[A]s New Hampshire confronts the problem of questionable sales of its liquor, including millions of dollars worth of Hennessy cognac and other high-value spirits, Vermont’s Department of Liquor Control has recommended increasing the fine for those caught illegally importing spirits.
Liquor Control Commissioner Patrick Delaney has sent legislators a list of 39 suggested changes to Title 7, which outlines the penalties for many liquor-related offenses.
Among the changes is an increase in the fine for illegal liquor imports from $1,000 to $5,000, due in part to the seizure of $80,000 worth of spirits en route from New Hampshire to New York.
“There has been a recent increase in the number of instances where organized illegal importation concerns have used Vermont as a route to market in New York state,” the commissioner wrote in a document outlining his recommendations.
“The DLC enforcement team has recorded three smuggling interventions and confiscated over $80,000 worth of distilled spirits purchased in New Hampshire and in route to the New York City metropolitan area,” he added.
New Hampshire recorded $26 million in Hennessey sales in fiscal year 2017, among the figures that officials believe point to a criminal liquor distribution network that is evading taxes and capitalizing on New Hampshire’s cheap liquor for resale in nearby states.
Those concerns were bolstered by a case in November involving a van that was stopped in New York, and found to be filled with 757 liters of high-priced liquor from five New Hampshire stores. New York officials estimated the driver would have evaded $1,300 in taxes, just with that haul.
In a memo to Gov. Chris Sununu on Feb. 13, District 2 Executive Councilor Andru Volinsky called attention to “certain business practices of the New Hampshire Liquor Commission (SLC) that may be illegal and unquestionably facilitate money laundering related to criminal activities.”
The memo mirrored similar findings of a legislative committee created six years ago to investigate the Liquor Commission’s apparent complicity in large cash transactions, often by out-of-state buyers.
Peter Engel, who retired as the New Hampshire Liquor Commission’s Director of Store Operations in 2012, said he “firmly believed that stores were being used for bootlegging and money-laundering,” according to the report of the outside counsel hired by the committee.
Both reports strongly suggest that New Hampshire’s Liquor Commission is encouraging store employees to improperly report large-volume sales to avoid federal regulations meant to stop money laundering.
Volinsky describes recent policy changes by the commission as “superficial efforts” that fail to address the problem. “The SLC has adopted practices that appear designed to undermine the policy and facilitate money laundering,” he wrote in the memo.
In a statement to New Hampshire Public Radio, the Liquor Commission said it was “committed to following state and federal laws” and, in turn, accused Volinsky of improper behavior during his investigation into the matter.
Delaney, Vermont’s Liquor Control commissioner, said in an email on Monday that the Internal Revenue Service had contacted him about the issue and thanked the department for its cooperation. However, Delaney said he made clear that Vermont would not be devoting more resources to it.
“I indicated that this activity was low on our priority list and was not a focal point of our core compliance and enforcement mission,” he added. “Additionally, the VDLC would not be allocating additional resources to doing regular border patrol activities.”
Helen Head, chair of the House Committee on General, Housing and Military Affairs, said they had taken testimony on Delaney’s recommendations, but passed them to the Senate to consider in conjunction with a bill that merges the departments of liquor and lottery.
“Sen. Sirotkin [chair of the Senate Committee on Economic Development, Housing and General Affairs] has agreed to take up both of these initiatives after crossover and I hope we’ll see them on the House side within the next few weeks,” she said.
