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Lawsuit: Iowa illegally marked up liquor prices for years

Posted at 10:40 AM, Dec 18, 2019
and last updated 2019-12-18 11:40:19-05

IOWA CITY, Iowa (AP) — The former top accountant for the state agency that oversees Iowa alcohol sales claims in a whistleblower lawsuit that for years it illegally and excessively marked up the price of liquor products.

Todd Halbur, former comptroller of the Iowa Alcoholic Beverages Division, alleges in the lawsuit that he was fired last year after questioning the illegal price markups and separate payments made under an improper no-bid contract.

Halbur’s lawyer, Stuart Higgins, said Tuesday that his client was a “dedicated public servant” who was improperly fired for complaining about those two issues.

Division spokesman Tyler Ackerson said Tuesday that the allegations in the lawsuit are “untrue” but declined further comment, citing the pending litigation. A spokesman for the Iowa attorney general’s office, which represents the division, also declined comment and said it would respond to the allegations in court filings.

Halbur filed the lawsuit earlier this month in Polk County after a state board did not act on a legal claim he filed that sought $7.5 million in damages earlier this year.

The lawsuit alleges that Halbur, who oversaw accounting for its roughly $300 million annual operation, determined in August 2017 that the agency “had been marking up the sale price of alcoholic liquor in violation of the law.” The lawsuit alleges that the agency’s longtime administrator, Steve Larson, had been aware of the excessive markups since at least sometime in 2014.

The lawsuit also alleges that Halbur encouraged Larson to report the excessive markups to Gov. Kim Reynolds and other state officials. It doesn’t appear that took place, based on a review of the agency commission’s meeting minutes and annual reports.

Halbur, 52, had worked for the agency since 2015. He earned a salary of about $86,000 in his final year of employment.

The second allegation in Halbur’s lawsuit alleges that the agency entered into a no-bid contract in 2017 with Beverage Merchandising, Inc., to run a promotional discount website and reporting database. Halbur alleges that he refused to sign off on payments under the contract in July 2018 and then was demoted and let go later the same month.

The agency is the state’s exclusive liquor wholesaler. It buys liquor from suppliers and can mark up the price by 50% under Iowa law before selling it to retailers, such as grocery stores, liquor stores and other liquor license holders. Halbur’s lawsuit alleges the markups exceeded that legal level but doesn’t elaborate.

Sales of liquor have jumped during Larson’s tenure as agency administrator, which began when he was appointed by Democratic Gov. Chet Culver in 2010. Sales of liquor from the agency to liquor license holders were worth $334 million in 2018, up by nearly 31% since 2012, according to state data. The volume sold increased during that time period by 16.6% to nearly 5.8 million gallons.

The lawsuit alleges that correcting the excessive markups would have impacted the state budget, but provides no specifics.

The Iowa Senate voted to confirm Larson for a third four-year term last year, after he was reappointed by Reynolds and by former Gov. Terry Branstad.

Bottles of Black Velvet whiskey, Captain Morgan rum and Hawkeye Vodka are among the most popular liquor products in Iowa.