KENTUCKY ALCOHOLIC BEVERAGE CONTROL BOARD

 

In the matter of:

                                                                       

            David Jennings & Rebecca Scruggs   )                       Case No. 05-ABC-100

            DBA Jen-X Grocery                                )

            347 East 13th Street                               )                       059-B-6445

            Covington, KY 41011                             )                       (05-059-0055-2)

 

 

FINAL ORDER

 

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Introduction

 

This case was brought on for hearing before the Kentucky Alcoholic Beverage Control Board on June 30, 2005, pursuant to an order directing the Licensees to show cause, if any they could, why their alcoholic beverage license should not be suspended or revoked because of alleged violations of:  (1) KRS 243.390 and KRS 243.500(2), False statement in license application; and, (2) KRS 243.500(5), Tax Delinquency.

The full Board was present, Chairman Lavoyed Hudgins presiding.  The Licensee, Mr. David Jennings, was present at the hearing and was represented by counsel, the Hon. William P. Whalen, Jr.  The Hon. David W. Barr represented the Office. 

Findings of Fact/Conclusions of Law

Based upon the testimony and evidence presented at the hearing, the record herein, having considered the arguments, and being otherwise sufficiently advised, a majority of the Board, pursuant to KRS 243.550, hereby makes the following findings:

David Jennings & Rebecca Scruggs, d/b/a, Jen-X Grocery, hold Retail Beer License No. 059-B-6445, for premise located at 347 East 13th Street, Covington, Kentucky.  The premise is operated as a convenience type store.

            Ms. Brandy Shular, a representative from the Kentucky Revenue Cabinet, testified that the Licensees are currently indebted to the Commonwealth of Kentucky, Revenue Cabinet, in the total amount of $479.22.  This amount includes interest and penalties.  Ms. Shular testified that the last time she was contacted by the Licensee was in April 2005.  The Board finds the testimony of Ms. Shular to be credible, and it finds that the Licensee has failed to pay its taxes in a timely manner, in violation of KRS 243.500(5).

            Retail Beer License No. 059-B-6445 was issued to David Jennings and Rebecca Scruggs on August 9, 2002.  This license was issued based upon an application and supporting documents submitted by David Jennings and Rebecca Scruggs.  The Licensees submitted with their application a “Lease Agreement” dated July 1, 2002.  This lease agreement was purportedly signed by “Jackie Jennings,” the purported owner of the realty where the licensed premise is located.  Investigator Dale Cross conducted the original field report and noted no problems with the premise at that time. 

            On January 25, 2005, Investigator Cross was contacted by the ABC and was advised that Ms. Jacqueline Jennings[1], the “Leasee” (sic) on the original Jen-X Grocery application, had called the Office and complained that her signature had been forged on the original lease.  Ms. Jennings learned of the lease as a result of an audit by the Social Security Administration. The Social Security Administration had conducted a routine check on Ms. Jennings and found that she was allegedly receiving $350.00 monthly rental income from the Jen-X Grocery in Covington, Kentucky.  Investigator Cross contacted Ms. Jennings who told him that she did not sign a lease for the premises and that the signature purporting to be hers was, in fact, forged. 

            Investigator Cross then contacted the Licensee, Mr. David Jennings, concerning Ms. Jennings’ signature on the lease.  Mr. Jennings stated he would provide a copy of the lease.  Investigator Cross picked up a copy of a lease at the Jen-X Grocery and noticed some problems on the lease.  The lease provided by the Licensee was titled “Commercial Lease” and was between David Jennings, as the “Lessor” (sic), and Mr. Derrick L. Humphrey[2], as the “Lessee” (sic).  The annual rent was $1.00.  The term of the lease was for five (5) years, but the lease had no beginning or ending lease dates, was not notarized, and was only signed by Mr. David Jennings.  This lease was never filed with the ABC.

            The official ABC licensing file for the Licensee contains an original Lease Agreement, notarized July 1, 2002 between “Jackie” Jennings and David Jennings and Rebecca Scruggs.  Page 1 of the Lease Agreement, line 1 has the names David Jennings, Rebecca Scruggs whited-out, and “Jackie” Jennings printed over the white out.  The term of the Lease Agreement was for a period of five (5) years beginning July 1, 2002 and ending July 1, 2007, monthly rent payable at a rate of $350.00 per month.  The Lease Agreement was notarized but the notary public’s name and signature were not legible.  Ms. Jacqueline Jennings testified the signature on the Lease Agreement was not hers. 

            Ms. Jacqueline Jennings testified that she originally purchased the property at 347 East 13th Street, Covington, Kentucky, in June 1998.  Ms. Jennings individually purchased property from James R. Wood and Linda L. Wood through a Warranty Deed dated June 5, 1998, and notarized by David Drake on the same date.  The Warranty Deed was filed with the Kenton County Clerk’s Office on the same date.  Mr. John C. Jennings’ name was not on the Warranty Deed. 

            Ms. Jennings knows Mr. David Jennings (her ex-brother-in-law), but does not know Ms. Rebecca Scruggs.  Ms. Jennings acknowledged that she filed a complaint with the Office in January 2005 regarding her forged signature on documents submitted to the ABC by David Jennings and Rebecca Scruggs.  Ms. Jennings testified that Mr. Otto Asaosula with the Tax Department, Social Security Administration, conducted an audit on her account and notified Ms. Jennings that their records showed that she was receiving $350.00 monthly rental income from the Jen-X Grocery premises and that her monthly check was going to stop. Mr. Asaosula also told Ms. Jennings that she owed back taxes on the property.  Ms. Jennings testified that she did not sign the Lease Agreement that is on file with the Office and she has never leased or sold the premises to David Jennings and Rebecca Scruggs.  Ms. Jennings testified that Mr. John Jennings told her that he personally signed her name to the lease.  Mr. John Jennings was in jail at the time. Ms. Jennings testified that when she found out about the Lease Agreement, she contacted the ABC and a copy of the Lease Agreement from the licensing file was mailed to her. 

             Ms. Jennings provided a copy of a Warranty Deed, dated June 5, 1998, wherein Ms. Jennings purchased the property at 347 East 12th Street, Covington, Kentucky, from James R. Wood and Linda L. Wood, in return for $36,000.00.  The Warranty Deed was properly signed in front of Mr. James Gray, Notary, and recorded. Ms. Jennings testified that she executed a Quitclaim Deed on August 26, 2004 to sign the property over to Mr. Derrick Humphrey.  She signed on page 2 of the Quitclaim Deed.  The Quitclaim Deed was undated, but was notarized on August 25, 2004 by Mr. Bill Whalen, David Jennings’ counsel.  The Quitclaim Deed had not yet been filed with the Office of the Kenton County Court Clerk.

            The Board finds the signatures of Jacqueline Jennings on the Warranty Deed of June 5, 1998 and the Quitclaim Deed notarized on August 25, 2004 are true and identical.  The Board further finds these signatures do not match the signature of “Jackie Jennings” on the Lease Agreement of July 1, 2002 filed with the ABC by the Licensees. 

            Ms. Jennings produced her Ohio Drivers License and copies of her employment timesheets showing that she always prints her name instead of writing it in cursive.   Ms. Jennings testified that the printed name of Jacqueline Jennings on the Quitclaim Deed was her signature and the signed name ‘Jackie’ Jennings on the Lease Agreement was not her signed signature.  The Board finds Ms. Jennings’ testimony very credible and accepts the same.

            David Jennings testified before the Board.  When Mr. Jennings was asked about the signatures on the Lease Agreement, Mr. Jennings testified that his brother, Mr. John C. Jennings (while incarcerated), asked him if he wanted to lease the Jen-X Grocery.  David Jennings testified that he prepared a lease and that he and Ms. Scruggs signed the lease, and he then personally delivered the lease to his brother.  David Jennings admitted that, at that time, the purported signature of Ms. Jennings had not been affixed to the lease.  David Jennings testified John Jennings signed his wife’s name to the lease and had someone at the jail notarize it.  When asked if John Jennings signed Jacqueline Jennings’ name to the lease, in his presence, David Jennings abruptly changed his testimony.  David Jennings then testified that he mailed the lease to his brother and that it was mailed back to him with Ms. Jennings signature affixed.

            David Jennings testified he had never seen Jacqueline Jennings’ signature before and didn’t know the signature on the lease was not that of Jacqueline Jennings.  Nonetheless, Mr. Jennings testified that he sends the $350.00 monthly rent to John Jennings’ girlfriend, “Kim”, who in turn gives the money to John Jennings.  John Jennings was not a party to the lease and was not an owner of the real property.

            The Board finds David Jennings’ testimony to not be credible.  The Board finds David Jennings knew that Jacqueline Jennings did not sign the Lease Agreement.  The Board further finds David Jennings knew his brother forged, or had forged, his wife’s name to the lease.  The Board further finds David Jennings knew these facts when he filed his original application.  The Board finds the Licensees have violated KRS 243.390 and 243.500(2).

            The Board is authorized to examine business relationships to determine whether they are a sham designed to subvert public policy or circumvent regulatory obligations.  Commonwealth of Kentucky, Natural Resources and Environmental Protection Cabinet v. Neace, 14 S.W.3d 15, 19 (Ky. 2000).  As the court explained in Southeastern Greyhound Lines v. Harden’s Adm’x, 281 Ky. 345, 136 S.W.2d. 41, 44 (1940), when one is but the “alter ego of another, or but a conduit through which one operated as by way of pretense of deceit, or in the perpetration of a fraud, the courts will look through the fiction and place responsibility where it belongs.”

            The hearing in this matter provided the Board with much information and knowledge so as to better understand and evaluate the business and personal relationship between Ms. Jacqueline Jennings and Mr. David Jennings and Ms. Rebecca Scruggs.  There is no business relationship between Jacqueline Jennings and the Licensees.  Based upon testimony and evidence presented at the hearing, the Board finds that the signature of Ms. Jackie Jennings on the Lease Agreement filed with the Retail Beer License application of August 2002 is forged, false and fraudulent.  David Jennings and Rebecca Scruggs have been operating Jen-X Grocery, located at 347 East 13th Street, Covington, Kentucky, as a front for John C. Jennings, who is in jail and therefore unable to have a liquor license in his name.

            KRS 243.500, Causes for which licenses may be revoked or suspended, in pertinent part, provides:

(2)     Making any false, material statements in an application for a license or supplemental license.

                       

            KRS 243.390, Sworn information in applications, given under oath, states in part:

A statement that neither the applicant nor any other person referred to in this section has been convicted of; any misdemeanor directly or indirectly attributable to alcoholic beverages; any violation of KRS 218A.050, 218A.060, 218A.070, 218A.080, 218A.090, 218A.100, 218A.110, 218A.120, or 218A.130 within the two (2) years immediately preceding the application; any felony, within five (5) years from the later of the date of parole or the date of conviction; or providing false information to the department preceding the application;         

 

            The Board believes Mr. John C. Jennings, who was ineligible to hold a retail alcohol license, was always envisioned as the license holder and Mr. David Jennings and Ms. Rebecca Scruggs’ application was filed as an alter ego to Mr. John C. Jennings.   The Board further believes the signature on the Lease Agreement filed with David Jennings and Rebecca Scruggs retail beer license application was not that of Ms. Jacqueline Jennings, and the Licensees are still indebted to the Kentucky Revenue Cabinet. 

            Based upon the evidence and the record herein, and being otherwise sufficiently advised, the Board finds the facts to be as set out in the Order to Show Cause.  The Board further finds that the Licensees’ license should be REVOKED.

Conclusion

            IT IS, THEREFORE, ORDERED that Retail Beer License No. 059-B-6445, issued to David Jennings & Rebecca Scruggs, d/b/a, Jen-X Grocery, be and is hereby REVOKED, effective the close of business on Monday, October 3, 2005.

Appellate Rights

All final orders of the Board may be appealed to Franklin Circuit Court in accordance with KRS 13B.140(1).  To appeal, you should file a petition in Franklin Circuit Court within thirty (30) days after the mailing date of this Final Order.  Copies of the petition must be served upon the Office and all parties of record in this proceeding.  The petition shall include the names and addresses of all parties of record in this proceeding, including the Office.  The petition shall also present a statement of the grounds upon which the review is requested.  A copy of this Final Order shall accompany the petition.

 

 


SO ORDERED this the _________ day of _______________, 2005.

                                                                        ALCOHOLIC BEVERAGE CONTROL BOARD

 

 

                                                                        _____________________________________

                                                                        LAVOYED HUDGINS

                                                                        CHAIRMAN

 

                                                                        _____________________________________

                                                                        STEVEN A. EDWARDS

                                                                        DISTILLED SPIRITS ADMINISTRATOR

 

                                                                        _____________________________________

                                                                        JOHN C. BARTON

                                                                        MALT BEVERAGE ADMINISTRATOR

 

                                                                       

 

 

 

 

 

 

ATTEST:

 

 

_______________________________

ANGELA F. DONAHUE

BOARD SECRETARY  

 

 


SERVICE LIST:

 

CERTIFILED MAIL:

 

Hon. William P. Whalen, Jr.

515 Kluemper Court

Ft. Wright, KY 41011

 

REGULAR MAIL:

 

David Jennings and Rebecca Scruggs

DBA Jen-X Grocery

347 East 13th Street

Covington, KY 41011

 

Thomas Schonecker

City ABC Administrator

638 Madison Avenue, 4th Floor

Covington, KY 41011-2298

 

Ms. Brandi Shular

Enterprise Collections Branch 
Division of Collections
P. O. Box 491
Frankfort, KY 40602

 

Investigators Cross, West

 

Files

 

 



[1] Ms. Jacqueline Jennings had been married to Mr. John C. Jennings, David Jennings’ brother.  Ms. Jennings and John C. Jennings were divorced on October 5, 2004.

[2] Mr. Derrick L. Humphrey is the son of John C. Jennings, ex-husband of Jacqueline Jennings.