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Alcohol Industry Regulators Will Want To Take Note...

|Includes: Liquid Holdings Group, Inc. (LIQDQ)

In an unceremonious fashion, on an unparticular and ordinary day, the Alcohol Regulatory Industry may experience an operational shift unlike that which has been seen in many years, and it all starts with a day in court.

This is the story of a man that was once ingratiated by the press for creating the fastest growing alcohol distribution company in the country; a man whom in less than a decade built his company from a few cases of liquor sold out of a home garage to an empire operating in 33 US States and 12 foreign countries, a man who created good paying jobs for hundreds of employees and who accomplished many tens of millions in revenues while creating a publicly traded company to grow into all 50 states, a man who was suddenly and almost instantly stopped in his tracks.

C. J. Eiras, the former CEO of the now defunct Liquor Group was unexpectedly arrested in 2012 for 70 Felony counts including criminal tax evasion and bootlegging, and was burdened with a bond to get out of jail set at $2.25 Million Dollars, a bond that is many times more than that set for accused rapists, child molesters or even murderers. To add insult to injury, the press gobbled up the story, as it was spoon fed to them by the powers that be. The national press wrote newspapers, magazine articles and even produced whimsical "American Greed" stylized stories about a modern day Gangster Bootlegger, one whom was nefariously operating a criminal enterprise network with evil lair facilities spread across the country that would make even Al Capone green with envy.

Elliot Ness turns into Hellova Mess.

Well after the dust settled, a completely different picture emerged.

The Special Prosecutor selected to handle the case spent 16 months deliberating over the "evidence" of wrongdoing by Eiras, and in the end publicly stated that there was no evidence to substantiate any of the claims made by the State of Florida Alcohol Beverage & Tobacco Division (NYSE:ABT). Well that in itself is disastrous for the State, however when you dig deeper you find that the actual agent in charge of the investigation, one Eugene Baker, has his own history with multiple government agencies of wrongdoings and miss deeds. Baker was actually concurrently being investigated by the Inspector General for the State of Florida while Eiras' case was being deliberated.

It gets worse...

When you dig even deeper to find the agent whom initiated the investigation was actually a former ABT Agent, Leonard Lee, who during his stint at the ABT arrested a Liquor Group manager in Florida for Selling Alcohol without a License, when in fact not only did the manager have his own personal LQS license with Florida, but he was delivering alcohol under the Liquor Group license in Florida, and was actually dropping off a donation of rum and vodka to a charity. The record after this is unclear, but it looks like Lee lost his ABT job after that case was thrown out by the court at the initial hearing, but I digress.

So now Eiras holds another record to add to his illustrious resume of achievements; the record for being arrested with the highest count of Felony Charges under the highest bond request to ever be dropped without any plee bargaining, by any prosecutor, in any state, at any time in the history of the alcohol industry. All of this activity, accusations, arrest, press, presumptions and vindications without a single court hearing ever scheduled on the docket, so how then does Eiras get his day in court?

On February 4, 2016 Eiras filled suit against the State of Florida ABT and Eugene Baker individually, and the ripple effects of this litigation will have State Alcohol Agencies all over the country watching keenly to see just what happens next. Stay tuned.

Disclosure: I am/we are long LIQR.