Saturday, November 19, 2011

Liquor License Auction Raising Questions

The Indiana Alcohol & Tobacco Commission auctioned off 279 new liquor license permits at an auction yesterday, 169 of which are to be issued in Marion County. The sale of the liquor licenses at the auction raised more than $3.8 million for the state. The highest-priced license sold at the auction went to United Package Liquors for a license in Brownsburg. It brought $450,000, a record purchase price according to the Indianapolis Star. Of particular note, though, is the sale of 94 new 3-way permits within the City of Indianapolis. Although the City of Indianapolis has grown substantially since the adoption of Uni-Gov more than four decades ago, the Commission has not adjusted the quota for the expanded boundaries of the city until now, which resulted in a glut of new 3-way permits. In recent years, bar and restaurant owners have paid $50,000 to $75,000 a piece to acquire a 3-way permit due to increased demand as the city grew. At yesterday's sale, the new licenses were being snatched up for $1,000 a piece, the face value of holding a permit.

WISH-TV's Deanna Dewberry discovered that one buyer, Liquor License R Us, was bidding on 10 licenses in Marion County and 26 others located elsewhere around the state. ATC rules prohibit anyone from purchasing a liquor license for speculative purposes with the intent of reselling it for a profit. Yet as Dewberry reports, that's exactly what Martin Rogness of Liquor License R Us appeared to be doing at yesterday's auction:
One bidder who got the attention of others competing for permits was a man who identified himself as Martin Rogness on his application, and his [business] as Liquor License R Us. Equally unusual was the number of licenses he was trying to buy: 36. Ten were in Marion County.
When we asked whether he was speculating, he wouldn't answer.
Travis Thickstun, spokesman for the Alcohol and Tobacco Commission confirms that speculating - buying licenses from the Alcohol and Tobacco commission and selling them to others at a profit - is illegal.
Dewberry also found that the ATC was doing very little to determine the qualifications of those bidding for the new licenses at yesterday's auction. If it had, it would have questioned Rogness' motives:
All bidders in Friday’s auction had to pre-qualify. But we learned pre-qualification isn't difficult. Bidders simply turned in a one-page form and answered questions such as "Are all interested parties of sound mind." They then paid a fee.
Why didn't Rogness' unusual business name and the extraordinary number of permits on which he was bidding concern ATC leaders?
"I can't comment on that,” Thickstun said. “I have no idea about his application. I don't know what his businesses are or are not."
It appears that Rogness may be the same Martin E. Rogness who formerly worked as a police officer in Portage, Indiana. Liquor license records indicate that Rogness' Sportsman's Lounge of Porter County, Inc. owns a 3-way liquor license in Valparaiso. A 1983 Indiana Court of Appeals' decision identifies a Martin E. Rogness who faced termination following an altercation with a man seeing his wife:
Appellee Martin E. Rogness was employed by the City of Portage as a police officer. On February 24, 1981, Rogness was driving a marked police car past Woodland Park, when he noticed his wife, Kathy, seated in her automobile with an unknown male. Prior to this date, dissolution of marriage proceedings had been commenced between Rogness and his wife. Rogness then parked his car and approached his wife's auto. He opened the passenger side door and repeatedly beat the passenger, David Carullo, about the head, and threatened to kill him. After this incident, Kathy Rogness made a report to Portage police which led to charges against Rogness before the Portage Metropolitan Police Commission.
Over the following months, hearings were conducted to determine Rogness' fitness for further duty. During these proceedings, evidence was gathered which resulted in a transcript of several hundred pages.
According to the decision, the Portage Metropolitan Police Commission had recommended Rogness be terminated as a police officer, but Rogness was successful in getting that reduced to a suspension after appealing the decision to a trial court judge in Starke County. The Indiana Court of Appeals reversed the trial court's decision and remanded to the trial court for further proceedings. It's not clear whether the person identified in this case is the same person who was purchasing liquor licenses at yesterday's auction.

Dewberry also learned that the owner of a troubled Hooka bar at 86th & Michigan that saw her liquor license yanked recently following repeated problems her establishment had with serving underage patrons and shootings that occurred at the establishment was able to purchase one of the new licenses. Gloria Botina told Dewberry she thought she could avoid those problems if she ran a bar with a 3-way license. "There will be no problems because the customers that we are targeting right now are 21-up," Botina said. Her hooka bar allowed persons 18 and over to enter the establishment according to Dewberry.

It seems a lot of neighborhood organizations, as well as current bar owners, are extremely unhappy with the ATC's decision to issue so many new 3-way permits in Marion County. The value of existing owners' 3-way permits was virtually wiped out with the influx of all the new 3-way permits that were acquired for only $1,000. Some fear that the 3-way permits will have little more value than the 2-way permits, which already are plentiful in Indianapolis and can be acquired from the ATC at face value. It should also be pointed out that the purchase of the permits sold at yesterday's auction is still subject to board approval so some purchasers of permits at the auction may not get to keep them.

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