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No criminal charges coming in Utah liquor agency scandal

Published: Friday, Dec. 7 2012 2:55 p.m. MST

Dennis Kellen stands in front of a giant storage building at the Utah Alcoholic Beverage Control center in Salt Lake City on April 4, 2005. Criminal investigators starting looking into former DABC executive director Dennis Kellen and licensing and compliance director Earl Dorius after a series of scathing audits initiated by the Utah Legislature last year.

Scott G. Winterton, Deseret News

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SALT LAKE CITY — No criminal charges will be filed against current or former Utah Department of Alcoholic Beverage Control employees after a series of audits found the agency rife with mismanagement.

After an investigation into alleged misuse of public funds, the Utah Attorney General's Office attributed accounting and procurement irregularities to "sloppy bookkeeping."

"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 Kirk Torgensen, chief deputy attorney general.

Criminal investigators started looking into former DABC executive director Dennis Kellen and licensing and compliance director Earl Dorius after a series of scathing audits initiated by the Utah Legislature last year.

One report cited "years of bid-rigging, falsifying financial documentation and artificially splitting invoices in violation of state statue," as well as "inappropriate and potentially illegal" business dealings.

Auditors suggested Kellen be investigated for potentially violating the Employee Ethics Act by steering thousands of dollars in contracts to a company owned by his son. Kellen, who worked had worked at DABC since 1975, resigned in August 2011 under pressure from the governor's office.

Dorius, an attorney, took free meals and gift cards, including one valued at $250, from a friend who owns eight establishments that hold liquor licenses, auditors reported.

A DABC employee for more than 20 years, Dorius resigned in March.

"I am hereby submitting this letter of resignation from the department for the reason that I received gifts from a licensee," he wrote.

Assistant attorney general Scott Reed said investigators thoroughly examined the case to determine if crimes were committed.

It's clear DABC accounting procedures were "horrendous," Reed said.

"This was incredibly lax in poor management, but sometimes that just doesn't equate to crime. It's less than the public deserves, but we can't manufacture a criminal charge just to teach people a lesson," he said.

In light of the audits, state lawmakers restructured the agency earlier this year, including more oversight from the governor's office.

While criminal charges won't be filed against Kellen or Dorius, an investigation into the owner of a contract liquor store in Eden that, according to an audit, lost $300,000 is ongoing. The operator of the store is not considered a DABC employee.

"That guy's still in the mix," Reed said.

Package agencies are privately operated, state contracted liquor outlets located in communities too small for a state store, as well as in resorts and hotels. The Eden location opened after Wolf Creek Resort chose not to renew its contract in 2009.

E-mail: romboy@desnews.com

Twitter: dennisromboy

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