Friday, April 13, 2007

ATC Must Close Brizzi Loophole

If Marion Co. Prosecutor Carl Brizzi (R) has it his way, the state Alcoholic and Tobacco Commission will use an opinion issued today by Attorney General Steve Carter's office to blow a mile-wide hole in a state law prohibiting law enforcement officers, including Brizzi, from holding an interest in an alcoholic beverage permit. Sadly, ATC Chairman David Heath has chosen to skirt his responsibility to uphold the laws by making an exception for Brizzi, which opens the door to every law enforcement officer in the state acquiring an interest in an alcohol permit.

Harry & Izzi's sought a 3-way permit for its new restaurant/bar in Circle Centre Mall. The applicant is a limited liability company. Indiana law is clear none of the members of the LLC can be a law enforcement officer. However, Brizzi's ownership is represented as a shareholder in a corporation which owns 95% of the LLC. The ATC has never promulgated rules to address a remote ownership interest. The opinion reads, in part:

The ATC has yet to promulgate rules relating to remote ownership of an applicant. Internal policies followed by the ATC over the years should be given appropriate consideration as a rule promulgation process is pursued. Earlier policies, while not binding, may have resulted in actions being taken in licensure matters that may have had unforeseen consequences. That is within the regulatory discretion of the ATC, and may be addressed through the promulgation of rules.

It is our opinion that the ATC is statutorily prohibited fiom issuing a retail alcohol beverage permit to an Indiana Limited Liability Company ("LLC") restaurant owner, one of whose members is a law enforcement officer. The statute does not address more remote ownership. The ATC has the authority to further regulate in this area but no rules have been promulgated that would extend the statutory requirements or prohibitions on applications for permits.

Offering this pathetic reponse to the AG's opinion, ATC Chairman Heath is quoted by the Star's Jon Murray as saying "the commission now has the legal cover to allow Brizzi's investment in Harry & Izzy's." "Brizzi said he planned to buy back a nearly 10 percent share worth $80,000 later today. " "It appears there is nothing that prohibits" Brizzi from taking part, Heath said.

Brizzi should be ashamed as one of the state's leading law enforcement officers to use this loophole to skirt the law's purpose. By failing to administratively act to address this problem, Chairman Heath has also, in effect, created an exception which will consume the rule. At a time when Brizzi should be focused on our spiraling crime problem here in the state's capitol city, he's instead consumed by the desire to make a quick buck in the private sector. I've already received a solicitation in the mail addressed by Brizzi promoting an event at Harry & Izzi's. We re-elected a full-time prosecutor last fall. If Brizzi would rather be involved in the bar/restaurant business, perhaps he should give the job up to someone with the intention of devoting full-time to the job.


Wilson46201 said...

In one of the stories leading up to the bar investment by Brizzi, Carl was quoted about being excited about getting back in the restaurant business - he reminisced about his Mom's place and how he worked for Jug's Catering. Carl Brizzi was going to be involved again!

Now it is being structured as a hands-off financial investment like maybe speculating in pork bellies or owning shares in a hot Internet startup in BanglaDesh. What happened to the excitement about Carl putting on a hairnet and peeling potatoes and shaking Martinis?

Anonymous said...

How's this any different than Carson's involvement in 300 East? She’s a lawmaker oops*, well she is suppose to be anyway. Do you expect to see her in the kitchen frying chicken?

Advance Indiana said...

anon 5:13, Carson has no financial interest in 300 East, and she's not a law enforcement officer. I fail to see any comparison between 300 East and Brizzi's restaurant/bar on this point.

Anonymous said...

Who's to say who has an interset in 300 East. Time will tell.

Wilson46201 said...

Yeah, and time will tell if Carl Brizzi has had a secret interest in the Unicorn Bar too?

braingirl said...

Gary, I understand the concern, but I do think there's a clear distinction between him being a member of the LLC directly and a shareholder in a corporation that's a member (part owner) of the LLC. Brizzi himself is *not* a member of the LLC.

How are you going to eliminate the possibility that any law enforcement officer is a shareholder in a corporation large or small, publically traded or not, that is a member of an LLC that owns or partially owns restaurants/bars? Joe policeman could own stock (as a shareholder) in a large, publically traded company and never even know. I understand the concern, but I also don't see how Brizzi's case is differnt than the guy who owns stock in an investor in the parent company, of say, Hooters.

Wilson46201 said...

I think the distinction is in the main business of the "parent corporation". For example: Hooters is in the bar business. It may incidently own an airline (didnt they try that?) playing off the fun image of the core business. But no matter how many layers of corporate control, Hooters is a saloon.

General Motors has a giant real estate business servicing car dealerships. I suspect they may have ended up owning (if only temporarily) a bar or two on some land they've bought. G.M. wouldn't primarily be in the bar business.

What about a hotel chain? That's a difficult one. Hotels usually run bars as an adjunct to their bedding business.

The Harry and Izzy's multilayer ownership seems a corporate subterfuge for either tax or liability purposes but the main point is to profit off of a bar business somehow. Without that single saloon at Circle Centre, there'd be no parent corporation.

Advance Indiana said...

braingirl, there are numerous regulatory provisions in other areas of the law which make the distinction between "control" persons and mere passive shareholders in large publicly traded companies. For example, "CONTROL SHAREHOLDER" means any Shareholder who, at the time in question, is a director or executive officer of the corporation or who beneficially owns (as determined pursuant to Rule 13d-3 under the Securities Exchange Act of 1934) more than 10% of the issued and
outstanding Shares. I suspect he picked the 10% ownership level in the event this common "control shareholder" definition were applied. It's his choice, but Brizzi's actions have permanently damaged his reputation in the eyes of many people who expect better of their public officials.

Anonymous said...

The phrase "legal cover" says it all, no? What happened to the notion of public servants avoiding the appearance of impropriety? Here, there seems a rush to embrace it. Monroe Gray. 300 East. Carl Brizzi. The hubris impresses.

Anonymous said...

Monroe Gray is an Arson Investigator, Law enforcement.
What's the difference? He (his wife) has an interest in 300 East.
If a divorce should happen I wonder how fast he will go after half of the shares or at half of their value.

Anonymous said...

"anon 5:13, Carson has no financial interest in 300 East, and she's not a law enforcement officer. I fail to see any comparison between 300 East and Brizzi's restaurant/bar on this point."

Once again, I must point out the conflict in the Indiana Code. In one area, the IC defines Brizzi as an LEO. In another, he is not an LEO. In the title that deals with alcohol, LEO is not even defined.

Anonymous said...

I'm not sure how much better-defined "Law Enforcement Officer" can be, than the man ultimately responsible for prosecuting them...sworn to two oaths, one as presecutor, the other as all attorneys are--an officer of the court.

Can someone help out with Dan Heath's background? His name rings a bell but I'm drawing a blank. Ft. Wayne...?

Advance Indiana said...

Dave Heath used to be mayor of West Lafayette. I believe he used to be a sheriff as well.

Anonymous said...

Now I remember, I think it was Laf., not WL. Sonja Margerum was mayor there for a long time. I believe Heath succeeded Jim Riehle.