THE VIRGINIAN-PILOT
Copyright (c) 1994, Landmark Communications, Inc.
DATE: Tuesday, November 22, 1994 TAG: 9411220623
SECTION: LOCAL PAGE: B3 EDITION: FINAL
SOURCE: BY ALEX MARSHALL, STAFF WRITER
LENGTH: Medium: 57 lines
Four Waterside nightclubs Legends, Schooners, Il Porto and the soon-to-open Bait Shack - can sell beer, wine and liquor even though one of their founders is a convicted cocaine dealer, the state ABC department has decided.
Hearing officer Susan R. Stevick ruled that Daniel R. Morgan had broken some state rules. They included not notifying Alcoholic Beverage Control of his position as vice president within MZ Inc., the company that owns Il Porto and Schooners.
As punishment, Stevick is requiring that Schooners, a club owned by MZ Inc., must either close for 15 days or close for seven days and pay a $500 fine.
Morgan's attorney, state Sen. Kenneth W. Stolle, who received a copy of the decision on Monday, said he would appeal. The clubs will not have to close during the appeal process, he said.
The clubs had faced a loss of their liquor licenses, but Stevick decided that the state had not proved that Morgan had either misrepresented himself or concealed his criminal record when applying for an ABC license.
Instead, Stevick blamed the state for not being more diligent in its review of Morgan's past. The 1982 drug conviction surfaced only after a city official noticed it during a background check and alerted the ABC.
The clubs occupy most of one side of the Waterside complex, and the city considers them important in its strategy for making the facility successful. In recent years, the Norfolk Redevelopment and Housing Authority has had to help Waterside meet its debt payments.
Morgan was an officer in Waterside Live, the company that owns Legends and the Bait Shack. But Morgan withdrew from the company after the ABC learned in April of his felony conviction. He operated the other two clubs for MZ Inc.
Still undecided is whether Morgan can be involved again with the four clubs, which the owners said they want. Stolle will ask the ABC Board for a waiver on its rules against having felons run night spots to allow Morgan to be involved with the clubs, despite his past.
Stolle described Stevick's decision as basically favorable.
``This is not an indictment of these restaurants,'' Stolle said. ``They are operating perfectly. What happened is that someone didn't file a document they should have three years ago.''
Stevick also ruled that Morgan had not violated ABC rules in telling the public and the restaurant community that he was owner of Il Porto and Schooners, when he was not.
Morgan was an officer in the corporation but not an owner, according to testimony at the ABC hearing. Stevick ruled that the state had not proved that Morgan had violated any specific department regulations in making his claims. by CNB