Exclusive: Special prosecutor investigating allegations against Monarch Beverage

A special prosecutor has been appointed to look into allegations that Monarch Beverage, the state's largest beer distributor, illegally funneled more than $1.5 million in campaign contributions to some of Indiana's most powerful elected officials.

Former Indiana Inspector General David Thomas has been appointed to review allegations by Monarch's competitors that the company passed the money through a small limited liability company in an effort to skirt limits on corporate campaign contributions.

In a Dec. 14 letter to Indiana Beverage Alliance President Marc Carmichael, who filed the complaint, Thomas wrote that he had "requested and received confirmation from the Indiana State Police that they would conduct an investigation."

"I will be unable to draw any conclusions as to what action is necessary until their investigation is complete and I have had a chance to review it," Thomas said. "I do commit now, however, that I will review their findings very carefully."

The investigation comes after an IndyStar story last year highlighted the allegations. At that time, Monarch CEO Phil Terry said the company and its affiliated promotional company, Vision Concepts LLC, did nothing wrong. He declined to comment for this story.

It's unclear who appointed Thomas as a special prosecutor in the case. He declined to comment for this story.

But Carmichael, whose organization represents smaller beer distributors that compete with Monarch, said he asked Marion County Prosecutor Terry Curry to investigate last summer after growing frustrated with months of inaction by the Indiana Election Commission.

A spokeswoman for Curry declined to comment about his office's involvement.

State Police spokesman Dave Bursten would not confirm or deny the investigation, but Carmichael said he had been in touch as recently as last week with a detective from the State Police Organized Crime and Corruption Unit.

The probe could send tremors through Indiana's political world.

Complaint: Monarch Beverage improperly funneled campaign cash

Many of Indiana's largest and most influential corporations have affiliated limited liability companies that contribute to campaigns — including members of Carmichael's Indiana Beverage Alliance.

That's because Indiana's campaign finance laws put strict contribution limits on corporations but not on limited liability companies, which didn't exist when the campaign finance laws were written.

The practice has raised questions about whether such corporations are breaking another law that prohibits companies from hiding the source of campaign cash by giving in the name of another company. It's an issue the Indiana Election Commission has never investigated, much less resolved.

State lawmakers have been reluctant to close the loophole, which benefits many of them.

House Speaker Brian Bosma and the House Republican Campaign Committee that he leads have received more than $200,000 from Vision Concepts over the past 15 years. The Indiana Republican Party has received more than $100,000. Then-Gov. Mitch Daniels received more than $117,000. And Gov. Mike Pence received more than $84,000.

Democrats also have received substantial contributions. Then-Gov. Joe Kernan received $60,000. The Indiana House Democratic Caucus received more than $40,000. And John Gregg, the former House speaker running for governor, has received more than $30,000.

None of those candidates or organizations has been accused of wrongdoing.

The amount of campaign cash flowing from Vision Concepts far exceeds what Monarch, as a corporation, would have been allowed to contribute. In 2011, for example, Vision Concepts contributed more than $300,000 to candidates and political committees. That's more than 13 times the $22,000 cap to which Monarch would have been subject.

Monarch’s bitter fight to sell hard liquor

That steady stream of contributions from Vision Concepts ended abruptly after the Feb. 8, 2015, IndyStar story that highlighted the practice. Since then, the limited liability company has contributed $0 to state candidates.

Carmichael alleges that the large contributions from Vision Concepts were part of Monarch Beverage's tenacious lobbying efforts at the Indiana Statehouse.

The company has tried since 2007 to persuade lawmakers to throw out a Prohibition-era restriction that prevents beer wholesalers from also distributing hard liquor. Indiana is the only state without state-run liquor stores to have such a ban.

Monarch also has taken its argument to the courtroom. The company has spent more than $1 million on five lawsuits against the state's Alcohol and Tobacco Commission in an effort to overturn the law.

So far, none of those efforts has been successful.

Carmichael and his Indiana Beverage Alliance, which represents 19 Anheuser-Busch beer distributors, oppose Monarch's efforts. They fear that Monarch, which distributes Miller/Coors brands, will completely dominate the market if it wins the ability to distribute liquor, too.

"We believe Monarch Beverage set out to violate Indiana election law beginning in 2003 or 2004 so it could make larger contributions than it could as a corporation, in hopes of gaining favor for their desire to distribute distilled spirits as well as the beer and wine they can carry now," Carmichael wrote in a Dec. 28 letter to Thomas.

He has suggested that Monarch purchases promotional products such as T-shirts from Vision Concepts at inflated prices so that Vision Concepts could make contributions on behalf of Monarch.

Terry, who is chief executive of Monarch and Vision Concepts, previously said that Vision Concepts is a legitimate business, not some kind of shell for campaign contributions. It has five full-time employees and sells $800,000 to $3.1 million a year in promotional items and services to customers in the alcoholic beverage industry. He said it has an interest in alcohol policy and enough resources to contribute on its own.

But state lobbying records show that Vision Concepts, which shares an address with Monarch, has never been registered to advocate on alcohol policy or any other issue. And campaign finance experts have said such large contributions from a small company are unusual.

The involvement of State Police and a special prosecutor in such a case is rare in Indiana. Disputes over campaign finance are typically settled by the Indiana Election Commission, a four-member panel with two Republicans and Democrats.

In this case, though, the commission failed to take action for more than nine months, according to Carmichael's June 29 letter to Curry asking him to investigate.

Election Commission Chairman Bryce Bennett blamed the delay on Carmichael. He said Carmichael wanted the commission to subpoena records from Monarch before holding a hearing but noted that the commission can't issue subpoenas except during a public meeting.

"All they had to do was ask for a hearing to issue the subpoenas, and that could have been done," Bennett said Monday.

But in his letter to Curry, Carmichael accused Bennett of twisting his words.

"I found this response to be disingenuous and evasive, and certainly not what one would expect from serious, committed election law regulators," he wrote. "I believe the IED does not want to look into this complaint and continues to look for any excuse not to do so."

If Curry did seek a special prosecutor in the case, rather than handling it himself, it might be because he, too, has received significant money from beer and liquor distributors. His campaign has received at least $20,000 in contributions from the industry since 2012. Most came from Monarch's opponents, but $1,000 came from Vision Concepts.

IndyStar reporter Chelsea Schneider contributed to this story.

Call IndyStar reporter Tony Cook at (317) 444-6081. Follow him on Twitter: @indystartony.