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TO: Mayor and Councilors
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Date: 4/1/2003 12:00:00 AM
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TO: Mayor and Councilors
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Date:
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Created:
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6/17/2008 10:01:00 AM
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THRU: Isaiah Hugley, City Manager
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FROM: Kay Love, Finance Director
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Subject: Non-Renewal of Jewel's Alcoholic Beverage License
No attachments for this document.
Debra Bennet is scheduled to appear on the public agenda regarding the results
of the acoholic beverage license audit at her restaurant, JEWEL?S, located at
3709 Gentian Blvd. The license is being non-renewed for 2003 because the
establishment does not meet the requirements of a restaurant as defined in
Section 3-1(f) of the Columbus Code of Ordinances. The chronology of events
and audit red flags are listed below for your reference.
Jewel's
Account # 06309001
Chronology of Events
08/20/01 - Restaurant license for Jewel?s (no alcohol) issued to
applicant/owner
Debra Bennett at 3709 Gentian Blvd.
08/27/01 - Brown Bag application for mixed drinks submitted by Debra Bennett
for
Jewel?s, 3709 Gentian Blvd.
08/29/01 - Brown Bag application approved and issued to Jewel?s on a
temporary
basis until their mixed drink alcohol application is
submitted and approved.
10/01/01 - Mixed Drinks alcoholic beverage application submitted by
applicant/owner
Debra Bennett for Jewel?s, 3709 Gentian Blvd.
10/22/01 - Mixed Drinks alcoholic beverage application approved and alcoholic
beverage licensed issued to applicant/licensee Debra
Bennett for Jewel?s, 3709 Gentian Blvd. Location is
conditional under
3-5(d) of the Columbus Code of Ordinances.
01/27/02 - Auditor, Paul Nipper conducted ?90 day compliance audit?. Based on
audit
findings, establishment passed compliance audit. Ms. Bennett
was advised of
audit results of 52% food and 48% alcohol, and that alcoholic
beverage license for 2002 could be renewed.
11/12/02 - Mailed alcohol renewal audit letter for the 2003 year to Jewel?s,
3709 Gentian
Blvd.
12/12/02 - Auditors, Paul Nipper & Howell Cone conducted compliance audit for
renewal of the 2003 alcoholic beverage license at Jewel?s. Ms. Bennett
was present for the audit. Auditors reviewed sales summary sheets and
purchase invoices.
Utilized alcohol distributor reports to compare to information provided by Ms.
Bennett. Indirect method was used due to the discrepancies noted
with the markup of alcohol, particularly beer, which was low,
compared to
the selling price advertised on the establishment?s menu.
Based on the
utilization of alcohol distributor reports and an indirect
method, it was
determined that alcohol sales were not accurately reported.
The audit findings
concluded that food sales were 42% and alcohol sales were
58%.
01/30/03 - Letter sent to Ms. Bennett by auditor Paul Nipper stating that
Jewel?s did not
Meet the 50% food sales requirement and that the Occupation
Tax Section
was recommending the non-renewal of the 2003 alcoholic
beverage license.
01/31/03 - Certified letter sent by Tax Supervisor Yvonne Ivey to Ms. Bennett
stating
that based on the renewal audit Jewel?s was not eligible for a 2003 alcoholic
beverage license.
02/07/03 - Tax Supervisor, Yvonne Ivey & Auditor, Paul Nipper met with Ms.
Bennett
and one of her employee?s in Finance Department Revenue Division office to
discuss audit findings. Ms. Bennett did not agree with the findings because it
did not take into consideration employee theft, additional spillage from a
broken tap on a keg, and special discount nights on alcoholic beverages. This
information had never previously been divulged to the auditors. Ms. Bennett
was asked if a police report was filed for the employee theft and
she indicated that no report was ever made to the police, and that she
did not
know how much alcohol or food was stolen nor how much money was stolen.
02/17/03 - Based on additional information received from Mrs. Bennett on
02/07/03 and
additional information from alcohol distributors, audit
figures were adjusted to
reflect a more realistic ratio of alcohol sales of 62% and
food sales of 38%.
Additionally, the figures were recalculated for an allowance of 20% for
spillage on draft beer, which resulted in alcohol sales of 61% and food
39%.
02/21/03 - A certified letter was mailed to Ms. Bennett stating that based on
additional
information from her, as well as third party inquires, the
establishment did
not meet the requirements of a restaurant and she was not
eligible
to renew her alcoholic beverage license for 2003 at this
location.
03/06/03 - At the request of Ms. Bennett, a meeting was held to discuss the
audit
results. Present were Ms. Bennett; her husband, Jewel Bennett; a friend,
Mr.
Bill Collins; Kay Love, Finance Director; Craig Strain, Revenue Division
Manager; Yvonne Ivey, Tax Supervisor. The results of the audit were
discussed in detail, including the methods of calculation, as well as
the ?red
flags? (see next page) that were noted by the auditors. Ms. Bennett was
again
informed that she could renew her restaurant license, but she was not
eligible
to renew her alcoholic beverage license and should cease selling
alcohol. As of
last week, alcohol was still being served at this location.
03/07/03 - Received sign and survey application on business establishment
named
Jewel?s Restaurant; location - 3709 Gentian Blvd., Suites
4-5-6 from
applicant, Doris Meadows (current manager of Jewel?s). Type
of alcoholic
beverage license applied for - Mixed Drinks, Beer, and Wine on
premise; type of business activity to be conducted ?
restaurant.
JEWEL?S
December 2002 - Audit Red Flags
Food Purchases:
While reviewing food purchases, it was discovered that several large dollar
invoices had been recorded twice on Jewel?s general ledger records. When this
was brought to their attention, no explanation was given as to the double
postings.
Alcohol Markup:
Aggregate alcoholic beverage sales show a markup of 157.82% on beer, 219.15%
markup on wine, and 271.20% markup on liquor. The markups, particularly beer
and liquor, do not accurately reflect the prices advertised on the
establishment?s menu. For example, with the provided sales and purchase
figures, a single can of beer costing $0.70 would retail for about $1.10, which
does not correspond to the advertised prices (regular prices or happy hour
prices).
Staff explained to Ms. Bennett that based on the indirect method used, it was
concluded that she was not reporting all the revenue or income she made from
selling alcohol. It was furthered explained to Ms. Bennett that after applying
the provided markup on alcohol purchases (after accounting for ending
inventory), the revenue reported on her sales summary sheet for alcohol sales
should have been more. Ms. Bennett stated that she was not in agreement with
the auditors? results because:
- She had problems with employee(s) stealing money and inventory.
*Ms. Bennett did not file a police report nor make any indication in her
daily records; therefore, this
statement could not be verified.
* The employee(s) theft was not brought to the attention of
the auditors until after Ms. Bennett was asked about
the discrepancy in alcohol sales reported. During the initial audit that was
conducted on 12/12/02, Ms. Bennett did not indicate to the auditors that the
employee(s) were stealing money and inventory, nor was it documented on any of
the financial documents (sales summary sheets and purchase summary sheets)
given to the auditors.
- There was not a decrease in alcohol purchases during this time. Ms. Bennett
continued purchasing quantities of alcohol, although it could not be determined
why the alcohol inventory was steadily turning over, when the revenue was not
reflecting the inventory turnover.
- Ms. Bennett stated that she had problems with a keg that continuously leaked
for a period of time; therefore, she did not make any money from the leaking
kegs. She also stated that she was not compensated from the Distributor, B &
B, for the problem keg(s).
*Mr. David Lewis, corporate stockholder of B&B Distributor stated that Ms.
Bennett reported the malfunctioning tap on the keg and the problem was resolved
within 15 to 30 days. Mr. Lewis also stated that the company did not replace
the spilled beer.
*If the leakage in the keg(s) was a principal factor in accounting for the
discrepancy in alcohol sales reported, using $147,330.60 as the unaccounted
revenue, the leaking kegs would have cost Ms. Bennett $44,613.19 over the
12-month auditing period. In terms of the number of kegs leaking, appr. 652
kegs would have leaked over the 12- month period. Appr. 54 kegs would have
leaked each month over the 12-month period. Ms. Bennett?s problems with the
leakage occurred over a three-month period and not 12 months. Using a
conservative selling price of draft beer such as happy hour and discount night
prices, which would range from $1.00 to $1.25 per mug, Mrs. Bennett would have
lost between $10,773.40 and $13,466.75 in beer revenue a month (over 12
months) because of the leakage. It does not seem feasible that the keg leakage
justifies the discrepancy in alcohol sales.