NCJ Number
50286
Date Published
1978
Length
5 pages
Annotation
A REGULATORY ACTION TO CONTROL THE LIQUOR INDUSTRY IN SOUTH DAKOTA IS CITED TO DEMONSTRATE THAT APPLYING CRIMINAL LAWS IS NOT ALWAYS THE MOST EFFECTIVE REMEDY IN PROSECUTING CASES.
Abstract
THE ECONOMIC CRIME UNIT (ECU) OF THE SOUTH DAKOTA ATTORNEY GENERAL'S OFFICE IS CHARGED WITH INVESTIGATING ORGANIZED CRIME AND PROSECUTING THOSE WHO COMMIT SUCH CRIMES. THERE IS NO SPECIAL ORGANIZED CRIME UNIT. IN 1976, THE OFFICE RECEIVED INFORMATION ABOUT A RETAILER WHO SOLD LIQUOR FOR LESS THAN OTHER RETAILERS WERE HAVING TO PAY WHOLESALERS. THE RETAILER WAS ALSO ACCUSED OF POLITICAL CORRUPTION BECAUSE HE ALLEGEDLY OBTAINED HIS LICENSE ILLEGALLY. A FEDERAL/STATE INVESTIGATION TEAM WAS FORMED TO GATHER EVIDENCE. LIQUOR SALESMEN, WHO HAD BEEN GRANTED IMMUNITY, PROVIDED INFORMATION ABOUT PRACTICES IN THE LIQUOR INDUSTRY THROUGHOUT THE STATE. THE ECU NEGOTIATED A SETTLEMENT WITH WHOLESALERS, THEIR LAWYERS, AND THEIR MANAGERS BY MEANS OF A CONSENT DECREE, WHICH INCLUDED AN AGREEMENT BY WHOLESALERS THAT THEY WOULD PAY THE STATE $50,000. IN ADDITION, WHOLESALERS AGREED TO STOP THE FOLLOWING ILLEGAL PRACTICES: FALSELY INVOICING RETAILERS, ILLEGALLY TRANSPORTING LIQUOR BY SALESMEN, AND MAKING KICKBACKS TO RETAILERS. THE CASE DEMONSTRATES THAT COMBINED ANTITRUST/REGULATORY ACTION CAN BE USED EFFECTIVELY TO STOP ILLEGAL ACTIVITIES AND TO SERVE AS AN ENFORCEMENT TOOL. ANOTHER EXAMPLE OF THE USE OF REGULATORY ACTION INVOLVED A PHARMACIST ENGAGED IN FRAUDULENT PRACTICES WHICH AMOUNTED TO ABOUT $400. THE STATE PHARMACY BOARD FINED HIM, REVOKED HIS LICENSE FOR 6 MONTHS, ORDERED THAT $2,500 IN INVESTIGATIVE COSTS BE PAID, AND PUBLICIZED THE ACTION THROUGHOUT THE STATE. IT IS RECOMMENDED THAT PROSECUTORS REVIEW THEIR CASES TO ANALYZE WHETHER ADMINISTRATIVE OR REGULATORY ACTION IS THE MOST APPROPRIATE REMEDY. (DEP)