Judge dismisses Empire/Breakthru fraud case

17th March, 2017 by Kristiane Sherry

A US judge has dismissed a fraud case brought by Empire Merchants against Reliable Churchill and Breakthru Beverage Group, which claimed the pair “smuggled” wines and spirits into New York.

A judge has dismissed a case in which Breakthru Beverage was accused of fraudulent activity

In September 2016, Empire alleged that Reliable Churchill, Breakthru’s Maryland operation, its co-chairman Charles Merinoff and president and CEO Greg Baird – and others – were part of a “reprehensible criminal scheme” that saw wine and spirits worth “millions of dollars” smuggled into New York and sold illegally.

In the final court ruling seen by The Spirits Business, judge Allyne R Ross said Empire Merchants did not have a case because the alleged activity by Breakthru could not have caused “injury” to Empire.

Allegations of mail fraud were not backed by specific evidence, and claims that Breakthru smuggled goods into New York were dismissed because any such activity would “defraud” the state rather than a company.

Empire had also claimed that Breakthru’s actions had broken exclusive agreements it had with certain suppliers. The judge ruled that Breakthru’s actions “were not calculated to deceive anyone”, and so could not be deemed fraudulent.

During the case, Breakthru made an offer to acquire Empire – a move the latter’s attorney said was “an outrageous publicity stunt”.

A Breakthru representative said there was no new information on the deal.

In a statement Breakthru Beverage Group co-chairman Rocky WReirtz and vice chairman Danny Wirtz said they were “thrilled” by the verdict.

“Last September, we wrote to Breakthru Beverage Associates to let them know that Empire Merchants of New York had filed a civil suit against Reliable Churchill, Breakthru’s Maryland operation, in addition to members of our leadership team. At that time, we asked for their support and confidence as this litigation ran its course, and they provided this overwhelmingly.

“Today, we were thrilled to share with them that the US District Court dismissed all claims by Empire Merchants against Breakthru Beverage and members of our ownership and executive team. We were confident from day one that we would prevail and are gratified that the Court ruled in our favour.

“We are thankful for the many who stood by our side, including our suppliers and many others in our industry.   With this support, we have continued to move forward without letting this be a distraction to the growth and innovation of our business.

“As we told our associates last fall, 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.”

Randy Maestro, attorney for Empire Merchants, told The Spirits Business: “At its core, Empire Merchants’ lawsuit is about a massive bootlegging scheme in which Reliable Churchill was a central participant.

“Since the lawsuit’s filing, six of Reliable Churchill’s co-conspirators have come forward to corroborate under oath its role in this bootlegging scheme.  So we are disappointed that the court decided to dismiss the federal lawsuit based on technical legal grounds, but we are considering our appellate options and continue to have state law claims to litigate.”

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