Hidden Ownership cases in Liquor Industry can lead to serious Crime

Impact in communities & enforcement efforts

By Anthony Ribera, Special Investigator

Arizona Department of Liquor Licenses and Control

In the past year, investigation efforts by state and local agencies have yielded tremendous information and intelligence on undisclosed or "straw" ownerships in bars, restaurants & off-sale liquor businesses.  While conducting multiple hidden ownerships in the past year numerous criminal and regulatory violations have been substantiated as well as additional

intelligence information concerning financial links to organized crime groups nationwide. In addition, cases have shown financial connections to countries such as Lebanon and other middle-eastern countries.

Who is the true owner of that corner liquor store or bar in your neighborhood?  Where is the revenue from the business (cash) going to?

Investigations have consistently shown that just because a person tells you he/she is the owner or manager of the business does not necessarily mean they are the true owner.  Hidden ownership suspects have educated themselves

on how to circumvent the application process both at the state and local levels to obtain alcohol licenses by using 'front" persons, in name only, for purposes of disclosure on state applications. Once the license is issued, hidden owners take control of the business usually both financially and physically.

This brings to the forefront the main reason for  conducting these cases of, "control" and "financial interest."  According to state law, if a person is considered a "controlling person" and/or has 10% or more financial interest he/she is required to submit an application, personal questionnaire & fingerprint cards for background purposes.   Of course, at the lowest level, an administrative complaint can be lodged against the issuance of the liquor license applicant or a compliance complaint if the license has already been issued.

These cases start out as undisclosed ownerships and  then lead to more serious crimes that ultimately affect patrol, investigations and other governmental operations.  In examining several recent cases the following crimes have been found to be consistent:

*     Tax evasion

*     Money laundering

*     Drug dealing

*     Homicide

*     Serious non-reported aggravated assaults

*     Illegal enterprise

*     Document crimes (false filings)

*     Fraud schemes

*     Perjury

One the most attractive reasons that the liquor business attracts unsavory customers is the fact that most of the dealings are done on a cash basis, thereby making concealment of cash easy to hide, transport, and of course, share abroad.

What can you do at your level to deter and detect possible hidden ownerships in your community? What can you do if you get a complaint from the public alleging a hidden ownership?  

Here is a list to start with:

*     Find out who is the actual disclosed owner of the business.  This can be accomplished by going on-line at the Department of Liquor's website (www.azliquor.org <http://www.azliquor.org/> ) and running a query or Contact the Arizona Department of Liquor and speak to a duty-officer at (602) 542-9062 Monday-Friday 0800-1700 hours and he/she can run a query of the ownership

*     Work with your local business licensing offices and find out who is disclosed as the owner of the business on business tax applications

*     Work with your local patrol officers and see if they know who claims to be the owner of a business

*     Review history crime reports for the business location and review victim information and if the person stated that they were an owner

*     Work with your area Department of Liquor Liaison Investigator and explain your suspicions and concerns

*     Document your findings in a report and include the following; How did you receive the complaint?  Who is the alleged hidden owner?  Who is the alleged true owner?  What did you discover when you examined corporation and business documents?  Is the alleged hidden owner listed on these documents?

*     Forward a copy of the report/complaint to the Department of Liquor Licenses and Control or contact the enforcement agent in you area to work in conjunction with your agency

Of course this is only a start.  These cases can require business records inspections, corporation and business entity searches, and interviews.  Contact the Department of Liquor for further assistance.

Arizona Department of Liquor Licenses & Control

800 W. Washington #500

Phoenix, Arizona 85007

Office:    (602) 542-5141

Fax:         (602) 542-5707

Email:      http://www.azliquor.gov