Whiteclay Liquor Stores Accused of Illegally Selling Beer to Bootleggers, Among Other Offenses

Omaha World Herald
By Paul Hammel
Mar 15, 2017

LINCOLN — The four beer-only liquor stores in the border village of Whiteclay are facing a new set of allegations, including that they illegally sell beer to bootleggers and sell alcohol after hours.

The 22 citations, recently filed by the Nebraska Attorney General’s Office, represent a new offensive against the continued sale of beer in the unincorporated village.

The equivalent of 3.5 million cans of beer a year are sold in Whiteclay, which has been blamed for the multiple alcohol-related woes across the Nebraska-South Dakota state line on the Pine Ridge Indian Reservation, where alcohol possession and sales are banned.

“We consider these serious violations and are prepared to provide appropriate evidence in support of these allegations,” said Nebraska Attorney General Doug Peterson in a prepared statement Tuesday.

Representatives of the four beer stores and their attorneys declined to comment when contacted by phone Tuesday.

The four stores already face an April 7 hearing before the Nebraska Liquor Control Commission to determine whether adequate law enforcement exists in Whiteclay — a village of about 12 people that has no local police force or zoning laws — to allow beer sales to continue.

Now, a second, separate hearing over the future of beer sales in Whiteclay will be scheduled, likely May 2 or May 3, to decide whether the new allegations are valid and whether the stores’ licenses should be suspended, canceled or revoked.

The citations represent a stepped-up effort by the state to ensure that the Whiteclay outlets are following all state laws.

For almost two decades, activists have sought to close down the Whiteclay stores, saying they fuel problems on the reservation. Store owners and others, meanwhile, say they run lawful businesses and that closing them down will not stop alcoholism.

An activist who has long sought tougher liquor law enforcement in Whiteclay said he was “floored” by the new developments.

“If they’re true, they will effectively be the death knell for these four stores,” said John Maisch, an Oklahoma attorney who used to be involved in liquor enforcement in that state and is a filmmaker who produced a documentary about Whiteclay.

Bob Batt, the chairman of the liquor commission, declined to comment when reached Tuesday. That three-person board, whose members are appointed by the governor, will act as judges to determine whether liquor sales should continue in Whiteclay, so it would be inappropriate to comment, Batt said.

Hobert Rupe, the executive director of the liquor commission, said an audit of the four stores was launched in November 2015 to delve into allegations that bootleggers were buying large quantities of beer from the stores for resale, which is a violation of state law.

“Our audit report showed some irregularities. So (the Attorney General’s Office) dove in,” Rupe said.

The 22 citations were filed on Feb. 27. Because they have not yet been adjudicated by the liquor board, they cannot be used as additional evidence at the April 7 hearing, Rupe said.

On Tuesday, the attorneys representing the four beer stores, Andrew Snyder of Scottsbluff and Warren Arganbright of Valentine, filed motions seeking to cancel that April 7 hearing and renew the licenses for the outlets.

The motions maintain, among other things, that the issue of adequate law enforcement is a condition for initially granting a liquor license but not one that can be considered when renewing a license.

In addition, the beer store lawyers said the liquor commission’s power is limited in deciding whether to renew a liquor license. They said the panel can determine only whether a licensee is still qualified to sell alcohol and whether the licensed premises has changed.

The four beer outlets in Whiteclay are the Arrowhead Inn, the Jumping Eagle Inn, D&S Pioneer Service and State Line Liquor.

Five administrative citations were filed against all four of the outlets: selling beer for resale; failing to cooperate with investigators; failing to document sales of more than 20 “wine gallons” of beer (which is more than eight 24-can cases); selling beer after hours; and failing to keep adequate books.

The Arrowhead Inn also was cited for two other alleged violations: selling alcohol on credit and filing false applications for liquor licenses.

The new allegations are sure to put additional pressure on the beer outlets to sell their businesses, which has been proposed by the head of a street ministry in Whiteclay, Bruce BonFleur. It’s unclear whether BonFleur can raise the estimated $6.3 million to buy out the stores.

BonFleur declined to comment on the new allegations but said he would be meeting with the beer store owners on Monday.

Frank LaMere, a Winnebago Indian activist who has been calling for the closing of the beer stores for years, joined Maisch on Tuesday in thanking the attorney general and liquor commission for following up on allegations of wrongdoing by the beer stores.

“I am very much encouraged,” LaMere said. “I anticipate swift and decisive action to end the debacle of Whiteclay once and for all.”

paul.hammel@owh.com, 402-473-9584

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