This article was reprinted with permission from Virginia Mercury.
A high-level official with the Virginia Alcoholic Beverage Control Authority has filed a lawsuit claiming she was wrongly put on administrative leave from her job this May after repeatedly reporting “millions” of dollars worth of missing liquor inventory to authority executives and Gov. Glenn Youngkin’s administration.
Jennifer Burke, ABC director of retail operations, claims she faced “retaliatory actions” for conduct protected under the state’s whistleblower law, according to a suit filed Dec. 13 in the U.S. District Court for the Eastern District of Virginia.
The case accuses ABC, Chief Retail Operations Officer Mark Dunham and former CEO Travis Hill as having “acted intentionally, willfully, recklessly and maliciously against Burke with utter and conscious disregard of her rights.”
Burke is one of four authority officials placed on administrative leave in connection with a string of embezzlements that occurred in 2022 when employees at seven stores exploited vulnerabilities in the cash register system to pocket thousands of dollars. At one Roanoke store, three employees netted more than $8,000. However, Burke claims there was “no way possible” she could have had any involvement with the incident and was scapegoated in retaliation for her reports about lost inventory.
“They sent me out on administrative leave to try to shut me up about the millions of dollars that they had lost,” Burke said.
The lawsuit is the latest evidence of trouble at the state liquor monopoly, whose leadership has undergone numerous shakeups this year. Hill and Chief Transformation Officer Elizabeth Chu submitted their resignations this September, nearly two months after the authority faced heavy criticism from the Youngkin administration over its rising operating costs and declining profits. Last week, The Richmond-Times Dispatch reported ABC Chief Digital and Branding Officer Vida Williams is also resigning from the authority.
The executive exodus has also caught the attention of state legislators, who told the Times-Dispatch they will be asking questions about ABC’s operations when the General Assembly convenes next month.
Burke is seeking a jury trial for her case. She is asking the court to bar ABC, Dunham and Hill from engaging in retaliation and requesting an order that ABC and Dunham engage in training and provide training to authority employees regarding whistleblower protections. The suit claims Burke is entitled to damages of up to $1 million.
“Virginia ABC needs fundamental changes in oversight and transparency,” said Burke’s attorney, Sarah Robb.
When asked about Burke’s lawsuit, ABC spokesperson Pat Kane told the Mercury, “Virginia ABC does not comment on pending litigation”
‘Millions couldn’t be accounted for’
While assigned to stabilize operations at ABC’s former warehouse on Hermitage Road in Richmond during early 2022, Burke said she and her team discovered $2.7 million worth of liquor missing from the building as well as what her lawsuit calls “financial irregularities,” including a vendor who had been paid double what was owed.
At that point, Burke said all new product shipments were being stored at the new distribution center in Mechanicsville, which she was also tasked with managing as the authority’s temporary logistics director. With pandemic-era liquor demand still booming and product shortages at several stores, Burke said the remaining liquor at the Richmond facility was intended to be sent to fill those gaps.
During her first visit to the site in early 2022, Burke said she immediately noticed the old warehouse still had “product on the conveyor belt — like they literally shut the conveyor belts down one day and then never came back.”
From January through June, she and her team conducted a full inventory count of the warehouse — the first done in seven years, according to Burke.
“When all that was done,” she said, “millions couldn’t be accounted for.”
While large inventory losses are typical for standard retail, Burke said $2.7 million well exceeds what is acceptable for states like Virginia that control liquor sales.
“We typically would have so much control in the process and we would count the inventory so often that we would not be vulnerable to losing that kind of money,” Burke said. “But because all of the processes were broken in the warehouse — no audits being done or training being done or oversight being done — we were able to lose that kind of money.”
Burke’s lawsuit says she initially flagged the losses to Dunham on June 29, 2022, but she alleges he never reported them to leadership. After no action was taken, Burke reported the issue to ABC Director of Finance Doug Robinson, whom the suit says told Burke that Dunham had asked for large write-offs to be recorded in ABC’s accounting system and that Hill knew about them.
The suit further claims, “Robinson also confirmed that Dunham had provided him an extensive list of ‘forward buy’ items and ‘one time buy’ items, which are ways that Dunham attempted to hide losses.”
In December 2022, the suit says Burke reported the losses to then-recently hired Chief Administrative Officer Dave Alfano, who had oversight of finance, HR and procurement. Alfano allegedly “ignored” her report. In January 2023, she says she reported her findings to former ABC Board Chair Maria Everett, and in March she reported them to the newly appointed chair, Tim Hugo, who began discussions of the losses involving other authority directors.
On April 6, 2023, the suit states Burke “engaged in whistleblowing activity” by reporting her findings on the losses to state Chief Transformation Officer Eric Moeller with Hugo present. In her filing, Burke says that “numerous Virginia ABC Directors met with Hugo and Moeller to voice concerns regarding their respective divisions” and that Hill and Dunham were aware of her discussions with Hugo and reported to the governor’s office.
She says that in retaliation, Hill and Dunham placed her on what members of the C-suite internally referred to as the “hit list,” which Burke said contained employees targeted for firing.
Less than a month later, on May 4, Burke was notified via phone call she was being placed on administrative leave and said she was not given a reason as to why. Two days later, she sent an email to Youngkin, Moeller and Hugo claiming the authority was retaliating against her.
“None of these leaders that are supposed to protect their people have even bothered to respond or investigate,” Burke wrote. “Instead they banned together on Thursday to put myself and my most high performing leaders in retail on Administrative leave telling our store field teams we did not uphold our values of integrity, trust and accountability.”
A string of store embezzlements
According to her lawsuit, on May 8, Burke was called into ABC headquarters, where she received a notice of pending disciplinary action from Dunham that said the authority was investigating whether she had been negligent and failed to follow ABC policy regarding the store embezzlement cases.
Burke said the notice was vague; a copy reviewed by the Mercury accuses her of not following up with an acting director “to figure out the nature of the theft and risk to Virginia ABC” after both she and the director were informed on June 1, 2022, of the embezzlement of $8,163 at the Roanoke store.
The notice also cites a later embezzlement of $17,833 that was conducted using the same method as the Roanoke theft, stating that Burke “after 06/01/22 did not follow-up with the acting Director … to confirm action was taken to prevent further incidents.”
However, Burke’s lawsuit claims she “had no responsibility for retail operations during that time” since she was on her temporary assignment as logistics director and was working in the warehouse. She says she “launched a full and complete investigation” into the thefts after learning about them on Feb. 8 this year.
After the meeting, Burke said two authority enforcement agents followed her home to take back her state-issued laptop and car.
A September 2022 internal audit done by ABC found the system vulnerabilities that allowed the store embezzlements came to light in spring 2022, when a regional manager contacted ABC officials about the Roanoke employees’ embezzlement. Burke is not mentioned in the report, and senior authority officials said they weren’t aware of it until February 2023, six months after it was published — a claim Hugo said in June he found “perplexing.”
Burke said she was questioned on March 9, 2023 by Alfano and Director of Human Resources John Singleton about her involvement with the store theft cases. Three other ABC officials who worked with Burke, whom she said had no involvement with the embezzlements, were also questioned and later put on administrative leave for similar reasons.
“Everyone claims that [the audit] never got to them until they decided to use it as a reason to put all of us on administrative leave after we blew the whistle on them,” Burke said.
In June 2023, ABC issued a press release stating that the authority’s inventory losses “compare favorably to the overall retail market.” In response to questions about the issue from the Virginia Mercury this June, ABC officials said they couldn’t provide a detailed breakdown of inventory losses, despite a presentation to the ABC Board of Directors and authority documents indicating ABC tracks that data.
Continued retaliation and warehouse issues
Burke’s administrative leave ended in early July, and on July 5 she returned to the authority as director of retail operations. She said she received no documentation indicating she was found guilty of any wrongdoing or that she would be facing disciplinary action.
Nevertheless, Burke said leadership “effectively demoted me without taking away my title or money.”
“I’m no longer allowed to make decisions within the retail division at all,” Burke said. “Yet I am still held accountable … for the multi-millions of dollars that we are required to turn over to the state.”
Now, Burke said she works double the amount of hours every week because she has to get written permission from Dunham or Singleton every time she needs to access basic documents necessary for her job. She said the authority has not acknowledged the millions in lost inventory.
Burke said problems at the Mechanicsville distribution center remain. Most notably, she said the authority still cannot determine the exact amount of product that is leaving the center because the scale responsible for weighing shipments has been broken for over a year.
“If I work in the warehouse and I slide a bottle out of the box and then tape it back up, the scale is supposed to catch that because the box does not weigh what it’s supposed to when it comes across the scale,” Burke said.
The broken scale can also lead to losses for vendors, whom Burke said aren’t paid for their product until ABC submits a record indicating it was shipped from its warehouse to a store. For example, if a vendor sends a case of 10 bottles to the warehouse but only nine bottles are shipped to a store, the vendor only gets paid for nine bottles, leaving them short. Burke said vendors are aware of the issue but are hesitant to voice their concerns to ABC out of fear their products may no longer be sold in the commonwealth.
“In Virginia, we’re a monopoly,” Burke said. “If you make ABC mad, well, then they just delist you. You don’t get sold in Virginia.”
The Mercury reached out to numerous vendors to ask about potential losses, but none agreed to comment. ABC also declined to comment about Burke’s allegations about continued problems at the distribution center.
Burke said she’s not the only one facing the repercussions of what she calls a “toxic work environment.” She said other employees have become increasingly worried about retaliation, with several considering retiring or moving jobs.
“I think that anytime you walk around the office building and you don’t hear people conversing or laughing or collaborating at all, there’s something wrong,” Burke said. “But that’s what happens now at ABC, because no one wants to talk because they’re afraid they’ll be retaliated against.”
Despite her lawsuit, Burke said she has no plans to quit.
“I’m the director of retail operations, and I am responsible for over 4,000 people that work in retail,” Burke said. “I don’t feel that the right thing for me to do is just leave and let the company think it’s okay for them to treat people this way, because if I’m leaving, there’s 4,000-plus people being treated this way.”
