Michael Jeffrey Lukas may have had the best deals in Ohio. He offered the choicest booze -- Absolut, Crown Royal, Jack Daniel's -- for delivery to party halls from Avon Lake to Brunswick. And when hall owners passed out his business cards to customers and said no one could beat his prices, they weren't kidding.
But Lukas's deals really were too good to be true. Unknown to his customers, his low costs were the drawing card of a black market business, investigators say.
Running a liquor scam in Ohio isn't easy. Officially, Lukas was a salesman for Postiy Wine & Spirits of suburban Columbus, but state laws barred him from delivering orders or accepting money. All booze in Ohio is channeled through government warehouses, which charge uniform prices and handle distribution themselves. Hence, it's almost impossible for scam artists to sell under market rate, much less get their hands on liquor in the first place.
But Jeffrey Rozier, a former agent with the Ohio Department of Public Safety's investigative unit, believes Lukas was a go-to guy for party halls across Northeast Ohio for seven or eight years. His specialty was places without liquor licenses that couldn't get the booze anywhere else, Rozier says.
The state only uncloaked the racket by accident, but a subsequent raid of Lukas's Parma bungalow in 2000 uncovered reams of evidence: cases of liquor, canceled checks, and counterfeit invoices.
Lukas did not respond to interview requests, but Rozier believes his profits were sizable. Lukas was known to brag about golfing in Pebble Beach with actor Michael Douglas -- a perk likely not covered by his $39,000 salary. Investigators also found investments worth thousands of dollars.
Almost two years later, however, the state concluded its investigation without fanfare. On February 5, Lukas pleaded guilty to one misdemeanor: a single count of illegal sales for a 1999 wedding. Only one of his co-conspirators has been prosecuted. Sheffield Lake liquor store owner Gary Pagano, alleged by police to be Lukas's partner, pleaded guilty the same day to a single count of complicity, a misdemeanor. (Pagano also declined comment.)
It would seem a minor case involving no-harm, no-foul crimes, except for one unanswered question: Where did Lukas get his liquor? Rozier is convinced that it was stolen from a state-owned warehouse. But rather than demanding the truth, he claims the state did everything it could to obscure it -- ultimately killing the investigation.
"We were hot on the trail, and they stopped me dead in my tracks," he says.
Ohio privatized its liquor stores a decade ago, but retained control of the distribution. The half-public, half-private system is complicated even to the most anal lawyer.
Lukas's role in the industry was supposed to be a small one. As a salesman for Postiy, he hawked liquor to licensed stores and party halls on Cleveland's West Side. He'd fax orders to the state-contracted warehouse in Brook Park, which handed them off to a trucking company. Stores sold the booze on consignment, with the state paying the store 6 percent to handle the sale.
Avon Lake Police stumbled onto Lukas's side business while investigating former Mayor Vince Urbin, who was later convicted of illegally spending city money at his brother's business, the Fountain Bleau party center. Police Sergeant Jack Hall discovered the mayor had written a check to Lukas to provide liquor for a fund-raiser at the Fountain Bleau. In May 2000, a few months before Urbin was indicted, Hall called the Ohio Department of Public Safety to check into liquor laws.
Rozier told him that the Fountain Bleau hadn't had a liquor license for 30 years. He also learned that Lukas was supplying liquor to numerous unlicensed events. Several hall owners admitted recommending Lukas for weddings and parties. And Lukas himself confessed to handling several a month, according to police records. Patrons wrote checks to Pagano's Sheffield Lake store. Pagano then cashed them, took a cut for himself, and passed the rest onto Lukas, according to Rozier's reports.
But there was a problem. The invoices showed Lukas was selling liquor below state prices. There was no way he could have bought it from Pagano, because Pagano would have lost money, Rozier wrote. Nor was Lukas getting booze through official warehouse orders. Those were delivered directly to permitted businesses and billed through the state, Rozier says.
So the investigator dug deeper. He learned that Lukas was a familiar face at the Brook Park warehouse, even though Lukas's horrified boss, who fired him after talking to Rozier, said he had no reason to be there. Lukas's planner noted a curious weekly appointment. "M. Lukas meets with an unidentified suspect only known as Tom W. every week to make a pickup of stolen liquor from that warehouse," Rozier theorized in his July 2000 report. Sergeant Hall would later repeat the allegation in his reports.
Rozier was never able to identify "Tom W." Joseph Collins, the warehouse manager at that time, says he doesn't know "Tom" either. But he, too, suspected that liquor was being stolen. "It's just a theory," Collins says. "But I knew there was shady stuff there."
When a squad of liquor agents arrived at the warehouse to ask about the mysterious Tom, Collins gave them a letter he had written to Liquor Control Chief of Agency Operations Terry Poole in 1997. In the letter, Collins alleged that someone was inaccurately claiming that shipments were broken or short and forging his signature. When he became aware of the forgeries, Collins says, he combed the previous six months of records. Approximately 30 cases had been marked as broken or missing without his knowledge -- a $6,000 value.
Through spokesman Matt Mullins, Poole says he investigated the claims. "We looked into it, and there was no evidence that shipments were short or documents were forged," Mullins says.
But Rozier was never given a chance to check it out for himself. He says he was pulled off the case, put back on, then pulled off again. And when he prepared to put Collins's allegations in his weekly report, he says Cleveland district Agent-in-Charge William Myers told him not to. (Myers hotly denies the charge: "I would never impugn my integrity.")
By summer 2001, Rozier had landed in disciplinary trouble. He was accused of using a police database without authorization and giving inaccurate information to investigators who questioned him, as well as conduct unbecoming an officer, according to his personnel file. He was fired in August. Rozier denies the allegations; the matter is in arbitration.
Sergeant Hall refers most questions to Scott Pohlman, assistant deputy director of the Ohio Investigative Unit. But Hall admits Rozier's departure left the case hanging. "A couple of times, Rozier said he'd been reassigned to something else, and then we just didn't hear anything from anyone," he says. "They never presented us with a conclusion."
In February, Avon Lake charged Lukas with one count of illegal sales and Pagano with one count of complicity. Since Lukas lives in Parma, Pagano's store is in Sheffield Lake, and the alleged sales took place throughout Lorain and Cuyahoga counties, further action was up to the Department of Public Safety, Hall says. "It was their case."
Pohlman believes his department handled it well. "As far as we're concerned, the whole thing is finished," he says. "I thought it was a good investigation." Both Myers and Pohlman say Rozier wasn't pulled off the case; he was finished before his problems began.
Yet the state offers little evidence that it properly completed the investigation. Hall's reports suggest dozens of potential charges against Lukas, Pagano, and others. None were pursued. When Scene requested reports, conclusions, or recommendations from the state's investigation, the Department of Public Safety faxed a terse memo. It said the state closed its investigation into Pagano's store in April 2001 after spending no money, issuing no violations, summarizing nothing, and making no arrests.
In essence, the state claims it conducted a full investigation -- without using any resources.
Pohlman and Myers contend that further action was the responsibility of the division of liquor control and county prosecutors. But the Cuyahoga County Prosecutor's Office has no record that it was even informed of the investigation, says spokeswoman Kim Kowalski. Lorain County Prosecutor Gregory White confirms the unit recommended no charges beyond the two in Avon Lake. And liquor control has no jurisdiction over criminal matters, says spokesman Mullins.
In fact, the only state department seemingly interested in looking at the case is the Ohio Department of Taxation. Police reports allege that Lukas and his cronies were charging sales tax and pocketing it, which is a fourth-degree felony, says Robert Bray, acting chief of the department's criminal investigation unit. Police also reported the Fountain Bleau to the state for failing to turn over taxes, according to reports.
For now, at least, no one else is interested. Case closed.