The 67-cent felony: A veteran winemaker runs afoul of the ABC

Long before vineyards became agriculture du jour in Virginia, Mike Bowles planted grapevines in 1977,  and he claims he's Albemarle's first farm winery operator. Thirty years later, he wanted to be a pioneer again and hop on the craft-distillery trend to make the Italian spirit grappa from his chardonnay grape leftovers. Instead, he's earned a more dubious distinction as possibly the first person to get busted while applying for a federal distillery license. Under Virginia's Alcoholic Beverage Control regs, that could cost him his license to make wine at all.

Bowles insists he was trying to comply with the hefty volume of federal and state regulations that date from the end of Prohibition, and says he had no idea the eight-ounce sample bottle sitting on his desk when ABC agents came in would lead to a felony charge that could jeopardize his mom-and-pop business.

Moonshiners, he points out, already know how to distill liquor, but the veteran winemaker did not. Bowles wanted to make sure he could do it before investing in a trend noted even in the spring issue of the ABC's Licensee newsletter, which featured "Craft distilleries on the rise." And the federal application required that he provide a step-by-step process.

His son, who was going to be in charge of making grappa for the winery, ordered a still off the Internet, and the sample he made and gave Bowles put the ex-Marine officer in trouble with the law for the first time in his life.

"We're being forced out of business by these people," decries Bowles. "They're living in a 1934 bubble."

Virginia's troubled history with alcohol
For nearly as long as there's been agriculture, farmers have fermented. And since this country's very beginnings, they've distilled leftover grain and corn to make liquor— at least until the Whiskey Rebellion in 1791, when the new federal government's taxation of liquor put a damper on the time-honored tradition.

Well before the 18th Amendment went into effect in 1920, Virginia was ahead of the Prohibition curve. The General Assembly passed legislation in 1914 that allowed a statewide referendum on alcohol, and Virginia officially went dry at midnight on Halloween night, October 31, 1916, becoming the 18th state to do so, according to historian Coy Barefoot.

Distilleries, several hundred saloons, and ultimately six state breweries were shuttered, although some were permitted to stay open as long as they sold alcohol out of state, says Barefoot. And some of the breweries, like Richmond’s Home Brewing Company, switched over to manufacturing “soft” drinks instead of “hard” liquors, he says.

Virginia, of course, never went completely dry, thanks to moonshiners and rum runners. And after the country realized that there was far more organized crime, more illegal stills and speakeasies, and more people killed, maimed or blinded by bathtub gin, the 21st Amendment repealing Prohibition was ratified in 1933.

Because the state had its own alcohol prohibition, the General Assembly called a special session to overturn the ban, and in 1934 created the Virginia Department of Alcoholic Beverage Control to monopolize liquor sales and issue state licenses to sell beer and wine.

The ABC brought in $347 million to state coffers in fiscal year 2012. It operates 343 ABC stores, and employees number 3,296, including 103 sworn officers in its law enforcement division (plus 151 "underage buyers" to sting unwary purveyors), according to August numbers from the agency.

Early in his term, Republican Governor Bob McDonnell tried to privatize the state liquor stores— to no avail, not even getting it on the floor for debate in the House of Delegates, which is controlled by his own party.

Flash forward to June 28, when news of the arrest of sparkling-water-and-ice-cream-buying UVA student Elizabeth Daly at the Harris Teeter in Charlottesville sparked a firestorm after the 20-year-old panicked when surrounded by six plainclothes ABC officers at night and fled, "grazing" two of the agents with her car. Although she apologized profusely when she later realized the window-banging, gun-wielding strangers were law enforcement, she was still arrested, spent the night in jail, and was charged with three felonies for her error.

Mike Bowles, too, has learned that no matter how well-intentioned one is, and no matter how eager to comply, screwing up with the ABC can result in a felony count.

Native son
Lifelong resident Bowles can trace his family tree back to Albemarle's first grape grower. "My great-great-grandmother was Thomas Jefferson's niece," he says.

Bowles, 70, is well informed on the history of wine in Virginia— and in Albemarle. He notes that across the street from his Montdomaine Vineyard is Viewmont Farm, built by Colonel Joshua Fry, who led the Virginia forces in the French and Indian War and who, upon his death in 1754, was succeeded by a young officer named George Washington. The farm was later purchased by John Kluge, and later, when Patricia Kluge embarked on her winemaking venture, Bowles says he sold her grapes.

He attended UVA, and enlisted in the Marines in the 1960s. As a Pan Am pilot, he commuted from Albemarle to LaGuardia.

But he seems most proud of his career as a winemaker. He shows a reporter a scrapbook on the winery he co-founded, Montdomaine Vineyard. On the first page is a photo of Gabrielle Rausse, the renowned winemaker who helped start Barboursville Vineyards and restore Monticello's, planting the first vines, which Rausse had grafted.

"Nobody believed it could be done; Virginia Tech didn't believe it could be done," recalls Rausse of the nascent wine industry in the mid and late '70s.

"[Bowles] spent time in Barboursville to learn about wine— he and his brother," says Rausse. "He was successful."

At its peak, Montdomaine sold 20,000 cases of wine, says Bowles. He opens a bottle of his chardonnay, and notes that it's made in the French style "with the classic Burgundian green apple finish," not the oakier California method.

In 1989, the White House hosted a dinner at Monticello for the 50 governors, and Montdomaine was served, Bowles brags.

"We were the first to grow merlot," he adds.

But by the early '90s, he says, he was burned out. He leased the winery and sold most of his grapes. Last year, he bottled just 75 cases.

And then he had this great idea: to jump on the artisan distillery bandwagon and be the first Virginia winery to make eau de vie from his chardonnay grapes.

The bust
Mike Bowles' path to a felony charge started with some trouble his son had involving marijuana. The Jefferson Area Drug Enforcement Task Force showed up at Alex Bowles' house March 9, 2012, with "guns blazing," says the son.

In the course of that raid, agents spied a five-gallon still, and they tipped off their buddies at the ABC, who showed up with a search warrant. Along with a felony for distribution of pot, for which he was sentenced to three months in jail, Alex Bowles picked up a felony for the illegal manufacture of alcohol.

"I said, before you spend $10,000 on a distillery," recounts Alex of a conversation he had with his dad, "let's see if we can do it." The tiny still was easily obtained off the Internet, he says.

According to the ABC narrative of the arrests, special agents Kevin Davis, who's famous locally for cracking down on art galleries serving wine at First Fridays in 2006, and Drew Covey, the agent who ended up on the hood of Elizabeth Daly's car in the Harris Teeter parking lot in April, went to Alex Bowles' home on March 14, 2012, where they found the incriminating distilling apparatus.

In the course of the agents' investigation, they learned that Alex's father was a licensee of the ABC. The ABC narrative also notes that a "female suspect" told the agents, "Mr. Bowles and his son were preparing to manufacture distilled spirits in a legitimate manner after the process was refined."

That revelation led to a visit to Mike Bowles by not one, not two, but three ABC agents— Covey, Davis, and Senior Special Agent John Craft— on March 16, 2012. In his office in the basement of his home, Bowles freely confessed he planned to make grappa, the agents reported. They noticed several bottles on his desk, some with grappa labels on them, and Bowles told them he was creating test labels and trying out different bottles. He also showed them the application he'd submitted to the Alcohol and Tobacco Tax and Trade Bureau for a federal license.

One bottle containing a clear liquid with no label caught Craft's attention. Subsequent lab testing confirmed that it contained un-aged distilled spirits.

"We're not bootleggers; we're not selling it," Bowles told Covey in a subsequent interview. The ABC report notes Bowles gave a detailed account of where he'd purchased the equipment, how he and his son intended to manufacture the grappa, and that he believed they were on the brink of a new industry, while admitting he'd used "poor judgment" in the experimentation. He applied for the state distillery four days after the agents' visit.

Based on his investigation, Covey charged Bowles with conspiracy to illegally manufacture alcohol, a felony, and illegal transportation of alcoholic beverages.

In August, Bowles pleaded no contest to illegal possession of untaxed alcoholic beverages, a misdemeanor, and the felony charge was dropped. He received a 30-day suspended sentence, two years probation, a $500 fine, and $81 in court costs.

But his troubles with the ABC were not over.

Lack of respect for law and order
What Bowles says he didn't realize when he pleaded no contest to the misdemeanor charge is that any conviction— even a misdemeanor — pertaining to alcohol threatens a license from the ABC. In Bowles' case, that meant not only his state application for a distillery, but also his farm winery license.

As 50 percent owner of the vineyard's Vinum LLC, that's a problem. He can't manage or be employed in wine making with that conviction.

His son faces the same dilemma. "I can't even work as a bartender now," says Alex Bowles, who had planned to make grappa for his dad.

On May 2, Mike Bowles went to a hearing at the regional ABC office in Staunton to defend what Virginia code calls "a lack of respect for law and order" stemming from his police record. He explained to hearing officer Sarah Gilliam that the federal application required the step-by-step procedure that he was going to use to make the grappa, and that's why they were trying to see how the distillation process worked. 

He testified that he didn't know he was violating the prohibition against making distilled spirits, and that it was not his intention to break the law, but rather a misunderstanding of it, according to a summary from the ABC.

The eight-ounce bottle Agent Covey sent to Department of Forensic Science contained 40.4 percent ethyl alcohol, according to a certificate of analysis.

Because he'd pleaded no contest to possession of untaxed alcoholic beverages, Bowles tried to make amends by paying the federal excise tax and calculated the amount he owed on the eight-ounce bottle: 67 cents, which he paid after the fact. 

Hearing officer Gilliam determined that while Bowles' actions were misguided, he did not knowingly intend to break the law. She approved his application for a distillery license.

Within days, the ABC Board in Richmond overruled her.

Disciplinary hearing
On August 6, Bowles appealed the agency's decision in Richmond before the Alcoholic Beverage Control Board, normally a three-person body appointed by the governor, but currently only made up of Commissioner Sandra Canada and board Chair Neal Insley. 

Inside the hearing room, a reporter was told photographs were not allowed during the administrative hearing to protect the privacy of those who've run afoul of the ABC.

The first up was the owner of a convenience store in Fredericksburg, where the ABC just opened an enforcement office in November, according to Licensee. A clerk in his convenience store sold alcohol to someone underage, and the store faced a 25-day suspension of its license or a $2,000 fine.

The owner told the two board members his employee had worked for him for 18 years and this was the first time this had happened— and that the girl had a fake ID. He asked that the penalty be lowered. "I cannot afford it," he said. "I'm going to have to close the store."

Insley pointed out that the fake ID was one not recognized from a foreign government, and he asked the man whether he'd taken the ABC's free training on spotting fake identification. He assured the worried store owner that the board would keep in mind it was his first offense as they deliberated, and the man would be notified in writing in 30 days.

Bowles came to the podium to try to convince Insley and Canada he had not demonstrated a lack of respect for the law. "I got some bad advice from an attorney," he said. "If he had told me I would lose the distillery and farm winery license, I wouldn't have pleaded nolo contendere."

He reiterated that the quantity of illegal booze was small. He said he'd applied for the federal license in January 2012. "We were trying to comply with federal procedure," he said.

"I'm pretty certain in the application process you may not make it," noted Insley.

The chair pointed out how big a deal it is that Bowles had illegal alcohol. "Our people are in peril trying to prevent the activity you were engaged in," said Insley. "We have to take it seriously."

Bowles admitted he'd made a mistake and had paid the 67-cent federal excise tax on the moonshine. And he said he wanted to make revenue for the state.

As he had with the violator before, Insley assured Bowles he and Canada would take that into consideration as they deliberated, and Bowles would be notified in writing in 30 days.

Agency under fire
The outrage over the ABC's heavy handedness in attempting to bust underage beer buyers at Harris Teeter has abated a bit since the Daily Progress broke the story in late June. Even ABC Board Commissioner Canada, the paper reports, has denounced the undercover op: "This whole thing has embarrassed these people who have worked here all these years, all because of the poor judgment of six agents in that one incident."

Reports that the lead agent in charge of the Daly arrest, John Taylor, had been transferred under a cloud to the Staunton office, didn't help either. Nor did reports of a deluxe $750,000 mobile command center.

State Senator Creigh Deeds proposes that the ABC's law enforcement be folded into the Virginia State Police.

House of Delegates Minority Leader David Toscano wrote Insley requesting information about the training and procedures used by the ABC's law enforcement branch and expressed his concern about the apparent "overreaction" of the agents in the April 11 Harris Teeter incident.

Robert Sarvis, the Libertarian candidate for governor, goes further. In an August 5 press conference in front of the ABC store at Barracks Road, he calls for the privatization of ABC stores, and wants enforcement to be handled by state and local police. "I propose that we begin to address the increasing militarization of police tactics, which undermine good relations between communities and law enforcement," he said, perhaps aware of a SWAT-style bust of a fake ID ring in April that shut down Rugby Road and raised questions about the level of force used.

Republican gubernatorial candidate/current Attorney General Ken Cuccinelli and Democratic candidate Terry McAuliffe did not respond to requests from the Hook seeking their positions on privatization of ABC stores and the agency's law enforcement efforts.

"Tragically, the Virginia ABC has become Nucky Thompson of HBO's Boardwalk Empire, with a crew of 120-plus armed agents working the state, looking for potential competitors who would dare get in on their business," Coy Barefoot writes in this week's essay in the Hook. "Our government was not created to sell liquor."

And in an editorial in the Richmond Times-Dispatch in the wake of the Harris Teeter debacle, Libertarian Republican and Charlottesville Electoral Board chair Rick Sincere questions the value of putting such resources into keeping 19- and 20-year-olds from drinking. He notes that only a handful of Muslim countries have a drinking age as high as that of the United States, and says it's time to bring the drinking age back to 18, the age of adulthood.

"A drinking age of 21 infantilizes adults who are otherwise able to serve in the military, marry without permission, enter into business contracts, buy tobacco, vote and run for public office," he wrote.

Mike Bowles just wants to make grappa, and is dismayed that his attempt to do so has gone so far astray.

"I recommend a complete overhaul of the ABC," he says. "Whole regulations need to be overhauled. It's completely out of date."

"My dad is a solid guy," says Alex Bowles. "He has nothing but good intentions. To treat him like a bootlegger is wrong."

"I was a Marine officer," says Mike Bowles. "My son was in the Marines. We're used to hanging tough, but if these stories aren't told, no one knows."

Postscript
Less than a week after Bowles was in Richmond, he got the call that his distillery license had been approved. "It's hanging on my wall now," he says. There's one catch: he's on probation for a year.

But he can now go forward with his craft distillery  that has been on hold for more than a year, and he expects to have his first batch of grappa ready around the end of September. "I can only sell it to the ABC or ship it out of state," he says.

Bowles still is not out of the woods with the ABC, however: His farm-winery license hearing is October 29, and he's facing a 90-day suspension of sales.