TGI Fridays booze fraud costs NJ franchisee $500K
A New Jersey TGI Fridays franchisee that swindled customers into ordering pricey top shelf alcohol but instead served them the cheap stuff has racked up a sizable tab of its own.
TGI Fridays franchisee Briad Group agreed to pay a $500,000 settlement to the state Division of Alcoholic Beverage Control – $400,000 in penalties for the violations and $100,000 in reimbursement for investigative costs, officials announced Wednesday.
The Briad Group – which was raided in May as a part of Operation Swill – has also agreed not to contest charges that eight of its restaurants were switching out premium alcoholic beverages orders with less expensive booze.
“Briad’s restaurants were scamming customers by serving them a cheap substitute for what they ordered,” Acting Attorney General John Hoffman said in a statement.
“This unlawful practice took advantage of consumers who were cheated out of what they thought they were purchasing. This fine should send a clear message to every bar and restaurant throughout New Jersey that customers should get what they pay for every time, without exception.”
Operation Swill was part of a yearlong investigation into New Jersey bars and restaurants suspected of disguising cheap alcohol as more expensive brands “in an effort to deceive the customer and increase their profits,” according to a release from state officials.
Some of the bars were allegedly going as far as serving “scotch” that was actually rubbing alcohol mixed with food coloring and passing off dirty water poured into empty bottles as liquor.
Officials said undercover ABC investigators in January and February visited 63 licensed New Jersey establishments and “covertly” took 150 samples of alcohol by ordering and paying for premium brand spirits neat – no ice or mixers.
Operation Swill culminated May 22 with a statewide raid during which more than 100 investigators inspected 29 bars and restaurants and seized 1,000 opened liquor bottles containing 20 brands of spirits.
Thirteen of the establishments raided were Briad Group-run TGI Fridays franchises, from which investigators with the ABC and Division of Criminal Justice seized about 250 bottles of spirits.
Charges were brought against eight of those TGI Fridays establishments, located in West Orange, East Windsor, Old Bridge, Piscataway, Freehold, Marlboro, Hazlet and Linden.
As a part of the settlement, Briad will also through June 30, 2014, employ an Alcohol Beverage Control-appointed monitor tasked with reviewing internal books, records and compensation programs and reporting his findings to the ABC.
The hospitality company is required to make internal changes, putting additional safeties in place to avoid similar incidents in the future, including updating employee training and inventory software.
Each of the eight establishments has been handed down a deferred five-day suspension that will be dismissed if there are no further drink substitution charges by June 30, 2014, officials said.
“Drink substitution threatens the integrity of the alcoholic beverage industry, and retailers, wholesalers and customers all lose because of this illegal activity,” Division of Alcoholic Beverage Control Director Michael Halfacre said in a statement.
“The financial penalty imposed on Briad should serve as a deterrent to licensees, and we are optimistic that the corrective actions taken by Briad will prevent any further deceptive practices.”
The investigation into other establishments targeted in Operation Swill remains ongoing.