This is an archived article that was published on sltrib.com in 2011, and information in the article may be outdated. It is provided only for personal research purposes and may not be reprinted.

Invoices released Thursday indicate that the Utah Department of Alcoholic Beverage Control did more business with the son of the agency's deposed director than previously believed, with the bottom line jumping to more than $456,000 from $275,000, from April 2003 through August.

Gov. Gary Herbert has called the transactions in the state-run liquor system potentially "serious violations" of state procurement law, and ordered the audit that brought the new numbers to light.

On Thursday, the agency's board of commissioners met for the first time since director Dennis Kellen was forced by Herbert to resign Aug. 17 amid allegations that contracts with Kellen's son were structured to avoid bids. The board approved the appointment of Commerce Department head Francine Giani as acting director of the liquor agency, but did not discuss the Kellen matter, other than to thank him for his long years of service.

In a later interview, commission Chairman Richard Sperry said that until an investigation into the contracts is complete, "I am withholding judgment. At this point, we do not have all the facts. This is, however, a personal tragedy."

Kellen had worked at the agency for more than 30 years and had been director since 2007. Neither he nor his son has returned telephone calls seeking comment.

State auditors are looking into multiple contracts given to Woods Cross-based Flexpak Inc., owned by Brian Kellen. The invoices released Thursday by Giani show that the majority of the contracts were under $1,000, which is the threshold required by state law to seek competitive bids.

The documents also show that Flexpak received more than $456,00 for warehouse products and services. It's unclear when Flexpak began providing warehouse products and services to the liquor department because the state routinely destroys older documents. The first known payments began in April 2003, about eight months after Flexpak was incorporated.

Payments increased through the years, from about $22,000 in 2003, escalating to $270,000 from January 2009 to August 2011. Products most often purchased were rolls of Stretchflex, commonly used to wrap pallets; rolls of tape; garbage can liners and bags; gloves; hand towels; and packing list envelopes. There are also billings for service and travel.

Giani said outside the board meeting that a sampling of contracts shows that no one at the department signed the invoice orders, a practice she said, "causes me great concern."

One of her first actions as interim director, she said, was to call in a demoralized DABC staff to discuss the investigation.

Giani said she told employees that if they had acted honestly, followed contract protocols and state ethics policies, "you will be grateful I am here. But if you haven't, you will not be working in state government." She will continue to serve as Commerce Department director.

The investigation was launched after unnamed department employees tipped officials. The state has conducted several previous audits of the agency but none focused on contract purchases.

When the allegation reached Herbert, he asked for Kellen's resignation. "There were some potential end rounds around our procurement policy," he said. "Things were not being done according to the spirit and the statute, so it warranted an investigation."

The governor said he wants to know who in the department knew of the contracts, and whether "someone turned a blind eye to what was taking place."

Herbert said he anticipates that the audit will spur discussions among lawmakers to privatize liquor sales.

The liquor department operates on a $30 million budget, while pouring profits into state and local treasuries each year totaling more than $100 million.

Tribune reporter Robert Gehrke contributed to this report.