‘More lucrative than heroin.’ KY liquor store raids part of sweeping bourbon investigation

A January raid of Kentucky vintage liquor store Justins’ House of Bourbon is tied to a same-day Washington, D.C., raid that found hundreds of potentially illegally transported bottles of Blanton’s, Weller and other premium bourbons.

No charges have been filed in the case. Details are laid out in a report filed in Washington D.C. where district regulators are working with Kentucky, Texas, Pennsylvania and federal alcohol agents on the case.

The case report was obtained by the Lexington Herald-Leader through an open-records request. The case was scheduled to be part of a closed meeting of the D.C. Alcohol Beverage Regulation Administration board on Feb. 8.

The multistate investigation is ongoing; according to the D.C. citation, 11 code violations are alleged, including illegally transporting alcohol into the district and unlawfully obtaining product from outside the U.S.

Treasury detains Blanton’s bottles

According to the report, hundreds of bottles of Blanton’s were placed in “Voluntary Detention” in Washington by the U.S. Department of Treasury, Alcohol and Tobacco Tax and Trade Bureau.

The investigation into Justins’ House of Bourbon began last fall when a Kentucky Alcoholic Beverage Control official contacted a D.C. alcohol investigator about shipments from Kentucky to D.C., informing the investigator that Justins’ had been issued “cease and desist” orders from two states “for illegally shipping alcohol,” according to documents obtained by the Herald-Leader. The states were not named in the report.

What is Justins’ House of Bourbon?

Justins’ House of Bourbon has a store in Lexington at 601 W. Main St. and another in Louisville at at 101 West Market St.

Justins’ also has been licensed for Internet sales in Washington, D.C., which allows retailers to sell alcohol to consumers through websites for delivery only, without a store open to the public.

Online alcohol sales were made through the website Bourbon Outfitters with alcohol shipped in and out of Washington, D.C., according to the case report.

All of the stores are owned by Justin Thompson, Justin Sloan and Phillip Lee Greer, a prominent Lexington developer, according to public documents.

Tom Bullock, a Lexington attorney for Justins’ House of Bourbon, declined to comment for this story. Thompson, Sloan and Greer did not respond to requests for comment. They have previously said they are cooperating with the investigation.

Thompson and Sloan also own “The Bourbon Review” magazine but apparently are no longer involved in the day-to-day running of the publication or website. Thompson and Sloan opened the Lexington store, apparently with Greer as an investor, in 2018 after the Kentucky General Assembly passed legislation in 2017 legalizing the purchase and sale of “vintage spirits” not regularly available from regular distributors.

According to the case report, Kentucky ABC agents had visited the Lexington store to buy a bottle and “asked to send it out of state but the owner said he could not do that. The agents proceeded to open the bottle and share it with the owner and a short time later, the owner advised the agents that he could drive the bottle to Washington. D.C. and ship it wherever they like.”

That kicked off an inquiry into Justins’ House of Bourbon’s shipping practices in Washington.

Thousands of bottles of bourbon shipped to D.C.

D.C. officials began investigating Justins’ in early November after Kentucky officials alerted them and learned that in 2022 Justins’ had been importing “large quantities of alcohol” into DC from Lexington including “several 1000 bottles of Buffalo Trace, Larceny, and Weller Reserve,” according to the D.C. case reporter.

Days later, the investigator learned, Justins’ was planning to import more bourbon: 620 bottles of Blanton’s.

On Nov. 10, 2022, D.C. investigators visited Justins’ House of Bourbon to conduct a regulatory inspection. While they were there, an employee said that Justins’ House of Bourbon transports alcohol from their retail locations in Kentucky to Washington D.C. to sell online and ship nationally, according to the case file. The employee confirmed that “they are transporting 500 cases of Blanton’s into the District that weekend,” according to the case file.

Questions raised about potential counterfeits

The employee said that the Blanton’s was coming in from The Netherlands. According to the case file, the supplier was MusthaveMalts.com in Utrecht.

When investigators contacted Sazerac, maker of Blanton’s, Weller and Buffalo Trace bourbons, the company said it “has been dealing with a widespread counterfeit of their product and that it was originating from the Netherlands” and has hired a retired FBI agent who is working with federal officials to track down counterfeit bourbon, according to the case report.

A federal investigator, who said an agent already was working in Kentucky on counterfeit Sazerac bourbons, told D.C. officials: “Sazerac product is more lucrative than heroin right now.”

Blanton’s is a super-premium brand of bourbon, known as the original single-barrel release, made in Frankfort at Buffalo Trace Distillery, which also makes Pappy Van Winkle. Coveted by collectors, Blanton’s is hard to find and expensive: Small bottles sell for more than $150; large ones for much more. Rare versions such as Blanton’s Gold may sell for over $1,000 because the scarce whiskey is “allocated” to individual retailers in tiny allotments, sometimes only one case at a time. Because each bottle comes with a unique stopper featuring a galloping horse and letters that spell out “BLANTONS” some fans search years for all eight to display.

What Sazerac told investigators

According to the D.C. case report, Sazerac compliance officer Mary Tortorice told the D.C. investigator that if agents could get a bottle of the Blanton’s “they have a testing facility at the Distillery where they can test the bottle and break everything down inside of it and determine if it is fraudulent.”

When the agent described the scope of Justins’ House of Bourbon’s imports, “Tortorice advised that Sazerac had not sold that many bottles to any person this year and she is certain if it is that much, it may be coming from an illegal bottling operation occurring in Kentucky,” according to the case report.

Sazerac only sells to Republic National Distribution Co. in D.C., not to any individual retailer, Tortorice told the investigator, “and she did not see any large orders being sent to RNDC in the past year.”

While the D.C. case report alleges that Justins’ House of Bourbon improperly transported alcohol, the report does not implicate the store in counterfeiting bourbon.

What the January raids found

On Jan. 17, in coordination with federal, DC, Pennsylvania and Kentucky officials, investigators descended on Justins’ House of Bourbon in Washington, Lexington and Louisville.

Kentucky officials seized an undetermined amount of alcohol. Kentucky alcohol officials declined to release more information about the investigation, including the citation listing alleged violations or a list of what was seized, citing an Open Records exemption for records of “agencies involved in administrative adjudication that were compiled in the process of detecting and investigating regulatory violations, if the disclosure would harm the agency by ... premature release of information to be used in a prospective law enforcement action or administrative adjudication.”

The Cabinet said in January that “ABC received complaints alleging several violations associated with Justins’ House of Bourbon for the improper acquisition, possession, transport, and sale of bourbon, including Vintage Distilled Spirits,” prompting the inspections.

During the raid, the state seized “numerous bottles of bourbon and other items of evidence were seized associated with suspected improper purchasing and sale of these products,” according to Kristin Voskuhl, Public Protection Cabinet spokeswoman.

D.C. officials said in their case report that investigators in Washington found empty packaging for Blanton’s bottles and many cases of alcohol in the warehouse with Kentucky labels.

An employee confirmed that “yes they bring alcohol back and forth and will bring alcohol from Kentucky and send alcohol back to Kentucky.”

They also found cases labeled “France” and “Europe.” Investigators in DC found dozens of cases of Blanton’s, about 600 bottles in all. According to the inventory, there were:

▪ 339 bottles of Blanton’s “Intl” 93 proof 750ml;

▪ 177 bottles of Blanton’s Gold 700ml (a size that is made for the European market and not sold in the U.S., some of the cases were labeled “France” and some “Europe”);

▪ 4 bottles of Blanton’s Domestic 750ml on a shelf;

▪ 4 bottles of Blanton’s 70cl 93 proof (an export product) on a shelf;

▪ 76 bottles of Blanton’s Straight from the Barrel, which had no Surgeon General’s Warning Label;

▪ 180 bottles of Blanton’s Chinese market 50ml bottles;

▪ 263 bottles of Weller Special Reserve 750ml.

Investigations in Kentucky, Texas, Pennsylvania

According to the D.C. case file, Kentucky ABC “seized a large amount of alcohol from Justins’ House of Bourbon retail stores in Kentucky and (is) still going through everything and would advise (the investigator) of what they find.”

Alcohol officials in Texas also told D.C. officials that Justins’ House of Bourbon has been improperly shipping alcohol into and out of that state, which would also be opening an official investigation into shipments to a Texas distillery.

Pennsylvania officials also are attempting to track down where 600 bottles of Weller Special Reserve came from that were allegedly sent from Pennsylvania to Justins’ House of Bourbon what appeared to be a shell company named Starr Liquidation with no liquor, wholesaler or import permits.

Kentucky ABC seizes bottles in raids at Lexington, Louisville vintage bourbon stores