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Wegmans, affiliates to pay $1.1M in fines for illegally operating liquor stores

Wegmans Food Corporation has agreed to pay $750,000 in civil penalties for managing five liquor stores without a proper license, according to the state Liquor Authority.

Each of the affiliated stores also was fined, including a liquor store near the Amherst Street Wegmans in Buffalo.

The other liquor stores are outside of Western New York.

The penalties levied against Wegmans are intended to settle eight charges — including six violations for availing their license to five affiliated liquor stores, one charge for availing the license of a wholesaler, one charge for aiding and abetting illegal gifts and services and one charge for illegally trafficking in wine.

Wegmans, in a statement Wednesday, denied some of the charges.

The Liquor Authority accepted a conditional no contest offer of $750,000 from Wegmans to settle the eight charges and an additional $375,000 from the five affiliated liquor stores, with each store fined $75,000 for charges of availing their license to Wegmans and accepting illegal gifts and services from a wholesaler.

Separately, the distributing company that provided services to Amherst Street Wines & Liquors, through Wegmans, agreed to pay a $225,000 penalty to settle eight charges levied by the Liquor Authority.

The Liquor Authority said it received a complaint that the Wegmans-affiliated liquor store on Amherst Street was doing business as Amherst Street Wines & Liquors in Buffalo, allowing Wegmans to effectively control the liquor business by managing its purchasing and pricing decisions, along with the liquor store's relationship with various wholesalers.

An investigation by the authority determined Wegmans was not licensed to sell wine or spirits in the state, and that it was exercising significant control over Amherst Street Wines & Liquors and four other stores outside the Western New York area.

As part of its settlement with the state, Wegmans has appointed a new corporate compliance officer and established a new corporate compliance program to avoid any additional legal complications in the future.

However, the company, in a statement released by Wegmans spokeswoman Jo Natale, disputed the Liquor Authority's charge that Wegmans exercised any control over the five affiliated liquor stores.

"What these stores have in common is that each is individually owned by a Wegman family member, and each owner is trying to run their store like we run Wegmans, with low prices, great selection and great service," the statement read.

"It’s unfortunate that the (Liquor Authority) chose to credit complaints from competitors of these liquor stores over the actual facts presented to them during the investigation," the statement said.

Wegmans has long maintained that liquor stores on its properties are separate entities — merely leasing space owned by the grocer.

State law prohibits grocery stores from selling alcohol other than beer, wine coolers and some premixed alcoholic beverages.

Wegmans for years lobbied the state to repeal that law — but dropped its fight in 2007, after Nicole Wegman bought a liquor store and moved it to a plaza near a Wegmans store in Pittsford.

Nicole Wegman, the daughter of Wegmans chief executive officer Danny Wegman, sold the store to another family member before opening the Amherst Street Wine & Liquor Store on the Amherst Street Wegmans property in the Black Rock neighborhood.

In its statement, Wegmans said it was informed by the state that only a licensed New York wholesaler can perform some of the steps involved in bringing alcohol products to the New York market.

As a result, the company agreed to correct the violations alleged by the state.

"The good news is that New Yorkers will continue to have access to the same great wines and spirits that we are able to offer to our customers in other states," the Wegmans statement said.

"With regard to the size of the fine, we say this: Everything costs more in New York State, except shopping at Wegmans," the statement said.

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