Oregon Liquor Officials Are Accused of Hoarding Rare Bourbon

Bourbon aficionados have watched over the years as Pappy Van Winkle Family Reserve bourbon has become a highly coveted luxury item — a status symbol, one whiskey expert said, akin to a Rolex watch, a Ferrari or a Birkin bag. The version that has been barrel aged for 23 years can sell for more than $5,000 a bottle on the secondary market.

So when an internal investigation, made public this week, found that top officials at the Oregon Liquor and Cannabis Commission had used their positions to procure and purchase hard-to-find bottles of Pappy Van Winkle, some bourbon connoisseurs said they were outraged but not surprised.

“Pappy has become a form of currency and power,” said Heather Greene, the chief executive of Milam & Greene, a Texas distillery, and the author of “Whiskey Distilled: A Populist Guide to the Water of Life.” For those who prize the bourbon and go to extreme lengths to find it, it’s about “the hunt, the kill, the win and then the flex,” Ms. Greene said.

The investigation found that six officials at the commission, which regulates alcoholic beverage sales in Oregon, had abused their positions by diverting bottles of Pappy Van Winkle and other liquor from a state warehouse so that they could buy them in stores. The liquor was intended for the public.

A longtime purchasing coordinator who complained about the practice said that commission managers had for years requested liquor from the “safety stock,” a reserve supply that was kept at the warehouse to replace bottles that broke in transit to restaurants, hotels and liquor stores, the investigation found.

After commission officials put in their requests, the bottles were shipped to liquor stores, usually to one in Milwaukie, Ore., near the office where commission officials worked, the investigation found. Commission officials were notified when the bottles had arrived, the employee said in a report detailing the findings.

Commission officials paid market price for the bottles and, according to their interviews with an investigator, either drank them or gave them as gifts, said Mark Pettinger, a commission spokesman.

Pappy Van Winkle bourbon that had been aged from 10 years to 23 years and Elmer T. Lee Single Barrel — another bourbon made by the same Kentucky distillery, Buffalo Trace — were the items that were “typically requested,” the purchasing coordinator told investigators.

Steve Marks, the commission’s executive director, was among the officials who were found to have procured bottles from the warehouse, the report stated. The findings were previously reported by The Oregonian/OregonLive.

In an interview conducted as part of the investigation, Mr. Marks acknowledged that he had asked for liquor from the warehouse “a few times,” including Pappy Van Winkle that had been aged 23 years, which he understood was rare and in high demand. He said he did not believe that his actions had violated the spirit of Oregon’s ethics laws or state policy.

The commission makes rare bottles of liquor available to the public through a lottery called the Chance to Purchase program. In December’s drawing, 351 bottles were up for grabs, including five of Pappy Van Winkle’s 23-year bourbon. The commission said the chance of winning the right to buy one of those bottles was 1 in 4,150.

In a letter to commissioners dated Wednesday, Gov. Tina Kotek of Oregon, a Democrat, asked that the commission install new leadership and remove the managers and executive leaders “who have taken advantage of their access and authority to benefit themselves.”

“This behavior is wholly unacceptable,” Ms. Kotek wrote. “I will not tolerate wrongful violations of our government ethics laws.”

Governor Kotek added that she had asked Oregon’s attorney general, Ellen F. Rosenblum, to conduct “an independent civil investigation” into the matter and to recommend stronger protocols to ensure the commission follows ethics laws.

Mr. Marks did not respond to an email seeking comment on Thursday, and Mr. Pettinger, the commission spokesman, said that Mr. Marks had declined to comment.

Mr. Pettinger said that all six officials cited in the investigation remained employed by the commission.

Nino Kilgore-Marchetti, founder and editor in chief of The Whiskey Wash, a news site about whiskey based in Portland, Ore., said the allegations were a slap at bourbon buyers who tried to find Pappy Van Winkle by searching in stores, entering the Chance to Purchase lottery or traveling out of state.

“The fact that these high-level individuals have essentially been hoarding these bottles on the side is pretty offensive,” Mr. Kilgore-Marchetti said, adding that it makes bourbon drinkers wonder: “Is this system fixed? Will I ever actually get ahold of one of those bottles and see for myself if it’s worth the hype?”