alcoholicbeverages.

7. ThePLCBaccomplishesits responsibilitiesthroughmarketingandmerchandisingaretailoperationof approximately608storeswithsalesof approximately $2. 1 billionin 2011-2012.

a. The PLCBalso oversees:

1. Regulationof 17, 000 licenses.

2. Administrationof alcoholeducationand awarenessprograms.

b. The currentemploymentcomplementof the PLCBis approximately4, 500peoplewith four ( 4) abor associations.

8. BetweenDecember6, 933,and April 1934, he PLCBcommencedoperationbyinitiatingthe following:

a. Morethan600licenseswereapproved,givingthe newlicenseholders,suchas bars and restaurants,the right to legally sell alcohol foron- premisesconsumptionin Pennsylvania.

b. The PLCBopenedsixty-hree (63) statestoresandfive ( 5) arehouses inthe Commonwealth.


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c. The PLCBestablishedfour ( 4) istrictofficesin Philade lphia, Harrisburg,Pittsburgh,and Wilkes-Ba rre.

1. Since 1939, he PLCB has maintained its headquarters at theNorthwestOfficeBuilding.

9. On April12, 1951, he PennsylvaniaGeneralAssemblycombinedexistingbeerandliquorlawsinto one statute,entitledthe LiquorCode.

10. On July 1, 987, he PennsylvaniaGeneralAssemblyreenactedthe LiquorCodeand created the Bureau of LiquorControl Enforcement (BLCE),within thePennsylvaniaStatePolice,whichis responsiblefor enforcingthe LiquorCodeandthe Board s regulations; and the Office of Administrative Law Judge, anautonomousofficewithinthe PLCB,whichis responsiblefor presidingovercitationand enforcementhearings.

11. The PLCBprovides products and servicesthrough seven ( 7) edicateddepartments designed to meet the specific needs of PLCB customers andlicensees.

a. Each of the seven ( 7) edicatedoffices has specificdeputieswho haveoversightresponsibility.

b. Dedicatedofficesare: Finance,SupplyChain,Marketing &Merchandising,RetailOperations,Administration,RegulatorAffairs,and ExternalAffairs.

12. The PLCBis the largestpurchaserof wineand spiritsin the UnitedStates.

a. The PLCBcurrentlyoperatesapproximately608 stores,whichare leasedfromprivatelandlords.

b. T hePLCBoutsourceswarehousingservicesfor three (3) istributioncentersin Pennsylvania.

c. Therecurrentlyare approximately25, 595 beveragealcohollicensesandpermitsthroughoutPennsylvaniaand 5, 391 registeredmalt and brewedbeveragebrandsgrantedby the PLCB.

13. Productsthat are sold by the PLCBare categorizedas eitherregularitems, uxuryitems,or specialorderitems.

a. Regularitems are productsthat are routinelystockedin the distributioncenters.

b. Luxuryitemsare productsthat are purchasedintermittentlyor as one- imepurchases.

c. Special order products are items that are not stocked in the PLCBdistributioncentersbut may be specialorderedby either licenseesor byconsumers.

d. On or aboutFebruary4, 004, he PLCBbeganthe Chairmans SelectionProgram,whichofferswineat premiumcollectionstores.

14. Inor about2006,a policywas developedby the PLCBknownas the brightline.

a. The policywasdevelopedduringthe timewhenJosephMartzwasserving


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as PLCBDirectorof Administration.

1. In 2006, Martz simultaneously served as Secretary of theCommonwealthand PLCBDirectorof Administration.

b. The bright line was a policy that advisedemployeesthey were to accept

nothingfromPLCBvendors.c. Wheninitiallyimplemented,the policywas applicableto employeesof the

AdministrativeDivisionof the PLCB.

1. Employeessignedthe policyagreeingnot to acceptanythingfromPLCBvendors.

d. Jonathan Newman was PLCB Chairman at the time the policy wasimplementedfor administrativestaff.

15. In 2006, he Directorof Administrationhadno supervisoryauthorityoveremployeesin the PurchasingDivision.

a. As a result, he brightline policywasneverenactedfor employeesin theMarketing/Pu rchasingDivision.

1. PLCBChairmanNewmanwas opposedto the policy.

2. Newmanhoped to enact a policywhich permittedemployeestoacceptitemsof valuesimilarto the provisionsof the EthicsAct.

3. The policyadvocatedby Newmanreiteratedthe restrictionsin theLiquorCodeand the PLCBCodeof Conduct.

16. The PLCBis the only retail sellerof wine/spiritsin the Commonwealth.

a. The PLCB maygrant licenses to entities/ establishmentsfor the sale ofalcoholicbeveragesforon- site consumptionas wellas for vendorswhosellproductsforoff- site consumption.

b. In order foran alcoholicbeverageto be sold in Pennsylvania,it must beauthorizedfor sale by the PLCB.

1. Ifa product is isted t is authorized for saleand stocked as aproductin PLCBretail stores.

17. Manufacturersand suppliersof alcoholicbeverageproductslawfullyemployseveraldifferentmethodsto sell their productswithinthe Commonwealthof Pennsylvania.

a. Manufacturers/suppliersmay markettheir productdirectly to the PLCBthroughthe listing/delistingprocessfor salesand distribution.

b. Manufacturers/suppliersm aymarkettheir productthrougha vendor.

1. Vendorsmustregisterwith the PLCB.

2. A manufacturer/supplierm ayserveas its own vendorof record.

c. Manufacturers/suppliersmayenlist the servicesof a broker,who in turnrepresentsthe manufacturer/supplierand its productsbeforethe PLCB.


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1. Brokers may representmultiple manufacturers/suppliers and/ ormultipleproductsbeforethe PLCB.

2. Abrokerm ayalso serveas a vendorof record.

18. Oncea productis manufactured,if a manufacturer/supplieris utilizinga vendorofrecord,productis then shippedto the custodyof the vendorof record.

a. The vendortakesphysicalcustodyof the productfor deliveryto the PLCB.

b. Paymentfor the product is made betweenthe PLCB and the vendor ofrecord.

c. Ifa manufacturer/supplieris servingas its ownvendorof record,productisshippeddirectlyfromthe manufacturer/supplierto the PLCB.

19. Ifa manufacturer/supplieruses a broker,productis still distributedfromthe vendorof recordto the PLCB.

a. Wherea brokeris used,paymentis madefromthe PLCBto the broker.b. Abrokerm ayalso serveas a vendorof record.

20. The PLCBperiodicallyreviewsall productscurrentlysold in PLCBretailstores toevaluatetheir profitability,and at or aboutthe same timeconsidersnewproductsfor placementin PLCB retail stores through a processknown as isting anddelisting.

a. Listing/delistingoccurstwicea year, usuallyin the fall and springof eachyear.

b. The goal of listing/ delistingis to achievea1: 1 ratio or a ero sum. Foreach productlisted, one is delisteddue to the limitedshelf spaceat each

PLCBretail store.21. The processto presenta new productfor listingis regulatedthroughthe PLCB.

a. Only individuals/entitieswith a PennsylvaniaVendorPermitmay presentitemsfor listing.

b. A fee of $150. 00 (per item/per size) or proposednewproductsis required.

c. Appropriatepaperworkas wellas two (2) roductsamplesfor wineandone1) roductsamplefor spiritsis also required.

d. Once the appropriateapplicationand sample(s) avebeen submitted,adate/ime is scheduledfor the vendor/brokerto presentits newproductstostaff] membersof the PLCB.

e. Generallytwo ( 2) ottlesof a productare providedfor sampling.

1. One (1) ottlefor tastingand anotherfor label revieware submitted.f The Directorof Marketingand Merchandisingdoes not regularlysit in on

new productpresentationsor evaluations.PLCB [staff] membersusuallyresponsiblefor evaluatingnew productare:


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Directorof ProductSelection

Chiefof ProductManagementand PricingDivision

MerchandisingPricingCoordinator(s).

g. Presentation time is limited to forty- ive to ninety ( 45-90) minutespervendor/brokerregardlessof the numberof itemspresented.

1. Samplingis to occur at PLCB headquartersin a roomcalled theRetailEducationCenteror R ECRoom.

h. Oncea newproductpresentationhas beenmade,a recommendationwillbemadeas to whetherthe new productshouldbe listed (sold in PLCBretailstores).

1. The Commissionersdo not participatein the new productreviewprocess.

2. TheDirectorof Marketingand Merchandisingalongwiththe Directorof Product Selection make the final recommendation to theCommissionas to whatproduct(s) houldbe listedfor sale.

3. A reportof productsto be listedis forwardedto the Commissionersfor approval.

4. TheCommissionersvoteon the entirerecommendednewproductlistwithoutan independentassessment.

5. Luxurywinesandone- imebuys,ncludingthe Chairmans SelectionProgram,are not subjectto the listing/delistingprocess.

22. Delistingoccurssimultaneouslywith the listingprocess.

a. The delistingprocessis forma llyterm ed categorymanagement,but iscommonlydescribedas a ucketingor iltrationprocess.

1. Productsof like typeare placedinto categories;i .winesof a similarvintage,type, style, price, etc., are groupedtogether.

2. Itemsare categorizedby lengthof timelisted: temslisted for lessthan one year arenot eligiblefor delisting;temslistedfor betweeneighteento twenty-four (18-24) monthsare reviewedseparatelyfromthoseitemslistedtwenty-four ( 24) monthsor more.

3. Aftereachitemis reviewed,it is placedinto a ucketifit passes thefiltering criteria. For example,if a productmeets the threshold

criteria,it is ucketedto the nextarea of review.4. Itemsare reviewedfor their profitabilitywith specialattentionbeing

placed on: how much profit [ was] generated;how many storesstockedthe item;percentageof profitgrowth (20% rowthis viewedby PLCBas a oodproduct.)

b. Ifa product is to be delisted, he vendor is notified and provided anopportunityto avoida delisting.


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1. Actionssuch as an adv ertising camp aign, discounts,and productsamplingare used to promotesalesand possiblyavoida delisting.

c. Recommendationsfor delistingare similarto listings,wherethe DirectorofMarketingand Merchandisingalongwith the Directorof ProductSelectionmakethe final recommendationto the Commissionas to what product(s)

shouldbe delisted.23. The PLCB relies primarilyon recommendationsmade by Short and his direct

reportswhenmakinglisting/delistingdecisions.

a. In an interviewwith CommissionInvestigators,Shortestimatedthat 5% fthe staffs recommendationsto list/delistare not acceptedby the Board.

24. Priorto sometimein 2012, he PLCBpurchasedall productand warehousedit in aPLCBfacilityuntil distributionto PLCBretail stores.

a. PLCB was responsiblefor paymentof the productonce it was within itspossession.

b. PLCBassumedresponsibilityfor loss of the productdue to theft, spoilage,damage,etc., oncein the physicalcustodyof PLCB.

25. Duringcalendaryear 2012, he PLCBinitiateda purchasing/nventorysystemofbailment.

a. Through the PLCB s bailmentsystem, product is shipped to PLCBwarehousesfromthe vendor,as occurredpre- 2012.

b. PLCBdoesnot transferpaymentof fundsor ownershipof the productuntilitis to be shippedto the PLCBretail stores.

c. The PLCBsystemof bailmentallowsfor greatercontrolover inventoryand

also limitsthe risk/exposurethe PLCBmayhaveregardingproductloss.1. Throughthe bailmentprocess,PLCBmaintainsno morethan three

3) o five ( 5) eeksworthof inventorywithinits warehouses.

2. Currentlytwenty-seven ( 27) endorsare under bailmentwith thePLCB, which representsapproximately80% of the cashvalue ofPLCBproductssold.

d. Prior to initiating a bailment process, PLCB staff were responsibleforpredictingthe marketfor a particularproduct;if saleswerenot as expected,the PLCBwould suffer a financialloss throughspoilageof productif anexcessiveamountof productremainedunsold.

26. The primaryvendorsprovidingproductsto the PLCBare:SouthernWine and SpiritsCapitalWine and Sp irits (AllianceBrands,White RockDistilleries)AlliedBeverage (Majestic).

Thesevendorsrepresentat least 31% of total PLCBsales/nventory.

27. SouthernWine and Spiritsof America,Inc. ( Southern) [claims]to be the nationslargestwineand spiritsdistributor.


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a. Sinceits creation/ormationin 1968,Southernhas maintainedits corporateofficein Miami,Florida.

b. Currently,Southernrepresentsclientsin no less than thirty-five (35) statesincluding ControlStatesand OpenStates.

1. An Ope nState efersto a state/urisdictionwherewine,spirits,andbeer sales are conducted through an independent beveragedistributor/retailer.

2. A ControlStates wherea stateor coun ty con trolsor regulatesthedistributionand/ or the sale of wine,spirits,and/ or beer.

3. Pennsylvaniais the largestControl State operationin the UnitedStates.

28. SouthernWine & Spiritsof Pennsylvaniaoperatesas a licensedwineand spiritsbroker/marketer.

a. Southernexpandedits operationsinto Pennsylvaniain 1995.b. Southernemploysapproximatelytwo-hundredtwenty-five ( 225) salesand

supportstaff statewidein Pennsylvania.

c. Southernmaintainstwo ( 2) fficeswithinPennsylvania,one in the KingofPrussiaarea, and the otherin the GreaterPittsburghgeographicarea.

1. Theseemployeesare responsiblefor marketingand merchandisingalcoholicbeveragesto the morethan six-hundred (600)PLCBstatestores,as well as Pennsylvanias 14, 500 on- premiseaccounts.

2. The PLCBis Southerns only off-premisecustomer.

29. BradM. Waxman (Waxman)s the ExecutiveVicePresident,GeneralManagerofSouthernWine & Spiritsof Pennsylvania.

a. In January1999,Waxmaninitiatedhis employmentwith Southern.

1. In 2002, Waxmanwas namedExecutiveVice President/GeneralSalesManagerof Southerns Pennsylvaniaoperations.

b. Mark Sweeney is the Vice President and GeneralManager of NorthAmericanWine and Spirits,a divisionof SouthernWine and Spirits.

1. Sweeneyalso makessalescalls to PLCBofficialsand employees.

2. In 2008, Waxmanwas promotedto the positionof ExecutiveVicePresident/GeneralManagerof Southerns Pennsylvaniaoperations.

30. Southernis a brokerand vendorof recordfor a numberof winesand/or spiritssoldto the PLCB.

a. Waxmanservesas a brokerfor a numberof the productsbeforethe PLCB.


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b. Productsfor which Southernserves as broker and/ or vendor of recordaccountfor betweenapproximately6. 43% o 6. 85% of PLCBtotal CostofGoodsSold (COGS)duringthe lastfive ( 5) ears.

c. A list of Southerns businesswith the PLCBis detailedbelow:

Fiscal YearSupplier Name Fiscal Year Percentof COGSPayment

SOUTHERNWINE &SPIRITSOFPA 200 7-200 8 $ 62, 051, 980. 00 6. 60%SOUTHERNWINE &SPIRITSOFPA 200 8-200 9 $ 67, 340, 276. 96 6. 64%SOUTHERNWINE &SPIRITSOFPA 200 9-201 0 $ 72, 529, 178. 51 6. 85%SOUTHERNWINE &SPIRITSOFPA 2010-201 1 $ 69,482, 807. 78 6. 43%SOUTHERNWINE &SPIRITSOFPA 2011-201 2 $ 77, 641, 059. 78 6. 78%

The spreadsheetabove is only able to detail approximately86% of PLCB inventory,as the remainingpercentageis madeup of smallpurchases.

31. Capital Wine & Spirits, LLC ( Capital)claims to be one of the largestwholesalers/brokersof wineand spiritsin Pennsylvania.

a. Capitalis a memberof the CharmerSunbeltGroup,a nationwidedistributorof wine,spirits,beer, and otherbeverages.

b. The CharmerSunbeltGroupis a collectionof privatelyheldcompaniesandoperates dis tributor/broke ragehouses in no lessthan fifteen (15) tates,includingPennsylvania.

c. Capitalemploysmorethantwo-hundred (200)employeesandreportsto sellin excess of four millioncases of wine and spirits throughouttheCommonwealth.

d. The reportedfour million cases of wine/ spirit sales include sales to thePLCB.

32. Capitalis a brokerandven dor/vendorof recordfor a numberof winesand/or spiritssold to the PLCB.

a. Productsbrokeredby Capitalaccountfor a total of betweenapproximately19.11% o 22.03% of PLCBtotal Costof GoodsSoldduringthelastfive (5)years.

b. A list of Capitals businesswith the PLCBis detailedbelow:


1BACARDIUSAINC. 200 7-200 8 $ 65, 399, 563. 92 6. 96%1BROWNFORMAN 200 7-200 8 $ 50,057, 434. 25 5. 33%

REMYCOINTREAUUSAINC.1 200 7-200 8 $ 8, 306,486. 83 0. 88%CAPITALWINE &SPIRITS 200 7-200 8 $ 40,178, 158. 61 4. 28%


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2WHITEROCKDISTILLERIES 200 7-200 8 $ 18,931, 222. 63 2. 01%BANFIPRODUCTSCORPORATION2 200 7-200 8 $ 12, 874, 577. 00 1. 37%SUTTERHOMEWINERY2 200 7-200 8 $ 11, 305, 649. 31 1. 20%


BACARDIUSAINC. 200 8-200 9 $ 62, 721, 532. 75 6. 19%

BROWNFORMAN 200 8-200 9 $ 46, 707, 019. 90 4. 61%

REMYCOINTREAUUSAINC. 200 8-200 9 $ 7, 032,821. 38 0. 69%

CAPITALWINE &SPIRITS 200 8-200 9 $ 37, 819, 784. 20 3. 73%

WHITEROCKDISTILLERIES 200 8-200 9 $ 15, 925, 879. 32 1. 57%

BANFIPRODUCTSCORPORATION 200 8-200 9 $ 14, 124, 707. 82 1. 39%

SUTTERHOMEWINERY 200 8-200 9 $ 14, 381, 248. 01 1. 42%


BACARDIUSAINC. 200 9-2010 $ 67, 263, 103. 22 6. 35%BROWNFORMAN 200 9-2010 $ 50,613, 490. 40 4. 78%

REMYCOINTREAUUSAINC. 200 9-2010 $ 7, 911,959. 34 0. 75%

CAPITALWINE &SPIRITS 200 9-2010 $ 38,317, 957. 26 3. 62%

WHITEROCKDISTILLERIES 200 9-2010 $ 21, 435, 297. 82 2. 02%

BANFIPRODUCTSCORPORATION 200 9-2010 $ 16, 606, 904. 35 1. 57%

SUTTERHOMEWINERY 200 9-2010 $ 15, 255, 869. 66 1. 44%



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BACARDIUSAINC. 2010-2011 $ 61, 685, 074. 98 5. 71%

BROWNFORMAN 2010-2011 $ 47, 563, 997. 04 4. 40%

REMYCOINTREAUUSAINC. 2010-2011 $ 7, 305,972. 37 0. 68%

CAPITALWINE &SPIRITS 2010-2011 $ 39,033, 604. 40 3. 61%

WHITEROCKDISTILLERIES 2010-2011 $ 19,421, 875. 69 1. 80%

BANFIPRODUCTSCORPORATION 2010-2011 $ 16, 521, 319. 81 1. 53%

SUTTERHOMEWINERY 2010-2011 $ 14, 909, 694. 70 1. 38%


BACARDIUSAINC. 2011-2012 $ 60,866, 013. 23 5. 31%

BROWNFORMAN 2011-2012 $ 48,337, 155. 48 4. 22%

REMYCOINTREAUUSAINC. 2011-2012 $ 9, 765,846. 17 0. 85%

CAPITALWINE &SPIRITS 2011-2012 $ 42, 274, 675. 76 3. 69%

WHITEROCKDISTILLERIES 2011-2012 $ 25, 582, 535. 77 2. 23%

BANFIPRODUCTSCORPORATION 2011-2012 $ 16, 385, 912. 23 1. 43%

SUTTERHOMEWINERY 2011-2012 $ 18,394, 480. 35 1. 61%1.Membersof TheAlliance2 Manufacturersrepresentedby Capitalin Pennsylvania

The spreadsheetabove is only able to detail approximately86% of PLCB inventory,as the remainingpercentageis madeup of smallpurchases.

33. In an effort to condensemarketing efforts and maximize sales and productexposure,several manufacturers/producersof wines, spirits and malt/ brewedbeverageshaveformedpartnershipsfor marketingpurposes;onesuchpartnershipis The Alliance.

a. The Allianceis comprisedof wine/spiritsuppliers: Baca rdiUSA (Bacardi);BrownForman;and RemyCointreau (Remy).


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b. The Alliancewasestablishedby Bacardi,BrownForman,and Remyto e-shape heirrouteto marketin orderto providegreaterserviceandaccess tothe consumer.

c. Thegoalof TheAlliancewas/s to createa wayfor Bacardi,BrownForman,and Remy to leverage their scale and profitability in order to secure

dedicatedresources.34. The Alliance is a UnitedStates programand is focused on distributionand a

combinedportfolioin an effortto competewith othersuppliers.

a. The Alliancecoverstwenty- six (26) markets,which include the state ofPennsylvania.

b. Within Pennsylvania,The Alliance is represented by Capital Wine &Spirits/CharmerSunbeltGroup.

35. Bacardiwasfoundedin 1862,withBacardiUSAbeingestablishedin NewYorkCityin 1944.BacardiUSArelocatedto Miamiin 1964.

a. Bacardireportsworldwidesales of $5. 5 billion;BacardifiscalyearrecapforPennsylvaniaincludeda PLCBRolling12 MarketProfitof $113, 127, 361.

b. The total Bacardi portfolio cases sold in Pennsylvaniawas reportedat642,870.

c. Bacardis total Pennsylvaniamarketingbudgetwas $5. 4 million.

36. BrownFormanwasfoundedin 1870andis oneof the largestAmericanownedwineand spirit companiesin the world,and is amongthetopten largestglobalspiritscompanies.

a. BrownForman reported $3.2 billion annual net spirit and winesales for

FiscalYear2009.b. BrownFormanreportedPLCBRolling12 MarketProfitof $77, 066, 137.

c. Thetotal BrownFormanportfoliocases sold in Pennsylvaniawas390, 415.

d. BrownFormans total Pennsylvaniamarketingbudgetwas $2, 582, 120.

37. Remyis a two-hundredeighty-eight (288)yearold companybased in Paris,Francewith globalsales reportedof over $ 1 Billion.

a. RemyUSAis headquarteredin NewYork,and it was establishedin 1981.

b. RemyUSAreportsto havespentapproximately $983,50 0.00 in SPAsupportfor sales programsduring the 2011- 2012fiscal year; and an additional400,000. 00 in marketing support for the Pennsylvania marketplaceannually.

c. Total estimated expenditures for marketing in Pennsylvania total1, 383, 500. 00 or approximately $23. 00on everycase of beveragesold in

the Stateof Pennsylvania.

38. CapitalWineand Spirits/AllianceBrandsrepresentativesinteractingmostoftenwithPLCBofficialsincludethe following:


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MarkLittles,President,CapitalWine and SpiritsChristinaDesmond,Directorof Marketingand BusinessAnalyticsRob Sirota,GeneralManager,AllianceDivisionof CapitalWine and SpiritsKevinMcCarty,Vice-Presidentof ComplianceandAdministrationof CapitalWine and Spirits

Tim Kilcullen,Vice- Presidentof Wine and Education,CapitalWine andSpiritsDavidFrank e (Brown-Forman).

39. Allied BeverageGroup,LLC ( Allied)was createdby the mergersof The BaxterGroup,Inc., F&A DistributingCompanyand The JaydorCorporation.

a. Alliedreportsto be NewJerseys largestandmostcomprehensivewineandspiritsdistributorand ranksamongtheten largestdistributorsin the UnitedStates.

b. Allied also operatessubsidiaryMajestic Wine & Spirits, USA, LLCMajestic),whichis a Pennsylvaniabrokerageandven dor/vendorof record

for productssold to the PLCB.

1. As a broker/ven dor,Majesticprovidesmerchandisingandpromotionalservicesfor severalmajorsuppliersof alcoholicbeverages.

2. Majestic reports to be the PLCB s highest volumedistributor ofspecialliquororders.

c. Majesticis the vendorwhichprovidesthe PLCBs privatelabel wines.

1. By March2011, he PLCBprivatelabelwines,TableLeaf,werebeingsold in statestores.

2. Shortwas primarilyresponsiblefor negotiatingwith vendorsandultimatelyrecommendedPapariellos company,Majestic,be awardedthe contract.

3. BroncoWine Company,a Majesticsupplier, bottledthe TableLeafbrand.

40. As a brokerand vendor/vendorof recordfor productssold to the PLCB,Allied sand/or Majestics salesaccountfor betweenapproximately1.51% o 2.18% of PLCBtotal Costof GoodsSold duringthe lastfive ( 5) ears.

b. A list of Majestics businesswith the PLCBis detailedbelow:


MAJESTICWINEANDSPIRITS 2007-2008 $ 15, 623, 508. 91 1. 66%MAJESTICWINEANDSPIRITS 2008-2009 $ 15, 267, 768. 10 1. 51%

2009-2010 $ 16, 454, 785. 45 1. 55%MAJESTICWINEANDSPIRITS2010-2011 $ 16, 973, 020. 65 1. 57%AJESTICWINEANDSPIRITS2011-2012 $ 25, 000, 032. 79 2. 18%MAJESTICWINEANDSPIRITS


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41. Majestics primarycontactswithPLCBofficialsand employeesareChrisPaparielloand EdwardMurray.

a. Papariellois ExecutiveVice- Presidentof Majestic.

b. Murrayservesas Majestics EasternRegionalManager.

42. Executivesand marketingrepresentativesfromvendorssupplyingproductsto thePLCBwouldmeetwith PLCBemployeesto marketproducts.

a. The market strategiesof these representativesincluded offering gifts,transportation,odging,and hospitalityto PLCBemployees,ncludingShort.

b. Theseitems included golf events, meals, alcoholic beverages,and giftcards.

c. Noneof the itemscouldbe directlytied to productlisting/delistings.

d. Itemsof valuewereprovidedto PLCBofficialswhowerein decisionmakingpositionsregardingproductselectionand placement.

43. Representativesof the numerousPLCBvendorsfrequentlycontactedShortandhissubordinates (Schwenk,Pollackand Fringer)to marketnewand existingproducts.

a. Someof theseproductsweresubjectto the listing/delistingprocess.

b. Otherproductswereluxuryproductswhicharenotsubjectto listing/delistingprocedures.

44. As part of the marketingprocess,vendorrepresentativesofferedand providedShortwith itemsof value,ncludingbutnot limitedto the following:

Alcohol

Meals,ncludinglunchesand dinnersGolf outingsOut of stategolf tripsGift cards/certificatesTicketsto entertainment/sportingeventsSportsmemorabilia

45. Thevendorsand representativeswhomostfrequentlyprovidedShortwithitemsofvalueincluded:

CristinaDesmondMarkLittlesChrisPaparielloEdwardMurrayBradWaxmanTriciaBrungoPaul CoulombePaul Doran

THE FOLLOWINGFINDINGSRELATE TO SHORTS RECEIPTOF GIFTSANDHOSPITALITYTHATHE WOULDNOT HAVEBEENIN A POSITIONTO RECEIVEABSENTHISEMPLOYMENTWITHTHEPLCB.


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46. RobertSirotais employedas the GeneralManager,AllianceDivision,for CapitalWine and Spirits.

a. In his position, Sirota serves as the directliaison betweenthe Alliancesuppliersand CapitalWine and Spirits.

b. Sirotareportsdirectlyto MarkLittles,President,CapitalWine and Spirits.47. In or about 2009, he concept for an Alliance Golf Open was conceivedas a

collaborativeeffortbetweenSirotaand membersof the Alliance.

a. T hegolfoutingwasorganizedas a meansby whichCapitalWineandSpiritsandthe Alliancesupplierscouldstrengthentheirrelationshipwiththe PLCBandto allowvariousAllianceseniormanagementofficialsto have acetimewith PLCBofficials.

48. Sirotaservedas the CapitalWine and Spiritslead/ point of contactin relationtoorganizationof the event.

a. AlthoughSirotaservedas the eventlead, PLCBindividualsto be invitedtothe event were determinedas a result of collaborationbetweenSirota,Littles,ChristineDesmond (Directorof Marketingand BusinessAnalytics,CapitalWine and Spirits),and/ or the Alliancesuppliers.

b. Actualinvitationsto PLCBofficialsfor the eventweremadeby Littlesand/orDesmond.

49. AllianceGolf Openeventswereheld in 2009,2010,and 2011.

a. Sirotaservedas the CapitalWineandSpiritsleadfor the eventorganizationeachyear.

b. Inviteesto the eventweredeterminedin the samemannerfor eachyear.

c. Actualinvitationsfor the eventswerepresentedby the same individualsforeachyear.

50. An Alliance Golf Open was initially planned for the 2012 calendar year butultimatelywas not held.

a. The 2012AllianceGolf Openwascancelledas a resultof the Commissioninvestigationin this matterand publishedmediaaccountsof the receiptofitemsof valueby PLCBemployeesfromPLCBvendors.

b. The decisionto cancelthe eventwasmadejointlyamongLittles,Desmond,and Sirota.

51. The 2009, 2010, and 2011 AllianceOpens were one- day eventsconsistingofmorningtravel (if necessary),a warmup session, unch,a roundof golf (eighteenholes),and dinnerin the evening.

a. Sirotadevelopedthe itineraryfor each respectiveAllianceOpen.

b. No specifictimeslot wasdesignatedfor any specificbusinesspresentationby CapitalWine and Spiritsand/ or the Alliancesuppliers.

c. No specificbusinesspresentationsweremadeby CapitalWine and Spirits


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and/ or the Alliancesuppliersat the events.

d. The eventwas socialin nature.

52. Thecostsassociatedwiththe 2009,2010,and2011AllianceGolfOpenwereborneby the Alliancesuppliersand CapitalWine and Spirits.

a. Thetotalcostsof the eventsweredividedintofourequalamountsto be paidby CapitalWine and Spirits,Bacard i, BrownForman,and Remy.

53. The 2009 Alliance Golf Open was held at the West Shore CountyClub, 100BrentwaterRoad,CampHill, PA 17011,on Wednesday,August19, 2009.

a. Therosterfor the 2009AllianceOpenidentifiedthe individualsparticipatingas shownbelow:

Group No. Player Affiliation1 Joe Conti PLCB,ChiefExecutiveOfficer

MikeRemitz RemyCointreauUSA,VP/DivisionManagerBartPio CapitalWines &Spirits,ChairmanWS Member* -

WS= WestShorememberto play as hostmembernot identifiedGroup No. Player Affiliation

2 MattSymanskiScottPickford BacardiUSAKevinMcCarty Capital Wine & Spirits: The CharmerSunbelt

Group,VP Compliance &AdministrationWS Member* -

WS= WestShorememberto play as hostmembernot identified

Group No. Player Affiliation3 Jim Short PLCB,Directorof Marketingand Merchandising

DaveFranke Brown-Forman,StateManagerPA/DEAl Bruni BacardiUSAMarkLittles Capital Wine & Spirits: The CharmerSunbelt

Group,President

Group No. Player Affiliation4 MattSchwenk PLCB,Directorof ProductSelection

BradMoser RemyCointreauUSA,RegionalSalesManagerR obSirota Capital Wine & Spirits: The CharmerSunbelt

Group, GeneralManagerof the AllianceDivisionChristinaGodfrey Capital Wine & Spirits: The CharmerSunbeltDesmond) Group, Director of Marketing and Business

Analytics

b. The rosteridentifiedthe start time of the eventas 10:30 a. m.

1. An actualeventitinerarywas not providedby Capital.

54. In additionto Short,PLCBattendeeswereCEOJoe Contiand MatthewSchwenk.

a. MatthewSchwenkis a subordinateemployeeto Short.

1. Schwenk s position in 2009 was PLCB Chief of CategoryManagement.

b. August19, 2009,wasa regularlyscheduledworkdayfor CommonwealthofPennsylvaniaemployees.

c. Althoughthe eventwassocialin nature,no PLCBemployeeutilizedleaveof


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anykind (annualor personal)n associationwithhis participationat the 2009AllianceOpen.

d. Neither Short s immediatesupervisor, CEO Joe Conti, nor any BoardMemberrequiredShortto use annualor personalleavefor participatinginthe event.

e. Shorts salaryin August2009 equatedto approxima tely $55. 29 per hourbasedon a thirty-sevenandone- half hour workweek (7.5 hoursper day).

55. Sirotareceiveda banquetinvoicefromthe WestShoreCountryClubfor the August19, 2009,AllianceGolf Openin the amountof $1, 324. 06.

a. The invoicedid not documenta date or invoicenumber.

b. Theinvoicedocumentedthe client/organizationas CapitalWineand Spirits.

c. The invoice documenteda breakdownof golf charges in the amountof1, 136. 80 and Food and Beveragecharges in the amount of $187. 261, 324. 06 total).

d. Thecostof the eventto CapitalWineandSpiritsandeachAlliancesupplierwas approximately $331. 00 ($ 1, 324. 00 4).

56. Additionalpurchasestotalingapproximately $147. 17 were madeby Sirota andDesmondfor refreshmentsin associationwith the 2009AllianceOpen.

a. Sirotas expensereportdocumenteda purchasein the amountof $67. 17 forthe golf outing.

b. Desmonds expensereportdocumenteda purchaseof $80.00for thegolfouting.

57. Expensesassociatedwiththe 2009AllianceGolf Opentotaledat least $1, 471. 23.a. The valueof the golf outingbasedon a maximumof sixteenindividualsin

attendancetotaledapproximately $105. 09 per individual.

1. Greensfeescostsfor the two (2) WSCCmembersarenot includedasthey werenot assessed fees.

58. Short realized a private pecuniary gain of 19.77 in association with hisparticipation at the 2009 Alliance Openbased onhis pro rata share of thehospitalityexpensesincurredby CapitalWineand Spiritsand the Allianceand hisfailureto utilizeleavefromemploymentto attendthe event.

a. Neither Short nor any of the other PLCB representativesin attendanceofferedto reimburseeitherCapitalWine and Spiritsor any of the Alliancesuppliersfor the hospitalitythey provided.

1. All expensesassociatedwiththe eventincludingcocktailsanddinnerafter the eventwere paid for by Capital Wine and Spirits and/ ormembersof the Alliance.

59. The 2010AllianceGolfOpenwasheldat the RiverCrestGolfClub,100 GolfClubDrive,Phoenixville,PA 19460on July 15, 2010.


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a. The event was more inclusive than the 2009 event by providinglunch,cocktailsand dinner.

b. The roster/ tinerary for the 2010 AllianceOpenidentifiedthe individualsparticipatingas shownbelow:

Group No. Player Affiliation1 PJ Stapleton PLCB, BoardMe mb er/ChairmanJoe Davolio CapitalWine &Spirits:TheCharmerSunbeltGroup,Executive

VP CapabilityDevelopmentMarkLittles CapitalWine &Spirits:The CharmerSunbeltGroup,PresidentAl Bruni BacardiUSA

Group No. Player Affiliation2 Joe Conti PLCBChiefExecutiveOfficer

KevinMcCarty Capital Wine & Spirits: The CharmerSunbeltGroup, VPCompliance & Adm inistration

MattSymanski Brown-Form an,TerritorySalesManagerR obSirota CapitalWine &Spirits:TheCharmerSunbeltGroup,Directorof

AllianceBrands

Group No. Player Affiliation3 Jim Short PLCB,Directorof Marketing

MikeRemitz RemyCointreauUSA,VP/DivisionManagerBartPio CapitalWines &Spirits,ChairmanScottPickford BacardiUSA


DaveFranke Brown-Forman,StateManagerPA/DEBradMoser RemyCointreauUSA,RegionalSalesManagerCristina CapitalWine &Spirits:TheCharmerSunbeltGroup,DirectorofDesmond Marketingand BusinessAnalytics

1. Althoughdocumentedon the 2010AllianceOpenroster,Contidid notparticipatein the event.

2. Fifteen ( 15) ndividuals participatedin the 2010 Alliance Open,includingthree (3) LCBofficials/employees.

c. The itineraryfor the eventdocumentedthe followingactivities:

11: 00 a. m. Warmup / Range-RiverCrestGolf Club12: 00 p. m. Lunch-GreensideGrille1: 00 p. m. First GroupTee Time1: 10 p. m. SecondGroupTee Time1: 20 p. m. ThirdGroupTee Time1: 30 p. m. FourthGroupTee Timeth5: 00 p. m. 19 Hole-Cocktailsat the Club HouseBar6: 00 p. m. HotelCheckIn-HotelFiesoleSkippack,PA7: 00 p. m. Cocktailsat BastaPastain Skippack7: 45 p. m. Dinnerat ParcBistroin Skippack

d. The itineraryfor the eventdocumentedhotelaccommodationsavailableatHotelFiesole,4046SkippackPike, SkippackVillage,PA 19474.

60. PLCBattendeesat the eventincludedShort,Schwenk,and P. J. tapleton (PLCBChairmanat that time.)

a. July 15, 2010, was a regularlyscheduledworkdayfor CommonwealthofPennsylvaniaemployees.


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b. Althoughthe eventwassocialin nature,no PLCBemployeeutilizedleaveofany kind (annualor personal)n associationwithhis participationat the 2010AllianceOpen.

c. Neither Short s immediatesupervisor, CEO Joe Conti, nor any BoardMemberrequiredShortto use annualor personalleavefor participatingin

the event.d. Shorts salaryin July2010equatedto approximately $55. 29 per hourbased

on a thirty-sevenandone-half hour workweek (7.5 hoursper day).

61. ShortsubmittedCommonwealthTravelExpenseVoucher (TEV)JS071610datedJuly 20, 2010, n the amount of $330. 50 for travel and overnightexpensestoPhiladelphia,Pennsylvania,on July 15, 2010,and Harrisburgon July 16, 2010.

a. TEVNo. JS071610listedShortdepartingfromHarrisburg,Pennsylvania,onJuly 15, 2010,at 8: 30 a. m. and returningfromPhiladelphia,Pennsylvania,on July 16, 2010,at 5: 00 p. m.

b. Documentationsubmittedwith TEV No. JS071610documentedShortincurringlodgingfeesat the HotelFiesolein Skippack,Pennsylvania,orthenight of July 15, 2010, n the amountof $119. 00.

1. Shorts receiptfor the HotelFiesoledocumenteda checkin time ofapproximately6: 43 p. m.

c. Shortclaimedsubsistenceexpensesduringtravelon July 15, 2010, n theamountof $61. 00 andJuly 16, 2010, n the amountof $8. 00 for a total of

69.00on TEVNo. S071610.

d. Short claim ed $142. 50 in mileagereimbursementexpenseson TEV No.JS071610 for use of his personal vehicle for travelfrom Harrisburg,Pennsylvania,to Philadelphia,Pennsylvania,and backon July 15, 2010,

andJuly 16, 2010, espectively.1. Short claimed a total of two hundred eighty- ive businessmiles

traveled (285 x 0. 50/mile = $ 142. 50).

e. The purposeof traveldocumentedon TEVNo. S071610 [was] stated:

1. July 15, 2010: Traveled to Philadelphiafor store visits anddiscussmerchandisingstrategiesfor prototypestorein NewHope.

2. July 16, 2010: Holidaysalespresentationsandyearlyreviewswith CapitalWine and Spiritsand Jim BeamGlobal.

3. Joe Contigavepermissionfor per. Vehicle.f TEVNo. S071610was approvedby Contion July 21, 2010.

1. Conti was aware that Short had traveled to, attended, andparticipatedin the 2010AllianceOpenat the timethat he approvedShorts TEV.

62. The TEV submitted by Short resulted in Short s receipt of 30. 50 inCommonwealthfundsfor non- businessexpensesincurredon July 15, 2010,andJuly 16, 2010.


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a. The majorityof Shorts regularlyscheduledworkday for July 15, 2010,wasspenttravelingto, attending,and participatingin the 2010AllianceOpen.

thb. Shortclaimedmealexpensesof $61.00on July 15 eventhoughlunchanddinnerwereprovidedby Cap ital/Alliance .

c. The 2010AllianceOpenwasa socialeventarrangedby CapitalWine andSpiritsand the Alliance.

1. Activitiestaking place at the 2010 AllianceOpen includedlunch,eighteenholesof golf, ocktailsat tw oseparatelocations,anddinner.

d. No evidenceis availableof any holidaypresentationsmadeby any Capitalrepresentativesas assertedby Shorton his TEV.

63. Recordsof CapitalWineandSpiritsin referenceto the July15, 2010,AllianceGolfOpendocumentedexpensesincurredin the approximateamountof $7, 363. 00.

a. The documentmemorializingthe costof the eventwasupdatedon July 16,2010.

b. The invoicedocumentedthe expensebreakdownas:

Description CostsFood &Beverage $ 4, 263. 00Golf $ 1, 280. 00Golf SwagBags $ 1, 600. 00Forecaddies $ 220. 00Total $ 7, 363. 00

c. Thecostof the eventto CapitalWineandSpiritsandeachAlliancesupplierwas approximately $1, 840. 75 ($ 7, 363. 00 4).

64. Documentedexpensesassociatedwith the 2010 AllianceGolf Open totaled aminimumof approximately $7, 363. 00.a. The valueof thegolf outingbasedon a maximumof fifteen (15) ndividuals

in attendancetotaledapproximately $490. 87 per individual.

65. Shortrealizeda privatepecuniarygain of $1, 236. 05 fromhis participationat the2010 Alliance Openbased on his pro rata share of the hospitality expensesincurred by Capital Wine and Spirits and the Alliance, when he claimed andreceivedreimbursementfor businessexpensesof $330. 50 basedonan incorrectdescriptionof the event he attended, and when he failed to utilizeleavefromemploymentto attendthe event.

a. NeitherShortnor any of the remainingPLCBrepresentativesin attendanceat the event offeredto pay either Capital Wine and Spirits or any of theAlliancesuppliersfor any giftsand/or hospitalityprovidedin associationwiththe 2010AllianceOpen.

1. All expensesassociatedwiththe eventincludingcocktailsanddinnerafter the eventwere paid for by Capital Wine and Spirits and/ ormembersof the Alliance.

b. Expensesincurredby Shortwerenot businessrelatedin that:


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1. Short claimed $61.00 in subsistenceexpensesfor July 15, 2010,althoughShort was providedsubsistencein the formof lunch anddinneron July 15, 2010,via attendanceat the 2010AllianceOpen;

2. Shortincurredlodgingexpenseson July 15, 2010, n the amountof119. 00 and subsistenceexpenseson July 16, 2010, n the amount

of $8. 00 as a result of his attendanceat the 2010 Alliance Open,whichwas a socialfunction.

3. Shortclaimedand receivedmileagereimbursementin the amountof142.50for businessuseof his personalvehiclefor travelto andfrom

the 2010AllianceOpen,whichwas a socialfunction.

66. The 2011 AllianceGolf Open washeld at the PhiladelphiaCountryClub, 1601SpringMill Road,Gladwyne,PA 19035on July 14, 2011.

a. The roster/ tineraryfor the 2011 AllianceOpen identifiedthe individualsparticipatingas shownbelow:

Group No. Player Affiliation1 PJ Stapleton PLCB, BoardMe mb er/ChairmanMikeLeibick

Mark Brown-Forman, Vice President/DirectorCentralStates &Satterthwaite CanadaMarkLittles CapitalWine &Spirits:TheCharmerSunbeltGroup,President

Group No. Player Affiliation2 Joe Conti PLCB,ChiefExecutiveOfficer

MikeRemitz RemyCointreauUSA,VP/DivisionManagerToddPemble BacardiUSA,RegionalDirectorMattSymanski Brow n-Form an,TerritorySales Manager

Group No. Player Affiliation3 Jim Short PLCB,Directorof Marketing

Guillermo Bacardi,V.P./ ManagingDirector -EastCommercialBusinessRodriguez Unit

JohnHiggins WirtzBeverageNevada,SalesManagerR obSirota CapitalWine &Spirits:The CharmerSunbeltGroup,Directorof AllianceBrands


ScottPickford BacardiUSACristina CapitalWine &Spirits:The CharmerSunbeltGroup,DirectorDesmond of Marketingand BusinessAnalyticsBradMoser R em yCointreauUSA,RegionalSalesManager

Group No. Player Affiliation5 DougHitz PLCB,BureauDirector

KevinMcCarty Capital Wine & Spirits: The CharmerSunbelt Group, VPCompliance & Administration

DaveFranke Brown-Forman,StateManagerPA/DERichByrne RemyCointreau,FieldMarketingDirector

1. Twenty ( 20) ndividuals participatedin the 2011 AllianceOpen,includingfive ( 5) LCBrepresentatives.

b. The itineraryfor the eventdocumentedthe followingactivities:

11: 00 a. m. Warmup/Range-P CC11: 30 a. m. Lunch-The Terrace12: 40 p. m. First GroupTee Time12: 50 p. m. SecondGroupTee Time


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1: 00 p. m. ThirdGroupTee Time1: 10 p. m. FourthGroupTee Time1: 20 p. m. Fifth GroupTee Time5: 00 p. m.-6: 30 p. m. Cocktailson the Terrace5: 00 p. m.-6: 30 p. m. HotelCheckIn-ConshohockenMarriot7: 00 p. m. Dinnerat PhiladelphiaCountryClub on the Terrace

c. The itineraryfor the eventdocumentedhotelaccommodationsavailableatthe Marriott,111 CrawfordAve, West Conshohocken,PA 19428.

67. PLCBattendeesat the eventincludedStapleton,Conti,Short,Schwenk,andDougHitz, PLCBBureauDirectorfor Planningand Procurement.

a. July 14, 2011, was a regularlyscheduledworkdayfor CommonwealthofPennsylvaniaemployees.

b. Althoughthe eventwassocialin nature,no PLCBemployeeutilizedleaveofanykind (annualor personal)n associationwithhis participationat the 2011AllianceOpen.

c. Neither Short s immediatesupervisor, CEO Joe Conti, nor any BoardMemberrequiredShortto use annualor personalleavefor participatinginthe event.

d. Shorts salaryin July2011equatedto approximately $55. 84 per hourbasedon a thirty-sevenandone-half hour workweek (7.5 hoursper day).

68. ShortsubmittedCommonwealthTravelExpenseVoucher (TEV)JS071511datedJuly 18, 2011, n the amountof $185. 20 for travel and overnightexpenses toPhiladelphia,Pennsylvania, on July 14, 2011, returning to Harrisburg,Pennsylvania,on July 15, 2011.

a. T EVNo. JS071511listedShortdepartingfromHarrisburg,Pennsylvania,on

July 14, 2011,at 8: 30 a. m. and returningfromPhiladelphia,Pennsylvania,on July 15, 2011,at 11: 00 a. m.b. Documentationsubmittedwith TEV No. JS071511documentedShort

incurringlodgingfeesat the Marriottin WestConshohocken,Pennsylvania,for the night of July 14, 2011, n the amountof $124. 20.

1. Short s hotel folio for the Marriottdocumenteda check in time ofapproximately10:15 a. m.

c. Shortclaimedsubsistenceexpensesduringtravelon July 14, 2011, n theamountof $61. 00 TEVNo. S071511.

d. Short claimedand/ or receivedno mileagereimbursementrelated to histravelon July 14, 2011,andJuly 15, 2011.1. Shortdid not utilizehis personalvehiclefor travelon July 14, 2011,

andJuly 15, 2011.

2. ShortrodewithHitzin Hitzs personalvehiclein relationto travelonJuly 14, 2011,and July 15, 2011.

e. The purposeof traveldocumentedon TEVNo. S071511 [was] stated:


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1. July 14, 2011: James Short, Director of marketing andMerchandising traveled in a vehicle with DougHicks [ sic] oPhiladelphiaforan Alliancebusinessreview, iscalyearplanningandholidaypromotionsmeeting.

2. July 15, 2011: Jamesprovidedhis CommonwealthTaxExempt

form to the Marriottstaff and it was not accepted (they would notremovethetax fromhis bill). He informedthemof the protocolandtheystill wouldnot removethetax fromhis bill. amesdid receiveastate rate for his room.

f TEVNo. S071511was approvedby Contion July 18, 2011.

1. Contiwas aware that Short had traveled to, attended, andparticipatedin the 2011AllianceOpenat the timethat he approvedShorts TEV.

69. The TEV submitted by Short resulted in Short s receipt of 85. 20 inCommonwealthfundsfor expensesincurredon July 14, 2011.

a. Shorts regularlyscheduledworkday for July 14, 2011,wasspenttravelingto, attending,and participatingin the 2011AllianceOpen.

b. The 2011AllianceOpenwasa socialeventarrangedby CapitalWine andSpiritsand the Alliance.

1. Activitiestaking place at the 2011 AllianceOpen includedlunch,eighteenholesof golf, cocktails,and dinner.

70. CapitalWine and Spiritsrecordsin referenceto the July 14, 2011, AllianceGolfOpen documentedexpenses incurred at the PhiladelphiaCountryClub in theapproximateamountof $9, 487. 96.

a. The banquetinvoicegeneratedby the PhiladelphiaCountryClub (BookingNo. 017299)documenteda billingdate of July 14, 2011.b. The invoicedocumentedthe expensebreakdownas:

Recap &Total CostsServices $ 2, 691. 55Resources $ 6, 037. 00ServiceChg $ 592. 14SalesTax $ 167. 27Total $ 9, 487. 96

1. Includedwithinthe eventcostweregolfhats,shirts,andgolfgift bagswith miscellaneousitemsfor the participants.

c. Thecostof the eventto CapitalWineandSpiritsandeachAlliancesupplierwas approximately $2, 371. 99 ($ 9, 487. 96 4).

71. Expensesassociatedwith the 2011 Alliance Golf Open totaled a minimumofapproximately $9, 487. 96.

a. The valueof thegolf outingbasedon a maximumof twenty (20) ndividualsin attendancetotaledapproximately $474. 40 per individual.

72. Short realized a private pecuniary gain of $1, 078. 40 in associationwith his


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participation at the 2011 Alliance Openbased on his pro rata share of thehospitalityexpensesincurredby CapitalWineand Spiritsand the Alliance,andreimbursementfor expensesin the amountof $ 85.20, andwhenhe failedto utilizeleavefromemploymentto attendthe event.

a. NeitherShortnor any of the remainingPLCBrepresentativesin attendance

at the event offeredto pay either Capital Wine and Spirits or any of theAlliancesuppliersfor any giftsand/or hospitalityprovidedin associationwiththe 2011AllianceOpen.

1. All expensesassociatedwiththe eventincludingcocktailsanddinnerafterthe eventas wellas golf shirts,hats,andgift bagswerepaidforby CapitalWine and Spiritsand/ or membersof the Alliance.

b. Expensesincurredby Shortwerenot relatedto PLCBbusinessin that:

1. Short claime d $61.00 in subsistenceexpensesfor July 14, 2011,althoughShort was providedsubsistencein the formof lunch anddinneron July 14, 2011,via attendanceat the 2011AllianceOpen;

2. Shortincurredlodgingexpenseson July 14, 2011, n the amountof124. 20 as a result of his attendanceat the 2011 Alliance Openwhichwas a socialfunction.

THEFOLLOWINGFINDINGSRELATETO SHORTS RECEIPTOF GOLFTRIPSTHATHE WOULD NOT HAVE BEEN IN A POSITION TO RECEIVE ABSENT HISEMPLOYMENTWITHTHEPLCB.

73. ChristopherPapariellois currentlyemployedas the ExecutiveVice- PresidentofMajestic.

a. Majesticis ownedby AlliedBeverageGroup.

b. Majesticprovidesmerchandisingand promotionalservicesas the brokerrepresentativeof severalmajorsuppliersincludingW.J. eutschand SonsW.J. eutsch).

1. W. J. Deutsch was founded in 1981 to market wine and spiritsproducedfrommajorwineand spiritsregionsof the world.

74. BeauClarkis employedwith W. J. eutschas a PennsylvaniaDistrictManager.

a. As the Pennsylvania District Manager for W. J. Deutsch, Clarkwasresponsiblefor developmentof the Pennsylvaniamarketfor bothon and offpremisesales.

75. In 2010, W.J. eutschorganizeda nationaltrip to PebbleBeach,California, o rvariouscompanyrepresentatives,companybrokers,etc.a. W.J. eutschroutinelyschedulessuchtrips onan annualbasis.

b. Papariellowas scheduledto participatein the trip as a representativeofMajestic.

76. Prior to departurefor California,Clark contactedPapariellovia telephoneandinquiredas to Papariellos interestin travelingto PebbleBeachto golf prior toPapariellos scheduleddeparturedate.


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a. Clarksuggested that PLCBemployeesJamesShortand MatthewSchwenkcouldaccompanyhimand Paparielloon the golf trip.

1. Schwenk is a subordinateemployeeof Short and is the PLCBsDirectorof ProductPlacement.

b. Clark informedPapariellothat W.J. eutschwouldcover the expensesassociatedwith the trip.

77. PapariellosubsequentlycontactedShortvia telephoneand invitedShortonthetripto PebbleBeachwith him and Clark.

a. Schwenkreceivedhis invitationfor the trip directlyfromClark.

b. PapariellohadconversationswithSchwenkregardingthetrip afterSchwenkwas initiallyinvitedby Clark.

78. At no time duringconversationsregardingthe trip with Shortand/ or SchwenkdideitherShortand/or SchwenkquestionPaparielloas to the costof thetrip or whomthey neededto submitpaymentto regardingexpensesassociatedwith the trip.a. Both Shortand Schwenkwereinformedthat W.J. eutschhad budgeted

fundsto coverthe costsassociatedwith the trip.

b. Costs associated with the trip included airfare, odging, greens fees,subsistence,and entertainment.

79. The dates established for thegolf trip to PebbleBeach called for Short andSchwenkto arrivein Californiaon August26, 2010,anddepartCaliforniaon August28, 2010.

a. August26, 2010 (a Thursday)and August27, 2010 (a Friday)wereregularly

scheduledworkdaysfor Commonwealthemployees.b. Shortutilizeda total of fifteen (15) hoursof annualleaveto accountforhis

absencefromworkon August26, 2010,and August27, 2010.

80. Lodgingaccommodationsas well as golf reservationsfor thetrip were madebyClark.

a. Short,Schwenk,Papariello,andClarkstayedat TheLodgeat PebbleBeachlocatedat 1700 17-Mile Drive,PebbleBeach,Californiaon the nightsofAugust26, 2010,and August27, 2010.

b. Short, Schwenk,Papariello,and Clark played two ( 2) ounds of golf atPebbleBeachGolf Linksandone roundof golf at Spy GlassGolf Courseduringthe threeday trip.

c. The trip was primarilya socialevent.

1. The trip was submitted as a businessexpense by Clark andPaparielloand was considereda marketingevent.

81. NeitherShort nor Schwenkmadeany paymentto either Paparielloor Clark forexpensesassociatedwiththe threeday golf trip to PebbleBeach,California,eitherprior to, uring,or after the trip.


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a. The initialminimumcostfor thetrip ofat least $6, 497.46 postedto and waspaid via Papariellos corporateAmericanExpressCreditCard.

1. Expensesincurredby Majesticrepresentativesvia use of corporatecreditcardsare paid directlyby the company.

b. App roximately $6, 000.00 of the minimum $6, 497.46 expensefor thegolf tripwas ultimatelyexpensedbackto W.J. eutschby Majestic.

1. W.J. eutschultimatelyprovidedDocumentNumber76845datedAugust31, 2011,to Majesticdocumentingthe issuanceof a credittoMajesticin the amountof $6, 00.00 for expensesassociatedwiththetrip.

82. Expensesfor thegolf trip totalinga minimumof approximately $6, 497.46 postedtoPapariellos corporateAmericanExpressCredit Card on August28, 2010, andAugust29, 2010, egardingall accommodations/activitiesorganizedthroughTheLodgeat PebbleBeach.

a. The value of the trip per individual was approximately $1, 624. 37 notincludingairfare (6, 497. 46 4).

83. Currentairfarefor one round- rip ticketfromPhiladelphiaInternationalAirporttoSan Jose InternationalAirportwith one stop is approximately $347. 50.

a. The cost of round-trip airfarefromPhiladelphiaInternationalAirportto SanJose InternationalAirportin August2010couldnot be determined.

b. NeitherPapariellonor his employerprovidedrecordsof airfareexpensesforShort.

84. Shortrealizeda privatepecuniarygainofat least $1, 971.87 in associationwithhis

acceptanceof an all-expensepaidthree (3) aygolf trip to PebbleBeachprovidedby Majestic/W. J. eutsch,a vendordoingbusinesswith the PLCB.a. NeitherShort nor any other PLCBrepresentativeparticipatingin the trip

offeredto payeitherMajesticWineandSpiritsor W.J. eutschfor the travel,lodging,and/ or hospitalityas relatedto the three (3) aygolf trip to PebbleBeach,California.

b. All expensesassociatedwith the eventincludingairfare,odging,greensfees, subsistence,and entertainmentwerepaid for by MajesticWineandSpiritsand/ or W.J. eutsch.

THEFOLLOWINGFINDINGSRELATETO GOLFOUTINGSFORSHORTARRANGEDBY WHITEROCKDISTILLERIESREPRESENTATIVES.

85. TriciaBrungoandPaulDoranare currentlyemployedby WesternSpiritsBeverageCompany (WesternSpirits)n the positionsof ControlledStates ManagerandRegionalSalesManagerrespectively.

a. CapitalWineand Spiritsservesas the distributor/vendorfor WesternSpiritsin the Commonwealthof Pennsylvania.


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86. Priorto their employmentwithWesternSpirits,Brungoand Doranwereemployedby WhiteRockDistilleries (WhiteRock)n the positionsof ControlStateManagerand RegionalSalesManagerrespectively.

a. CapitalWineand Spiritsservedas the distribu tor/vend orfor WhiteRockinthe Commonwealthof Pennsylvania.

b. In 2010,WhiteRockwas marketingproductsto the PLCBincludingThreeOlivesvodka.

1. Brungoand Doran marketedproductsto PLCB officialsincludingShort.

87. White Rockis not currentlyoperational.

a. WhiteRocksold the rightsto all of its brandsand ceased operationsas ofJune1, 012.

b. Paul Coulombewas/ servedas the owne r/ChiefExecutiveOfficerof WhiteRockprior to its closing.

88. During or about February2010, Coulombeinvited Short and Schwenk (PLCBrepresentatives),Brungoand Doran (WhiteRockrepresentatives),and DesmondCapitalWine and Spiritsrepresentative)o his residencenearNaples,Floridafor a

weekendgolf outingto occurat BonitaBay East.

a. Coulombeentertainedhis guestsas a marketingefforton behalfof WhiteRock.

1. All expensesincurred by Brungo, Doran, and other White Rockofficialswerereimbursedby White Rock.

b. Short was invited due to his position as Director of Marketing and

Merchandisingwith the PLCB.c. Lodgingfor Shortand Schwenkwasprovidedby Coulombeat his personal

residencenear Naples,Florida.

89. Thedatesestablishedfor the golf trip to BonitaBaycalledfor Short,Schwenk,andthe remaininginviteesto arrive in Floridaon Thursday,February11, 2010, anddeparton Saturday,February13, 2010.

a. Thursday,February11, 2010,andFriday,February12, 2010,wereregularlyscheduledworkdaysfor Commonwealthemployees.

90. Shortand Schwenktraveledto Floridaon February11, 2010,and playedat leastoneroundof golf (eighteenholes)withCoulombe,Brungo,Doran,andDesmondatBonitaBay duringthe three (3) ay trip.a. No specificbusinessmeetingswereheld duringthe threeday time frame.

91. NeitherShortnor Schwenkpaid Coulombe,WhiteRock,CapitalWineand Spirits,or the remainingindividualspresentfor expensesassociatedwith the golf trip.

a. All of Shorts and Schwenks expensesassociatedwiththe trip ( i . irfare,greensfees, meals,entertainment,etc.) werepaid for by Coulombeand/ orWhite Rockrepresentatives.


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92. Totalexpensesfor thegolf trip sponsoredby Coulombe/WhiteRockcouldnot bespecificallydetermineddueto the lackof recordsprovidedby WhiteRockregardingairfares,meals,greensfees and entertainmentpaid foron behalf of Short andSchwenk.

a. No specificrecordscouldbe locateddetailingthe costsassociatedwiththetrip withthe exceptionof two entrieson Brungos expensesummaryreportfor February13, 2010.

1. Brungos expensereportfor February13, 2010,documentedcocktailspurchased at Trulucks and Verginas for $84.26 and $ 88.30respectivelyfor entertainmentregardingShortand Schwenk.

93. Currentairfarefor one round- rip ticketfromPhiladelphiaInternationalAirporttoSouthwestFloridaInternationalAirport (a/ k/ a FortMeyersAirport)withonestopisapproximately $330. 20.

a. The cost of round- rip airfarefrom PhiladelphiaInternationalAirport toSouthwestFlorida InternationalAirport in February 2010could not bedetermined.

94. Short failed to utilize Commonwealthleave of any type ( annualor personal)toaccount for the fifteen ( 15) hour absence from his normal working hours onFebruary11, 2010,and February12, 2010.

a. Shortdid not informhis superiorsthat he wouldbe takingthegolf trip paidfor by a vendor.

95. Shortreceivedapproximately $829.35 in wagesfromthe Commonwealthfor fifteen15) workhourson February11, 2010,andFebruary12, 2010,for whichShortwas

absentand did not submitleaveof any typeto offsetCommonwealthtimespentinFlorida.

a. Shorts salarybasedon a thirty-sevenandone-half ( 37. 5) ourworkweekequatedto $55. 29 per hour in February2010.

96. During or about November2011, Coulombeagain invited Short and SchwenkPLCBrepresentatives),Brungoand Doran (White Rock representatives),and

Desmond (CapitalWine and Spiritsrepresentative)to his residencenearNaples,Floridafor a weekendgolf outingto occurat BonitaBay East.

a. CoulombeentertainedShort,Schwenkand the othersas part of a WhiteRockmarketingeffort.

1. All expensesrelatedto the trip werepaid by White Rock.

2. PLCB employeeswere invited to attend due to their respectivepositionin the Marketingand Merchandisingdivisionof the PLCB.

97. Thedatesestablishedfor the golf trip to BonitaBaycalledfor Short,Schwenk,andthe remaininginviteesto arrive in Floridaon Thursday, December1, 011,anddeparton Saturday,December3, 011.

a. Thursday, December1, 011,andFriday,December2, 011,wereregularlyscheduledworkdaysfor Commonwealthemployees.


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b. Shortutilizeda total of fifteen (15) hoursof annualleaveto accountforhisabsencefromworkon December1, 011,and December2, 011.

98. Lodgingaccommodationsweremadeon behalfof Shortand Schwenkat the HyattCoconutPoint Resortand Spa locatedat 5001 CoconutRoad, BonitaSprings,Florida,for the nightsof December1, 011,and December2, 011.

a. The cost associatedwith one night of lodgingat the HyattCoconutPointResortand Spa totaledapproximately $354. 31 includingtaxesand fees.

b. ExpensesassociatedwithShorts tw onightsof lodgingat the HyattCoconutPointResortand Spa totaledapproximately $708. 62.

99. Short and Schwenktraveledto Floridaon December1, 011, and followedthescheduleditineraryas detailedbelow:

a. December1, 011:

1. Arrivalat Fort Meyerson DeltaAirlines:11:36 a. m.2. Freetime to relaxat the pool or enjoyspa service:12:00- 4: 00 p. m.3. Meetin lobbyfor transferto Coulombes housefor cocktails:5:00 p.m.4. Dinnerat CapitalGrill: 7: 00 p. m.

b. December2, 011:

1. Meetin lobbyto departfor lunchat BonitaBay East:10:15 a. m.2. Golf at BonitaBay East:12:30 p. m.3. Meetin lobbyfor transferto dinner:6: 30 p. m.4. Dinnerat HandsomeHarrys: 7: 00 p. m.

c. December3, 011:

1. Departairporton DeltaAirlines:11:06 a. m.

d. No PLCBbusinessmeetingswereheld duringthe threeday time frame.100. NeitherShortnor Schwenkpaid Coulombe,WhiteRock,CapitalWineand Spirits,

or the remainingindividualspresentfor expensesassociatedwith the golf trip.

a. All of Shorts and Schwenks expensesassociatedwiththe trip ( i . irfare,greensfees, meals,entertainment,etc.) werepaid for by Coulombeand/ orWhite Rockrepresentatives.

101. Totalexpensesfor thegolf trip sponsoredby Coulombe/WhiteRockcouldnot befully determined,particularlyairfare,greensfees and mealsand entertainment.

a. No specificrecords were provided by White Rock detailing the costsassociatedwith the trip, with the exceptionof three entries on Brungosexpensesummaryreportfor December2, 011.

1. Brungos expensereportfor December2, 011,documentedmealspurchased at the Hyatt in the amount of 05. 73 and drinkspurchasedat HandsomeHarrys in the amountof $69.80 respectivelyfor entertainmentregardingShort,Schwenk,Doran,and Desmond.

aa. The approximatecost was $95.10 per person.


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2. Brungos expensereport for the week endingDecember2, 2011,documentedlodgingfees totaling $3, 543. 12 in regardto lodginginBonitaSprings,Florida.

aa. Brungo paid for individualrooms for Short, Schwenk,Desmond,Doran,andherselffor tw onights ($354.31 x5x2 =

3, 543. 10).102. Currentairfarefor one round- rip ticketfromPhiladelphiaInternationalAirportto

SouthwestFloridaInternationalAirport (a/ k/ a FortMeyersAirport)withonestopisapproximately $330. 20.

a. The cost of round- rip airfare from PhiladelphiaInternationalAirport toSouthwestFloridaInternationalAirportin February2010 [sic] ouldnot bedetermined.

b. AlthoughWhiteRockrepresentativesconfirmpayingfor Shorts airfare,norecordswereprovided.

103. Shortdid not informhis superiorsat the PLCBthathe wasacceptingan all-expensepaid golf trip froma PLCBvendor.

104. Shortrealizeda privatepecuniarygainofat least $2, 27.98 in associationwithhisacceptanceof two all-expensepaid, hreeday golf trips to BonitaBayprovidedbyWhite RockDistilleries,a vendordoingbusinesswith the PLCB.

a. Thegain is determinedby year as follows:

2010: 2011:Drinks: $ 34.51 Room: $ 708. 62Airfare: $ 330. 20 Drinks: $ 95.10Wages: $ 829. 35 Airfare: $ 330. 20

Total: $ 1, 194. 06 Total: $ 1, 133. 92b. These amounts do not include all meals, greens fees, and other

transportation.

c. NeitherShortnor any other PLCBrepresentativeparticipatingin the tripspaid White Rock Distilleries or Capital Wine and Spirits for the travel,lodging,and/ or hospitality.

d All expensesassociatedwith the eventincludingairfare,odging,greensfees, subsistence, and entertainment were paid for by White RockDistilleriesrepresentatives.

THEFOLLOWINGFINDINGSRELATETO SHORTS GENERALRECEIPTOFGIFTSANDHOSPITALITYTHATHEWOULDNOTHAVEBEENINAPOSITIONTORECEIVEABSENTHISEMPLOYMENTWITHTHEPLCB.105. Vendorrepresentativesmakeregularappearancesat the PLCBofficeslocatedin

the NorthwestOfficeBuilding,Harrisburg,Pennsylvania.

a. Primaryvendorsand/ or supplierswhomarketedproductsto the PLCBwithwhomShortinteractedon a regularbasisincludedCapitalWineandSpirits;Southern Wine and Spirits; Majestic Wine and Spirits; WhiteRockDistilleries;BeamGlobalSpiritsand Wine; and Diageo,amongothers.


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1. SpecificrepresentativesShortdealt with fromthe primaryvendorsincluded,n part, he following:

aa. CapitalWine and Spirits:

1. MarkLittles,President2. ChristinaDesmond,Directorof MarketingandBusiness

Analytics

bb. SouthernWine and Spirits:

1. Brad Waxman, ExecutiveVice President, GeneralManager,SouthernWine and Spiritsof PA

cc. MajesticWine and Spirits:

1. ChristopherPap ariello, ExecutiveVice President

2. EdwardMurray, EasternRegionalManagerdd. White RockDistilleries:

1. TriciaBrungo, Con trolStatesManager

2. Paul Doran,RegionalSalesManager

ee. BeamGlobalSpiritsand Wine:

1. Erin ( a/ k/ a Red) Schiller,PennsylvaniaStateAccountManager.

ff. Diageo:1. MarkSweeney,Vice Presidentof Sales

106. Short acceptedm eals, icketsfor entertainmentfunctions,andgifts from PLCBvendorsin his positionas the PLCBDirectorof Marketingand Merchandising.

a. Shortacceptedgifts,hospitality,and/or otheritemsof economicvaluefrommultiple vendor representatives,including butnot limited to, ittles,Desmond,Waxman, Papariello, Murray, Brungo, Doran, Schiller, andSweeney.

1. Shortmaintaineda closerelationshipwithDesmondand Papariellospecifically.

b. ThetwoprimaryvendorsfromwhichShortreceivedgiftswereCapitalWineand Spiritsand MajesticWine and Spirits.

1. Desmondis employedby CapitalWine and Spirits.

2. Papariellois employedby MajesticWine and Spirits.


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c. But for Shorts employmentwiththe PLCB,Shortwouldnot havebeenin apositionto cometo knowspecificPLCBvendorrepresentativesandreceiveanythingof valuefromthem.

d. Shortwas provideditemsby vendorsin his officialcapacityas part of themarketingof productsby vendors.

107. Someof the meals,entertainmentand roundsof golf were providedas part ofShort s attendanceat annual National Alcohol BeverageControl Association

NABCA)conferences.

a. NABCAis the nationalassociationrepresentingthe ControlStateSystems,thosejurisdictionsthat directlycontrolthe distributionandsale of beveragealcoholwithintheir borders.

1. D.C. Area: NABCAservesasan informationclearinghouseand asliaison to federal, state and local governments, research andadvocacygroups,and otherorganizationsimpactingalcoholpolicy.

2. Managementof NABCAis vestedin its Boardof Directorswith onedirectorfromeach of the votingmembercontroljurisdictionsand aChairmanelectedby the Boardannually.

b. NABCAhostsannualconferencesat resortson a rotatingbasis betweenArizonaand Florida.

c. NABCAis primarilyfundedby the liquorindustry.

d. Shortis a StateRepresentativeto NABCA.

108. Vendorswouldcontacteither Shortor PLCBChairmanP. J. tapletonvia e- mailpriorto the startof a conferenceto solicittheir interestin playinggolf and goingtodinner.

a. All costsassociatedwith golfand dinnerare incurredby vendors.b. Shortregularlywasa guestof a vendorwhenattendingNABCAconferences

in 2009,2010,2011and 2012.

c. Vendorspayingexpensesfor Shortwererepresentativesof CapitalWineand Spiritsand Majestic.

109. Short, Matt Schwenkand Steve Pollack, Chief of the PLCB ChairmanSelectProgram,maderegulartripsto Californiato purchasewinefor the ChairmanSelectProgram.

a. Prior to 2010, he trips wouldincludetasting at various wineries in theregion.1. The PLCB employeeswould be accompaniedby PLCBvendor

marketingrepresentativesfromCapital,Majesticand Southern.

b. Inor about2010,the tastingswerescheduledfor a hotelconferenceroom.

1. Vendorswould arrangewineriesto make presentationsover thecourseof three (3) ays.


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c. Followinga day of testing,vendorrepresentativeswouldprovidedinnerforShort,Schwenkand Pollack.

1. The primary vendor representativesproviding dinnerwerefromCapitaland Majestic.

d. Shortaccepteddinnersand drinksannuallybetween2010 and 2012 fromthesevendorsduringChairmanSelectbuyingexcursions.

110. While servingin the positionof PLCBDirectorof Marketingand Merchandising,Shortreceivedandacceptedmeals/hospitalityand/or gifts,ncludingduringNABCAevents and Chairman Select buying trips fromLittles and/ or Desmond,representativesof CapitalWine and Spirits.

a. Littles expense summariesdocument meals/ hospitalityreceivedandacceptedby Shortas detailedin the chartbelow:

Activity Date Net Amount Description Additional Text

04/29/ 2009 $ 717. 25 GreyGooseTables MAGRestaurantGroupPittsJ Short, T Jones,CWS J Short PLCB,T JonesPLCB

05/14/ 2009 $ 841. 95 NABCADinner CapitalGrill PhoenixPLCB Jim Short, KMcCarty,B Pio,D Pio,

C Godfrey

08/13/ 2009 $ 1, 144. 27 Dinne r, DrinkswithPLCB, NoblePhiladelphiaCWS PLCB J Short, K Pain [ sic], M

SchwenkCWS Managers

11/12/ 2009 $ 1, 335. 90 Dinner/DrinksPLCB UnionTrustWhiskeyFestEvent J Short, K Payne,M Schwenk,A

Schwenk,T Fringer,2 PLCBEventSpecialists,4 CWS Managers

01/10/ 2010 $ 143. 98 Lunch EmbassySuitesNapaPLCBChairmansBuyingTrip PLCBBuyingTeamJ Short, T Jones,S Pollack

01/11/ 2010 $ 1, 833. 04 Dinner AquaSFPLCBChairmansBuyingTrip PLCBBuyingTeam

CWS SellingTeam

01/11/ 2010 $ 145. 11 Foodand Drinks WestinNapaPLCBBuyingTrip T Kilcullen,D Mich,J Short

03/23/ 2010 $ 148. 46 DrinksPre Dinner BaltimoreFostersWinemakerEvent FostersWinemakerEvent

PLCBBuyers, PA RestBuyers,Fostersand CWS Personnel

04/13/ 2010 $ 177. 92 HersheyHotel HersheyHotelPLCB,BUSAMeeting B Pio, J Short

05/16/ 2010 $ 474. 46 Dinner Kurrents,MarcoIslandPLCB,CWS Dinner PLCB,CWS

05/17/ 2010 $ 295. 74 DinnerPLCB,CWS Sale s PepeNABCAMeetingPLCB, CWS

05/17/ 2010 $ 379. 31 DrinksBefore &AfterDinner Marriot,MarcoIslandPLCBand CWS PLCB, CWS


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Activity Date Net Amount Description AdditionalText11/24/ 2010 $ 249. 07 FoodDeliveredto Jim Shorts Michaels,Harrisburg

House-Dads Funeral Jim Short s Dad s Funeral

02/23/ 2011 $ 87.14 LunchMeetingwithJim Short MangiaQui, HarrisburgPLCB,B Pio, D Dahme PLCBLunchMeeting

03/18/ 2011 $ 149. 73 CateredLunch Sophias on Market,Harrisburg,PAJim Short,PLCB,FamilyFuneral Catered Lunch, Jim Short andFamily

04/19/ 2011 $ 31. 34 LunchMeeting,PLCBHarrisburg Sammys HarrisburgPLCBModernization Jim Short, PLCB

R onRaymondLobbyist

04/28/ 2011 $ 64. 06 PLCBLunch MangiaQui, HarrisburgSLOVintageDiscussionw Jim Short Jim Short, PLCB,C Desmond,K

McCarty

05/13/ 2011 $ 888. 49 Dinner Mastros CityHall, Scottsdale,AZNACBA,PLCBMembers NABCAMeetings

J Short, PJ Stapleton, CWSManagers

05/15/ 2011 $ 540. 82 Breakfastand Drinksw PLCB ArizonaBiltmoreAt NABCA05/10--05/15 PLCBBoard Members, Buyer JShort,

CWSManagers /NABCAMeeting

05/25/ 2011 $ 2, 974. 39 PLCBHolidayPresentationDinner Davios &Parc,Philadelphia,PABacardi/B-F 50% e PLCBHolidayPresentationDinner

BillBack50% o Bacardiand 50%to BrownForman

10/14/ 2011 $ 102. 86 LunchPLCB/CWSManagersMeeting MangiaQui, HarrisburgLunch Meeting PLCB, CWSManagers

10/20/ 2011 $ 291. 91 PW SA /PLC BBreakfast/Lunch North Wales, CateredMeetingat CWS Breakfast/Lunchfor PWSA,PLCB

Meeting

03/13/ 2012 $ 46. 28 LunchMeeting MangiaQui, HarrisburgJim Short,PLCB J Short, PLCBIssues

05/21/ 2012 $ 461. 92 NABCADinner Verdis,San Marco,FLMeetingw CWSManagersand PLCB

1. Littles issued payment for the expenses incurred via use of hispersonalcreditcard.

aa. AlthoughCapital Wine and Spirits issues corporatecreditcards to applicablerepresentativesfor businessexpensesincurred, Littles utilizes his personalcredit card regardingpaymentfor businessexpenses.

1. CapitalWine and Spiritsemployeesare permittedtoreceivereimbursementfromthe companyfor legitimatebusinessexpensesincurred.

2. CapitalWine and Spiritsemployeesmay not receivereimbursementfor personalexpensesincurred.

2. Littlesdocumentedthe expenseson his employeeexpensereportsfor reimbursementand receivedreimbursementfor said expenses.


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3. The percentageof expenseswhich could directlybe attributedtoShort based on the identifiednumberof attendeeson eachitemincludes:

05/14/ 09 1/ 6 of $ 41. 95 $ 140. 3311/ 12/ 09 1/ 12 of $1, 335. 90 $ 111. 33

01/10/10 1/ 4 of $143. 98 $ 36.0001/11/ 10 1/ 4 of $145. 11 $ 36.2804/13/ 10 1/ 3 of $177. 92 $ 59.3002/25/ 11 1/ 4 of $87.14 $ 21.7904/19/11 1/ 3 of $31. 34 $ 10.4504/28/11 1/ 4 of $64. 06 $ 16.0203/13/ 12 1/ 2 of $46. 28 $ 23.14

Total: $ 454. 64

111. Desmonds expensesummariesdocumentmeals/hospitalityand/ or gifts receivedand acceptedby Shortas detailedin the chartbelow:

Activity Date Net Amount Description Additional Text

09/14/ 2009 $ 172. 25 ResorationHardware:Frames for Nonekey buyers

12/14/ 2009 $ 106. 69 Primos: ABCASupplierandPLCB Nonelunchat NW Office

06/09/ 2010 $ 300. 00 NeimanMarcus-Gift for buyer None

12/06/ 2010 $ 418. 70 NeimanMarcus:Gift for buyer None

12/08/ 2010 $ 41. 62 GlassLounge:LunchwithBuyer None

12/22/ 2010 $ 74. 81 AlfredVictorian-unchwithbuyers None

04/26/ 2011 $ 268. 00 Phillies-Ticke tsfor buyer None

05/13/ 2011 $ 316. 69 AZ Biltmore:Dinnerwithbuyer None05/15/ 2011 $ 97.73 AZ Biltmore:Lunchand drinkswith None

buyer

06/03/ 2011 $ 200. 00 Nordstrom:Gift for buyer None

11/24/ 2011 $ 500. 00 Ferragamo:Gift for buyer None

08/30/ 2012 $ 39.98 Five Guys:LunchandSto reSurvey Lunchwithbuyers

a. In a swornstatementgivento StateEthicsCommissionofficials,DesmondconfirmedShorts receipt/acceptanceof the abovelisteditems.

b. Desmondissuedpaymentfor the expensesincurredvia useof her corporate

issuedcreditcard.1. Capital Wineand Spirits employees are permitted to receive

reimbursementfromthe companyfor businessexpensesincurred.

2. CapitalWineand Spiritsemployeesmaynot receivereimbursementfor personalexpensesincurred.

c. Desmonddocumentedthe expenseson her employeeexpensereportsforreimbursementand receivedreimbursementfor said expenses.


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d. The 05/13/ 2011and 05/15/ 2011expensesare relatedto the 2011NABCAconferences.

e. Shortand Desmondcommunicatedby e- mailon05/ 11/11 priorto thestartofthe conferenceas follows:

May11, 2011,4: 42 p. m. Shortto Desmond:Do you knowwhatI ust realized?I havethe entiredelistwithme bysupplier,but I can t et yousee it.

May11, 2011,7: 45 p. m. Desmondto Short:Yippy You are here. Oh yesyoucan.

May11, 2011,8: 12 p. m. Shortto Desmond:I cant waitto checkin a[ nd] ay downfor a few. No diceon the delist

1. Thereis no evidencethat Shortever disclosedthe list/delistdocument.

f ExpensesfromDesmonddirectlyattributedto Shortare as follows:

06/09/10 $ 300. 0012/ 06/10 $ 418. 7012/ 08/10 $ 41.6204/26/11 $ 268. 0006/03/11 $ 200. 0011/ 24/11 $ 500. 00

Total: $1, 728. 32

112. Desmondarrangedfor alcoholicbeverages (wine and spirits) o be providedto

Shortwhilehe was vacationingin HiltonHeadIslandin June2011.a. In an e- mail exchangebetweenDesmondand Short on June 9, 2011,

Desmondconfirmedthe locationwhere Short would be stayingand thearrivaldate:

June9, 011,10:14 a. m., Desmondto Short:Whereare you stayingin OBX.

June9, 011,10:22 a. m., Shortto Desmond:I don t go to OBX,I go to HiltonHead.

June9, 011,10:28 p. m., Desmondto Short:Oh ok. Wherein HiltonHead?Do you havethe address?

June9, 011,3: 27 p. m., Shortto Desmond:402 OceanOne11 SouthForestBeach,HiltonHead,SouthCarolina29928

June9, 011,3: 28 p. m. Desmondto Short:And whenwillyou be arriving?

June9, 011,4: 07 p. m., Shortto Desmond:thJune25.


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b. DesmondsubsequentlycontactedKevinKarcherof Ben ArnoldBeverageand arrangeda deliveryof wineand spiritsto the propertyrentedby Short.

1. Karcherwas previouslythe Presidentof CapitalWine and Spiritsbeforebeingemployedby Ben ArnoldBeverage.

2. Karcherdeliveredand/or arrangedfor the deliveryof six (6) ottlesofwineand a bottleof WoodfordReserveBourbonon June25, 2011.

c. On June25, 2011, he followinge- mail exchangeoccurred:

June25, 2011,4: 19 p. m., Shortto Desmond:You are the best

June25, 2011,9: 58 p. m., Shortto Karcher:Kevin, I rust this note finds youand your family well. I saw Steve thisafternoonand I wantedto dropyou a quicknoteof thanks. Thankyou verymuchfor the primeselection.Be well Jim

06/25/ 2011,10:01 p. m., Karcherto Short:Havea greatvacation Let me knowif you needanythingelse.

113. Althoughnot listed on any vendorexpensereport, Short also admittedto StateEthicsCommissionInves tigators [that he received]a roundof golfat HiltonHeadsHarbourTownGolf Coursewhilevacationingin HiltonHead.

a. Shortwas not certainof the year.

b. Shortbelievedthe costswerepaid by eitherCapitalor Southern.

114. Short acceptedthe meals/hospitalityand/ or gifts fromLittles and/ or Desmond,representativesof CapitalWine and Spirits.

a. AbsentShorts employmentwiththe PLCB,vendorrepresentativesLittlesand/or Desmondwouldnot havegivenmeals/hospitalityand/or giftsto Short.1. Thetotal specificvalueof all the mea ls/hosp italityrece ivedby Short

fromLittlescouldnot be determined.

aa. Amountsdirectlyrelatedto ShortfromLittlestotaled $454. 64.

2. The specific value of the gifts/ gift cards and meals receivedandacceptedbetween2009and 2011by ShortfromDesmond,a PLCBvendorrepresentative,otaledat least $1, 728. 32.

3. Short madeno personalpaymentfor any meals/hospitalityand/ orgifts providedto him fromLittles/Desmond.

T HEFOLLOWINGFINDINGSRELATETO ITEMSPROVIDEDTO SHORTBY BRADWAXMAN.

115. While servingin the positionof PLCBDirectorof Marketingand Merchandising,Short received and accepted meals/ hospitality and/ or gifts from Waxman, arepresentativeof SouthernWine and Spirits.


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a. Expensesdocumentedon monthlystatementsassociatedwith Waxmanscorporateissuedcreditcard relatingto Shortas identifiedby Waxmanaredetailedin the chartbelow:

Purchase Description of Expense Expense ProvidedDate Amount To

05/18/ 2008 DinnerwithJ. hort,J. Martinto discusslistings $ 429. 11 Short

08/06/ 2008 DinnerwithPLCBto discussholidaypriorities J. 987. 96 Short,JonesShort,T. ones-Table31

08/09/ 2008 Dinner Jim Short Decpriorities $ 182. 30 Short

12/11/ 2008 DrinkswithJ. hortto discussSanza $ 30.25 Short

12/12/ 2008 Coffee Jim Short o discuss (llegible) $ 9. 37 Short

12/15/ 2008 Lunch Jim Short MarleyCrane to discuss $ 39.21 ShortAbsolute

12/19/ 2008 Ticketsfor J. hortfor wrestlingat GiantCenter $ 83.50 ShortHershey

12/09/ 2009 Constellation -DinnerwithPLCB Jim Short,Matt $ 308. 66 Short,SchwenkJohnClemmons,Brandon (llegible) Schwenk

12/11/ 2009 Dinne r -Chops Jim Short/MattSchwenk $ 421. 39 Short,Schwenk

05/15/ 2011 Ticketsto 76ersgamefor Jim Short PLCB $ 110. 00 Short

05/26/ 2011 Fourticketsto Wickedat GershwinTheatre,New $ 1, 000. 00 ShortYork,NewYork:Will Call Pick UpJim Short

06/01/ 2011 Golf withPLCB HersheyCC $ 750. 01 Short,Schwenk

06/01/ 2011 Lunch - John Clemmons, Jim Short, Matt $ 65. 97 Short,Schwenk,BradWaxman -HersheyCC to discuss Schwenkbusiness

a. Portionsof the aboveexpensesdistributedto Shorttotal $ 2, 118. 02.

b. Waxmanissuedpaymentfor the expensesincurredvia use of his corporateissuedcreditcard.

1. Southern Wine and Spirits employeesare permitted to receivereimbursementfromthe companyfor legitimatebusinessexpensesincurred.

2. Southern Wine and Spirits employees may not receivereimbursementfor personalexpensesincurred.

c. Waxmandocumentedthe expenseson his employeeexpensereportsforreimbursementand receivedreimbursementfor said expenses.

d. Shortasserts that he did not attendthe December11, 2009event/dinner.

116. Between2008and2011,Shortacceptedmeals/hospitalityandgiftsfromWaxman,a representativeof SouthernWine and Spirits.


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a. AbsentShorts employmentwiththe PLCB,Shortwouldnot havebeenin apositionto receivethe meals/hospitalityand gifts fromWaxman,a PLCBvendorrepresentative.

b. The specificvalueof the giftsand mealsreceivedand acceptedby ShortfromWaxman,a PLCBvendorrepresentative,otaledat least $2, 118. 02.

c. Thetotal specificvalueof the meals/hospitalityreceivedand acceptedbyShortfrom Waxman, a PLCBvendor representative, could not bedetermined.

d. Shortdid not pay for the meals/hospitalityand/ or gifts.

117. Shorts acceptanceon June1, 011,of lunchand a roundof golf fromWaxmanatthe HersheyCountryClubresultedin Shortreceivinghis Commonwealthwagesathis regularemployeerate for approximatelyfour hours (1p. m. o 5p. m.) uringwhichtime Shortwas not working.

a. Wednesday,June 1, 2011, was a regularly scheduledworking day forCommonwealthemployees.

118. Shorts normalworkinghoursare 8: 30 a. m. o 5p. m. witha one hourlunchperiod.

a. Waxmans receiptfor the lunchexpensedocumentedthe timeof paymentas1: 17 p. m.

b. Waxmans receiptfor the cost of the roundof golf documentedthe time ofpaymentas 1: 29 p. m.

119. Short failed to utilize Commonwealthleave of any type ( annualor personal)toaccountfor the approximatefour hourabsencefromhis normalworkinghoursonJune1, 011.

a. Shorts salarybasedon a thirty-sevenandone- halfhourworkweekequatedto $55.84 per hour as of June1, 011.120. Shortreceivedapproximately $223.36 in wagesfromthe Commonwealthfor four (4)

hoursworkon June1, 011,for whichShortwasabsentanddid not submitleaveofany type to offsetCommonwealthtime spentplayinggolf with Waxman.

a. Shortwasabsentfromworkand/or playedgolf at the HersheyCountryClubwithWaxmanfor approximatelythe last fourhoursof his regularlyscheduledworkdayon June1, 011.

THEFOLLOWINGFINDINGSRELATETO SHORTS RECEIPTOF ITEMSOFVALUEFROMMAJESTICREPRESENTATIVES.

121. While servingin the positionof PLCBDirectorof Marketingand Mercha

ethics panel adjudication for james short

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