Wheat Ridge demands return of records detailing billionaire’s stake in liquor giant Applejack
Author: Ernest Luning - May 3, 2017 - Updated: May 3, 2017
Saying the city released records it shouldn’t have, an attorney representing the city of Wheat Ridge is demanding the immediate return of dozens of pages of documents concerning a 2014 liquor license application for a new owner of Applejack Wine and Spirits obtained in March under the Colorado Open Records Act, The Colorado Statesman has learned.
Questions about ownership of the giant retailer — longtime owner Jim Shpall, who retained a 20-percent share of the business after bringing on the new investors, according to the records, boasted a few years back that it’s the “largest single liquor store in the country” — surround legislation introduced Tuesday to allow independent liquor stores to acquire eight additional liquor licenses in coming years instead of the four additional licenses allowed under current law.
Different organizations representing various locally owned, independent liquor retailers have been squaring off all session over the issue.
Opponents of House Bill 1370, which is scheduled for its first hearing Wednesday morning before the House Finance Committee, say the change would dismantle the delicate balance established in last year’s landmark overhaul of the state’s liquor licensing laws, ushering in an era of giant retailers with the ability to gobble up Colorado’s retail liquor landscape.
“HB-1370 seeks to gut this historic compromise and gives mega-store Applejack Liquors and other mega-chains the ability to consolidate and dominate the Colorado market and alter the buyout provisions agreed to in SB-197 that protected Colorado’s small, Mom & Pop liquor stores during this market transition,” the Colorado Licensed Beverage Association wrote in an alert to its members and supporters on Tuesday. “HB-1370 benefits the few at the expense of the many in the last days of the 2017 legislative session.”
The bill — sponsored by state Reps. Faith Winter, D-Westminster, and Larry Liston, R-Colorado Springs, and state Sens. Tim Neville, R-Littleton, and Andy Kerr, D-Lakewood — is merely an attempt to put the state’s independent liquor stores on the same level field as grocery and big-box chains, which will have the ability to acquire 20 liquor licenses over the next 20 years and an unlimited number after that under compromise legislation passed last year, sponsors say.
“I always questioned why are we giving the grocery stores and the big-box stores so much of an advantage over our local, homegrown liquor stores,” Winter told The Statesman. “Why do the Targets and Wal-Marts get to ultimately have an unlimited number of liquor licenses? It didn’t seem right to me. So I wanted to figure out a balance that protected the interests of the little guys.”
Wheat Ridge’s legal counsel says the documents were “mistakenly” released on March 14 to Boulder attorney Bruce Dierking, an owner of Hazel’s Beverage World in Boulder, and contain “confidential information and trade secrets” that would exclude the records from CORA.
The Statesman published a story Tuesday night that references information contained in the records, including operating agreements, purchase documents, loan documents and company bylaws for Applejack and associated businesses, which were part of a municipal liquor license application file maintained by Wheat Ridge. The newspaper obtained the records from another party prior to the demand issued by the city.
According to the records, Applejack is controlled through a series of companies by local billionaire Ken Tuchman, the chairman and CEO of the Englewood-based outsourcing firm TeleTech, and the firm that invests Tuchman’s fortune, Mantucket Capital. (Forbes said Tuchman was worth $1.35 billion on Tuesday, ranking him 1,567th among the country’s billionaires on the magazine’s 2017 list.)
The records show that Tuchman’s Mantucket Capital controls an entity that purchased an 80-percent share in Applejack three years ago, leaving Shpall with 20 percent of the company that had been in his family since 1980. Shpall serves as chairman and CEO of Applejack, according to the records, but Tuchman and Mantucket Capital have control of the company.
First Amendment lawyer and CORA expert Steve Zansberg, board president of the Colorado Freedom of Information Coalition and an attorney who represents members of the Colorado Press Association, including The Statesman, told The Statesman that Applejack and its investors could possibly pursue a claim against Wheat Ridge for releasing the documents when it shouldn’t have but added that any news organizations that received the public records are free to report the information contained in them.
“The First Amendment protects journalists from legal claims of all kinds, including under the trade secrets act, for publishing truthful information that was lawfully obtained when that reporting addresses matters of legitimate public interest and concern,” Zansberg said.
In a letter to Dierking dated April 28, attorney Gerald E. Dahl, a partner in the firm that serves as Wheat Ridge’s general counsel, asks for the immediate return of all documents the city furnished to Dierking on March 14 in response to his Colorado Open Records Act request. “[T]he vast majority of the records provided at the time of your request constitute ‘trade secrets, privileged information, and confidential commercial data’” and should not have been released under CORA, Dahl wrote. He also instructs Dierking to provide him with the names and contact information of everyone who received copies of the records.
Dierking told The Statesman he’s retained counsel to advise him on the city’s demand but added that he’s “unaware of any legal basis for their claims” and hasn’t complied with the city’s demand.
Dierking said he’d grown curious about Applejack’s ownership structure after hearing Shpall testify in favor of another bill before a Senate committee and decided to stop at Wheat Ridge’s city hall on his way home to Boulder to see what the public record contained.
During a hearing before the Senate Business, Labor and Technology Committee on March 14 on Senate Bill 199 — it would have allowed independent liquor stores to acquire an unlimited number of liquor licenses after 20 years but was killed later by another committee — Shpall described Tuchman as his sole partner and “a gentleman who lived about four houses down from me” who “loves wine.”
“And he’s a Colorado resident,” Shpall testified in response to a question about Applejack’s ownership from state Sen. Angela Williams, D-Denver. “I’m a Colorado native. There’s no big, looming force out there as it’s been portrayed sometimes. As I said, he lives four houses from me.” (According to the documents, six other individuals and business entities in addition to Tuchman and Shpall have a small indirect interest in Applejack via some of its parent companies.)
Dierking said Shpall’s testimony “seemed to be at odds with what I had heard the year before” when Applejack had been involved in negotiations on the 2016 legislation. “My personal perception was that he was being evasive and not really candid,” Dierking added.
Shpall and Tuchman didn’t respond on Tuesday to The Statesman’s request for comment.
At the conclusion of an interview with The Statesman on Tuesday, Dierking stressed that he hadn’t “talked about the substance of what’s in the documents.”
The documents released by the city include a memorandum to Wheat Ridge Police Chief Daniel Brennan dated Aug. 27, 2014, reviewing Tuchman’s liquor license application as “a new investor/owner for Applejack Liquor,” as well as the results of a background check on the billionaire.
“Kenneth Tuckman [sic] will own the majority of Applejack Liquor,” the memorandum reads. “The current owner James Shpall was previously back grounded and will now own 20 percent of Applejack Liquor.”
Tuchman passed the background check with flying colors, with just nine traffic tickets showing up over the previous 15 years. None of the references contacted by the city were concerned, with some describing him as “an intensely achieving businessman, a serious leader, tremendous integrity, dependable, good social conscience, good friend, loyal,” and “best business man I’ve ever met, can’t say enough good things about him.” Two of those contacted praised Tuchman’s philanthropy.
The memorandum recommends submitting the liquor license application for Tuchman to the Wheat Ridge Liquor Authority, which subsequently approved it.