Head of OLCC defends handling of ‘Bourbongate’ internal investigation

MILWAUKIE, Ore. (KGW) — At a regular meeting of the Oregon Liquor and Cannabis Commission’s board of commissioners on Wednesday, Chairman Paul Rosenblum opened with a blistering critique of the press and a defense of the board’s actions after news broke last week that high-ranking OLCC members used their positions to net rare bottles of expensive bourbon.

OLCC executive director Steve Marks stepped down this week at the request of Gov. Tina Kotek, who called for the resignations of several high-ranking officials after alleging that they had “abused their position for personal gain.”

To set the scene, Oregon is a place where all hard liquor is controlled and taxed by the state. The OLCC operates a state-run monopoly through something called the Distilled Spirits Program. It buys liquor, stores it in warehouses, then sells it to independently operated liquor stores that are licensed through OLCC.

One of the most coveted bottles that passes through the OLCC is a Kentucky bourbon called Pappy Van Winkle. It’s produced in small batches and aged for as long as 23 years.

The bottles sell for about $300 retail, but can fetch $2,000 on the illegal market. It’s so rare that the state holds a lottery for who can get it.

And for years, according to an OLCC internal investigation recently uncovered by The Oregonian, top managers at the OLCC got notified when bottles of Pappy Van Winkle and other popular liquors were placed at stores so they could “jump the line,” so to speak, and buy them up before members of the public could get there first.

The internal investigation, which The Oregonian got through an open records request, took place last year. It found that the practice of setting aside rare spirits has gone on for at least 8 years. The scheme involved six top managers, including Marks and his second in command.

While it’s unclear at this point who else was involved in getting the hard-to-find bottles, The Oregonian reported that a top OLCC official admitted to investigators that he’d set aside bottles hundreds of times — and that some of the people he hooked up were state lawmakers.

According to The Oregonian’s reporting, the scandal first came to light last April after an OLCC employee complained, prompting the investigation.

‘What did we know? Nothing’

While Gov. Kotek can call for the resignation of these officials, actual oversight falls to the all-volunteer OLCC board of commissioners. They’re the ones who appoint the agency’s executive director.

Opening the board meeting on Wednesday, Chairman Rosenblum first chastised members of the press for seeking comment or expecting action from the OLCC commission before a meeting could be held.

“This is the time and place for myself as chair and for this commission to respond to what’s going on and the issues,” Rosenbaum began. “The OLCC is a public body, nothing can be done in private — nothing can be done without a majority of the commissioners voting. In my opinion we are the most open public agency in the state, bar none.”

Rosenbaum underlined that he and the other commissioners are not permitted to discuss matters with one another outside of a public meeting. After repeatedly emphasizing that this was the reason why the board had not taken action, he went on to address the controversy itself.

“What did we know? Nothing. Nothing. There is not one person up here who knew a thing about the process, the procedure, the thing we’re all discussing today,” Rosenbaum said. “Not one. And if we didn’t know about it — and we didn’t — how could we participate in it? We didn’t. So stop asking questions about that, I’m telling you nobody knew anything about it.”

According to Rosenbaum, none of the other commissioners knew about the matter until “less than a week ago.” He’d learned about it five months prior, on Sept. 8 by his reckoning, when former Oregon State Police superintendent Richard Evans completed the internal investigation for OLCC about the alleged abuse of authority.

Evans was brought in to head the investigation because OLCC’s top official, Steve Marks, was himself implicated in the scheme.

When the investigation was over, the findings were added to each implicated OLCC official’s employment record, Rosenbaum said, and he was told that they were disciplined according to Oregon statute. He did not indicate what that discipline involved.

Regardless, Rosenbaum seems to have put the matter to bed at that time. What he appeared most upset about Wednesday is that the matter later leaked to the press.

“Now here’s the kicker to this whole thing, to me. I was told that this employment record was confidential,” Rosenbaum said. “Let me say it again, it was confidential. Let me say it a third time so the press understands it more than anybody else — it was confidential. In this day and age, people think they can lie and it’s perfectly okay. People think that confidential means that you breach it.”

“Eight months later when this blows up in The Oregonian, The New York Times, The New York Post and everything else,” he continued. “You want to look at me and ask me, did I do the right thing? Yes I did. Yes I did, I look at you and tell you without a doubt, this was the right thing to do. Confidentiality is confidentiality.”

Rosenbaum praised his colleagues on the board, and said that he didn’t sign up for his position on the board in order to micromanage the executive director of the OLCC, but to create policy.

“We’re the most ethical people you ever want to see,” Rosenbaum said of the other board members. “These are all wonderful people, they’re all business people, they’re all doing this as a matter of public service.”

Rosenbaum then indicated that he wanted to talk about Gov. Kotek’s Feb. 8 letter calling for implicated OLCC employees to resign, but he was diverted by several interruptions — the first asking when he intended to get to items on the agenda for Wednesday’s meeting.

“We’re going to get to the agenda after I finish my opening statement,” Rosenbaum responded. “Because my opening statement is in response to what we’re doing here and the aggravation we have taken. And I think it’s important that we get this out.”

The second interruption came from an Oregon Department of Justice lawyer who asked that any discussion of termination or resignations at the OLCC be saved until a later meeting where the public could be notified beforehand. ORDOJ has opened a criminal investigation into the allegations at OLCC, which Oregon Attorney General Ellen Rosenblum announced last Friday.

That remark seemed to put Rosenbaum on his heels. Ultimately, other members of the board signaled that they wanted to move on and discuss these matters “later.” Rosenbaum conceded the point.

‘Make sure to keep your job open, just in case’

Next on the agenda, quite literally, was Craig Prins. After Marks announced that he would heed Gov. Kotek’s call to resign, the governor announced Tuesday that she was recommending Prins to become interim director of the OLCC.

Prins’ background is that of a law enforcement watchdog. He’s been inspector general for the Oregon Department of Corrections since 2016. From 2004 to 2014, Prins served as executive director of the Oregon Criminal Justice Commission.

Though Kotek put Prins’ name forward, it’s the OLCC board that has to approve these appointments. At Wednesday’s meeting, they seemed happy to rubber stamp Kotek’s recommendation while the search for a permanent executive director begins.

For his part, Prins dutifully pledged to do right by the OLCC and the public — to “right the ship,” essentially.

Members of the board who commented on Prins’ appointment expressed gratitude for his willingness to step into the vacuum left by Marks’ toppling, but joked ruefully about possible bloodletting at the agency.

“I also want to thank you for stepping up. Make sure to keep your job open, just in case,” said Commissioner Marvin Révoal, chuckling. “For a number of years I’ve bragged about Oregon — ‘Oh, we didn’t do what that state did, we didn’t do what that state did.’ I’m not ready to stop bragging about Oregon and OLCC. We’re going to need your help.”

Révoal wasn’t the only commissioner to reference the state of Washington, which privatized liquor sales and distribution in 2012 with a voter-approved initiative. Prior to that, Washington had even greater control over the liquor industry than Oregon, selling hard alcohol only in state-owned stores.

“I’m not ready for us, on my watch, to go down like Washington went down,” Révoal said.

“Thank you for stepping up,” agreed Commissioner Dennis Doherty. “You’ve come at a time that’s certainly chaotic. You’ve heard the chair talk about all the shots that we’re taking, and that’s what we’re here for. We’re here because we can take it.”

The commission voted unanimously to approve Prins as interim director, giving him their congratulations and condolences.


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