Breakthru to ‘aggressively’ fight fraud allegations

Breakthru Beverage Group has reassured employees it will “aggressively” fight fraud charges brought against two of its executives by New York distributor Empire Merchants.

Breakthru denied allegations made against its co-chairman Charles Merinoff and president and CEO Greg Baird

Newly formed US distribution company Breakthru denied allegations made against its co-chairman Charles Merinoff and president and CEO Greg Baird, which claimed that the men – among others – were part of a “reprehensible criminal scheme” that saw wine and spirits worth “millions of dollars” smuggled into New York and sold illegally.

The action alleges that for “at least” the past eight years, Breakthru’s Maryland operation, Reliable Churchill LLLP, and Republic National Distributing Company (RNDC) conspired with retailers in rural Maryland and New York to secretly ship alcohol products between the states.

Breakthru Beverage itself is not named in any court documents.

While RNDC is frequently mentioned in Empire’s complaint, is is not named as a defendant – however the firm recently received an indictment on federal smuggling charges.

According to the civil suit, New York wholesalers – such as Empire – lost the distribution rights to which they were entitled, while the state of New York was deprived of “millions of dollars” in tax revenue.

“These allegations are wholly without merit and will be fought aggressively,” said Rocky Wirtz, Breakthru co-chairman, and Danny Wirtz, vice chairman, in an internal email to employees.

“We take very seriously any accusation that impugns the integrity of Breakthru Beverage. The foundation of our company was built generations ago on the pillars of integrity and hard work. Those values hold strong today.

“Breakthru Beverage is focused intently on delivering excellent results as we launch the critical OND season and to maintaining our strong supplier relationships. With your hard work, we are on track to deliver a historic first year.

“We appreciate your support and confidence and ask for your commitment in the months ahead.”

Breakthru Beverage was created after Wirtz Beverage Group and the Merinoff family’s Charmer Sunbelt merged earlier this year.

The two men, both formerly Charmer Sunbelt executives, stand accused of fraud, unfair competition, deceptive trade practices and breach of fiduciary duty, among other allegations. The complaint also alleges violations of the Racketeering Influenced and Corrupt Organisations Act (RICO).

According to the lawsuit, Merinoff served on Empire’s board of managers, as Charmer Sunbelt was part owner in the joint venture that operated as Empire.

The complaint contends that Merinoff “directed and participated in the Maryland bootlegging scheme for pecuniary gain” by intending to “wrest control over Empire’s New York operations from Empire’s other principals”.

Empire’s complaint also names Lloyd Sobel, who was fired this week as Empire’s CEO, and a number of retailers in Maryland and New York.