David Trone’s Path to Business Success Included Three Arrests Involving Disputes with State Authorities

District 8 congressional candidate says he was "absolutely" aware past legal tangles could become an issue in campaign

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David Trone, pictured at one of his original beer retail stores, was arrested three times in Pennsylvania for dealings related to his business

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Just weeks before his surprise announcement in late January that he was running for the District 8 congressional seat, Total Wine & More co-owner David Trone and his wife, June, made one of the largest donations ever to the American Civil Liberties Union. But the $15 million gift, intended to promote reform of the criminal justice system, was more than simply another instance of generosity by a wealthy couple with an adopted pet cause.

The Trones “know firsthand how the judicial system can run roughshod over the rights of law-abiding Americans,” ACLU Executive Director Anthony Romero said in announcing the gift.

The story dates back 30 years, when Trone leveraged his pursuit of a master’s degree in business administration at University of Pennsylvania’s Wharton School into the opening of several retail outlets in the Pittsburgh area, selling beer at a discount. Over the next decade, Trone was arrested three times, as he butted heads with state authorities in Pennsylvania on issues related to his business.    

In the end, the charges against him were dropped. But for Trone—who recently said he would spend “whatever it takes” to win election to Congress—vindication in his early business career came at a high personal as well as financial cost.

“I have no recollection of what the total [legal] bills were: It was millions and millions,” Trone said in a recent interview. “We ultimately paid everything.”

He added: “The personal cost way outweighs the financial cost—the personal cost of losing relationships with good people we had known for many years…when they were intimidated and threatened by the government.”

So far, Trone’s record of legal scrapes with state regulators has not been injected into the congressional campaign; two of his leading rivals late last week sidestepped questions on whether it should be a matter of concern to voters. But Trone acknowledged that this part of his past—the subject of continuing media coverage in Pennsylvania and other states in the intervening years—had factored into his deliberations over whether to be a candidate for public office.

“Competitors have tried to use [it] against us all over America,” Trone said, as his business has sought to expand the Total Wine & More enterprise into additional states.   

Months before his May 1985 graduation from Wharton, Trone, 29 at the time, moved to open several Pittsburgh-area outlets—operating under the name Beer and Pop Warehouse and, later, Beer World—with the stores owned by family members and friends. It was a means of getting around Pennsylvania law that barred an individual from owning more than one retail outlet selling beer. According to Trone, he operated a consulting firm that earned fees from these various stores, handling a variety of financial and marketing tasks along with negotiating discounts for the stores from beer distributors.

As these stores were opening, they benefited from a coincidental regulatory change by the Pennsylvania Liquor Control Board, rolling back restrictions against advertising of beer prices. “We advertised the price of beer like crazy, and business for us went through the roof,” Trone recalled. “But all the competitors were ballistically upset.”

The competition, a powerful association of so-called “mom and pop” smaller package stores, lobbied successfully for a 1987 law that reinstated the ban on beer-price advertising. (That law was overturned nearly a decade later by a related U.S. Supreme Court ruling.) And, according to Trone, the mom and pop stores and their allies didn’t stop there.

“They spread rumors that we were part of the Philadelphia Mafia,” he chuckled. “Well, I only lived in Philadelphia for two years—at Wharton. My family is Lutheran, my wife is Jewish.”

Around this time, the Liquor Control Board’s enforcement officers were merged into the Pennsylvania state police, “and these liquor control officers [were] being told by the people they’ve been regulating for 20 years, the mom and pops, that ‘the guys from Philadelphia’ are bad people and doing something wrong,” Trone said. “So they began to do a series of investigations of price advertising for beer.”

While those investigations never resulted in charges against Trone or his client stores, Trone was arrested in 1989 for negotiating quantity discounts on behalf of the stores. A second arrest that year stemmed from a separate set of charges that Trone’s business model was circumventing state transportation regulations.

The latter charges were dismissed by a judge after state authorities requested repeated postponements of the case. And the Allegheny County district attorney ultimately refused to prosecute the quantity discount allegations, citing the state Liquor Control Board’s own policies.

“The funniest thing was that the Liquor Control Board had in writing a statement that they encouraged quantity discounts for [the board] to buy wine and spirits for less,” said Trone, noting that wine and spirits—unlike beer—are sold only in state-owned stores in Pennsylvania. The liquor control officers, he said, had “misinterpreted the rules and regulations.”

But Trone’s biggest legal challenge came with a third arrest in 1992, when a grand jury in Dauphin County brought 23 counts against him, ranging from tampering with public records to criminal solicitation. The charges arose from an investigation by the then-state attorney general, Ernest Preate, alleging that Trone, through his consulting firm, owned multiple beer retailing stores, in violation of state law.

“The reality is that I owned no stores,” Trone said. One store was owned by June Trone, who was charged with nine lesser counts in the indictment. Another store was owned by David Trone’s brother, Robert, now co-owner of Total Wine & More; he was charged with a single count.

According to Trone, the day after the charges were brought, a deputy state attorney general called Trone’s attorney and offered to drop the charges against Trone’s wife and brother if he agreed to plead guilty to one count. “We talked about it and told them they could drop dead, because when you’re right, you’re right, and we weren’t going to bend for anyone,” Trone said.

The attorney general’s office then sought leverage by summoning owners of the other retail stores who were clients of Trone’s firm, DJT Consulting, before the grand jury; in addition to the stores owned by Trone family members, several others were owned by friends and associates. “A number of them, on the advice of their attorneys, said ‘I don’t want to be next’,” Trone recalled. “And the attorneys said ‘Why don’t you fire DJT Consulting?’ And so, all of a sudden, I got fired [by several stores]. The liquor control people quickly realized that [Trone] doesn’t own those stores because he doesn’t go there anymore, and they don’t pay him. It pretty much gutted their case.”

In 1994, a state judge, Joseph Kleinfelter, threw out 19 of the 23 counts against Trone, suggesting there had been “prosecutorial overreaching” by the state attorney general’s office, according to coverage at the time in the Harrisburg Patriot-News. The office subsequently dropped the remaining counts in return for a payment of $40,000 from Trone to help cover the cost of the investigation. Attorney General Preate resigned a year later, pled guilty to charges related to campaign finance irregularities, and was sentenced to 14 months in prison.

But, in addition to Trone owing millions in legal fees at the time, his legal victory came at the cost of alienation from friends and associates who had fired him in the course of the proceedings.

“I never spoke to those owners or those managers again,” he said. “I helped them build their businesses, had known one of them for decades.” He puts the blame on state authorities, who he said “used government intimidation. It’s big government picking on entrepreneurs and people who aren’t sophisticated in the ways of big government.”

Trone did score a civil court victory against “big government” during this period when he sued the federal Bureau of Alcohol, Tobacco and Firearms.

The ATF, which conducts a permitting process for all liquor stores, had provided the financial records of Trone’s client retail stores to Pennsylvania authorities, who were legally entitled to such information. But Trone said the ATF had violated the law when it gave state officials access to the records of his consulting firm, and filed suit against the agency in federal court.

After a four-day trial, the court ruled in his favor and awarded him $400,000. His attorney was Pittsburgh-based Roslyn Litman, a national board member of the ACLU. Litman’s representation led to Trone’s two-decade-long involvement with the ACLU, and more than $1 million in donations prior to last year’s $15 million gift.

“David Trone confronted a true miscarriage of justice, and I was proud to be his legal counsel and ensure that he and his family did not become victims of our broken system,” Litman said  when Trone’s latest donation was announced in December.      

Trone’s experiences prompted him to decide that he “needed to go somewhere else [other] than Pennsylvania, because this was not a friendly, hospitable environment.” Two stores in Delaware and one in New Jersey that David and Robert Trone opened in the early 1990s were the beginning of Total Wine & More, now the nation’s largest privately owned retailer of alcoholic beverages, with outlets in 18 states.

But the regulatory hassles for Trone persisted in New Jersey—where, in 2002, he agreed to a payment of $200,000 annually for five years to compensate state officials for the cost of a series of investigations of Total Wine & More’s four stores in that state. “We went to them and said ‘What do you think is wrong?’ and we couldn’t get an answer,” said Trone, who blamed his problems on the same factors that he had confronted in Pennsylvania: a close relationship between the so-called mom and pop stores and state liquor control authorities.

Trone depicted the settlement, which cost $50,000 annually per store—for a total of $1 million for the four stores over the five-year period—as a pragmatic move. “Each of the four stores was throwing off a couple of million dollars a year” in profit, Trone said, adding, “We decided it was in our best interest not to spend time dealing with New Jersey. We’ve operated there without a question or phone call [from state authorities] ever since."

His experiences in Pennsylvania prompted a shift to a less confrontational strategy as he moved into other states. “We were young, and we didn’t know any better,” Trone said of the time in Pennsylvania. “We did not have a lobbyist; we never wrote a campaign contribution. We were taken to the cleaners because of our naiveté.”

He added, “So generally what we do now when we enter a new state is hire a lobbyist, hire a great legal team, and go meet the regulators. It’s preemptive, 100 percent.”

Part of this strategy has involved a generous pattern of campaign contributions, often to Republicans at odds with Trone’s personal political philosophy. “We need to be practical, and we need to try and get things done,” Trone said of his contributions. But such donations—more than $150,000 to GOP candidates over a 15-year period—have provided rival candidates with ammunition since Trone announced his candidacy for Congress last month.

So far, however, opponents have not made an issue of Trone’s legal and regulatory hassles in Pennsylvania and later in New Jersey.

When asked if voters should be concerned about Trone’s past legal problems, state Sen. Jamie Raskin, a rival for the District 8 Democratic congressional nomination, said, “Obviously, those of us in public office have to defend our records in public office, and I am running precisely on my record of legislative accomplishment. Those who do not hold public office presumably have to run on what their record of professional service has been.”

Another leading candidate, former Marriott International executive Kathleen Matthews, declined to comment for this story.

Trone said he “absolutely” anticipated the possibility of his past becoming an issue in weighing a bid for public office. “When I decided to run for Congress, I knew this mistreatment my wife and I had gone through 25 years ago by a corrupt attorney general and that has been in the newspapers and talked about in states all over the country…would be potential political fodder for opponents,” he acknowledged.

“But I also knew we’ve been outstanding corporate citizens, philanthropic members of the community,” he said, also citing a Democratic National Committee fundraiser at his Potomac home last year that was attended by President Obama.

“President Obama does not come to your house unless you’re a really good person, unless you have a really good record—because that’s stuff pretty easy to check,” Trone said. “And I’ve been through more background checks than any other retailer in the alcohol business in the country.”

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