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April 30, 2013

ABC denies package beer license to liquor store

Ernie’s Spirits leases ‘false and fraudulent,’ says state board

CORBIN — One of the three winning applicants for a package liquor license in Corbin has been denied a retail package beer license by the state Department of Alcoholic Beverage Control (ABC).

The ABC confirmed last week that Ernie’s Spirits LLC, doing business as Ernie’s Spirits at 25 RJV Drive in Corbin (behind Applebee’s restaurant), was denied the retail package beer license.

They said the reason for the denial was because Ernie’s Spirits had knowledge that a lease turned in to the ABC as part of its retail beer license application in May 2012, and a revised lease on the 25 RJV Drive property turned in to the ABC in September 2012, were both false and fraudulent.

“They do have a liquor license. They do not have a beer license. There is a hearing scheduled for May 20 at 1 p.m. in Frankfort,” Nathan Jones, public information officer for the ABC, said.

According to records at the state ABC website, a retail package liquor license was issued to Ernie’s Spirits on April 4. The record showed the expiration date for the package liquor license was May 30.

The denial of the retail package beer license to Ernie’s Spirits came in a letter from the ABC on April 8, and was obtained by the Times-Tribune through an open records request. It was addressed to Kevin Durham and Ernie Durham, both principals in Ernie’s Spirits and came from Stephanie Stumbo, the ABC’s Malt Beverage Administrator.

In their original ABC application, Kevin Durham, of Lexington, is listed as manager-member, while Ernie Durham, of Richmond, is listed as member.

Stumbo’s letter stated, “KRS 241.080 authorizes the Malt Beverage Administrator of the Department of Alcoholic Beverage Control (“Department”) to issue or refuse to issue state licenses. In accordance with that statute, your application for a retail beer license hereby is refused/denied.”

Mentioning a section of the Kentucky Revised Statutes (KRS), the document added the statute “provides that a license to be issued…’shall be refused’ by a state administrator ‘if the applicant has made any false material statement in his application.’ The term ‘shall’ is a mandatory directive.”

According to the ABC letter, Ernie’s Spirits LLC submitted its application for a retail beer license at the RJV Drive location on May 9, 2012. “KRS 243.220 provides that no license shall be issued for any premises unless the applicant is the owner of the premises or is in possession of the premises under a written lease. The application of Ernie’s Spirits was accompanied by a written lease dated May 1, 2012. The lease represented that Matuse Property Holdings LLC (“Matuse”) owned the property leased to Ernie’s Spirits.”

The letter showed that on Sept. 25, 2012, Ernie’s Spirits supplemented its application with a revised lease of the property on RJV Drive. Like the original lease in May, the revised lease represented that Matuse was the owner and landlord of the property.

Stumbo further noted, “The Department learned in a subsequent investigation that Matuse did not exist when the original lease was executed and submitted as part of the application. The original lease thus was false and fraudulent. Further, Matuse did not own the property when the revised lease was submitted on Sept. 25, 2012. Records at the Whitley County Clerk’s Office show that R.J.V. Properties LLC did not sell the property to Matuse until Oct. 4, 2012. Kevin Durham signed the deed as a member of Matuse. Since Kevin Durham is the principal member of Ernie’s Spirits as well, Ernie’s Spirits had actual knowledge that the May 1, 2012 (lease) was false and fraudulent as was the Sept. 25, 2012 revised lease.”

The letter added, “In these circumstances KRS 243.450(1) requires that the Malt Beverage Administrator refuse to issue a retail beer license to Ernie’s Spirits. Additionally, KRS 243.450(2) provides that a license which might be issued under KRS 243.020 to 243.670 may be refused by a state administrator for any reason which the administrator, in the exercise of sound discretion, deems sufficient. That Ernie’s Spirits submitted fraudulent leases falsely claiming a possessory interest in the proposed premises is a discretionary basis for refusing the license under KRS 243.450(2).”

Stumbo closed her letter by saying both Kevin and Ernie Durham have the right to request an administrative hearing before the Kentucky ABC Board in regards to their application.

Phone calls to Kevin Durham and Ernie Durham were made Monday. Ernie Durham’s phone had no voice mail and, as of late Monday, the call to Kevin Durham had not been returned.

The building which will house Ernie’s Spirits was completed earlier this spring, but has yet to open for business.

On July 1, Ernie’s Spirits, Tri County Liquor (now Liquor Mart of Corbin) and Liquor King were chosen by the ABC as the winning applicants awarded the three retail package liquor licenses allocated to the City of Corbin. Liquor Mart of Corbin was the first to open on Sept. 28. Liquor King opened with limited hours Oct. 25 and began operating with regular hours on Nov. 1.

In October, Corbin’s ABC Administrator and Assistant Police Chief Bruce Rains said the owners of Ernie’s Spirits filed with the ABC for an extension of, and were granted, a letter of intent for a liquor license to April 30 of this year. Rains added the extension would let Ernie’s Spirits build a store.

Package beer sales in Corbin began June 6, with Rite-Aid Pharmacy being the first retailer to do so in the city. Both retail sales of package liquor, beer and wine at liquor stores, and retail package beer sales were the result of a special election on Feb. 14, 2012, where voters approved having licensed retail outlets in Corbin to sell alcoholic beverages by the package.

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