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(Scott Sommerdorf I The Salt Lake Tribune) Former Utah liquor-control director Dennis Kellen resigned earlier this year after audits revealed that the liquor department, under his control, failed to get competitive bids and then paid premium prices for supplies, equipment and services provided exclusively by Flexpak, a Woods Cross-based company owned by Kellen’s son.
No charges against ex-Utah liquor bosses named in audit
Probe » AG’s office finds no evidence of intent or personal gain in their actions.
First Published Dec 07 2012 03:00 pm • Last Updated Apr 08 2013 11:32 pm

Former state liquor-control bosses Dennis Kellen and Earl Dorius will not face charges connected to their business dealings while directing the Utah Department of Alcoholic Beverage Control, prosecutors said Friday.

Legislative auditors had called for a criminal probe of Kellen, whose department did business with his son, and Dorius, who acknowledged accepting free dinners from a liquor licensee.

At a glance

Investigation ends

Dennis Kellen » Former liquor director resigned last year amid allegations his department did business with Kellen’s son

Earl Dorius » Ex-liquor division director resigned in March after reports surfaced he accepted free dinners from a licensee

Prosecutors » Say men’s actions were contrary to the public interest but not criminal

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Prosecutors said that although the actions were not in the public’s interest, investigators found no evidence of criminal intent or that either man personally profited from the transactions during their tenure at the agency that oversees the state liquor monopoly.

Kellen and Dorius were among seven top liquor-control executives who either resigned or were fired in the wake of several audits critical of management practices, administrative perks and bookkeeping irregularities at the department, which has annual operating revenue of more than $320 million.

"While the degree and magnitude of disregard for standard accounting procedures or best-business practices was egregious and appalling, there is insufficient basis to conclude that any employees of DABC intentionally caused or received personal gain for any person," said Chief Criminal Deputy Kirk Torgensen. "Sloppy bookkeeping and lax procurement procedures are certainly contrary to the public interest, but are not crimes in this case."

A single investigation of the embattled department is continuing, this one involving the privately run liquor outlet in the Ogden Valley town of Eden. The store operator left $300,000 in outstanding debts to the state after the outlet was shut down. Auditors faulted the DABC for continuing to ship liquor to the outlet for several months, despite the store’s mounting bills. The outlet was closed in July 2010, and has not reopened.

Constance White, a member of the board that oversees the DABC, said the end of the criminal investigation signals "a new day for the department. We all want to learn from past experiences, and we are attempting to put into effect the recommendations of the legislative auditors. We’re moving forward."

Through spokeswoman Ally Isom, Gov. Gary Herbert said "we are confident that statutory changes passed by the Legislature have put in place safeguards to ensure DABC employees follow state law and policy." Among the changes, the DABC board has been expanded from five to seven members — although one slot remains open because of disagreements between the governor’s office and Senate leaders.

Sen. John Valentine, R-Orem, said he was satisfied with prosecutors’ findings. He added he has met with recently appointed DABC director Salvador Petilos and other new top executives, "and I’m impressed with their willingness to adhere to state laws and the spirit of state ethics laws."

In August 2011, Gov. Herbert had called for Kellen’s resignation after audits revealed that the liquor department, under his control, failed to get competitive bids and then paid premium prices for supplies, equipment and services provided exclusively by Flexpak, a Woods Cross-based company owned by Kellen’s son.

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Kellen also could not be reached for comment Friday, and son Brian Kellen did not return a telephone call.

Flexpak has received more than $456,000 in payments from the state since July 2008, according to records. That includes more than 250 purchases from Flexpak since July 2009 for just under $1,000 each, including, in some instances, three or four payments a day, which could have been a violation of state purchasing law, auditors said.

Under Utah law, agency directors have discretion to make purchases under $1,000 without getting other quotes or bids.

Kellen, 70, had been the DABC’s deputy director for 32 years before being appointed director in 2007.

Compliance director Dorius, 65, resigned in March amid reports that he accepted free dinners from a licensee who owns eight establishments, each holding a different liquor permit. Dorius did not return a phone call Friday for comment.

Assistant Attorney General Scott Reed said investigators failed to uncover evidence that Dorius gave special consideration to the friend who had given him the dinner gift cards. The two men had known each other for years, said Reed, and the gifts came during times of a death, marriage or holiday.

Before joining the department 22 years ago, Dorius was best known for prosecuting murder cases as an assistant attorney general, including that of convicted killer Gary Gilmore, who in 1977 became the first person executed in the United States a decade after the U.S. Supreme Court effectively put death penalty statutes on hold.

Dorius also contested the appeals of Pierre Dale Selby, executed for his 1974 involvement in the brutal murders of three people inside the Hi-Fi Shop in Ogden.



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