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State rules against Providence in most liquor license appeals, data shows

Target 12

PROVIDENCE, R.I. (WPRI) — Standing outside a fifth-floor hearing room at Providence City Hall last month, an attorney for a Federal Hill nightclub whose patron was murdered said he was sure state regulators would disagree with the city’s decision to shut the business down.

Nick Hemond was correct, at least for now. One week after the Providence Board of Licenses shut down the establishment, Club Seven, the R.I. Department of Business Regulation said the nightclub could reopen under strict conditions pending a full appeal.

It was the 51st time in the past five years that the DBR ruled in favor of a club or bar rather than the city of Providence in a liquor license appeal, according to a Target 12 analysis of DBR decisions dating back to August 2014.

In fact, during that period DBR ruled two-thirds of the time in favor of an establishment by either staying, overturning or reducing a punishment from the city licensing board. The department upheld the licensing board’s decision one-third of the time, according to Target 12’s review.

The cases range from outright closures to liquor license suspensions or fines. The decisions often stemmed from violent incidents in or around the establishments, including fights and shootings.

In the Club Seven case, the licensing board’s chairman said the establishment had been “indirectly causal to a brawl, two shootings and a murder” during the short time it had been open on Federal Hill. But the state’s DBR hearing officer, Catherine Warren, wrote a week later: “there is no link either directly or indirectly between [Club Seven] and the tragic fight.”

The deadly beating and stabbing of Stephen Cabral took place in the Walgreens parking lot up the street after both he and the suspects left Seven. Police have charged seven murder suspects so far.

“I’m satisfied with the decisions that we make, each and every one,” DBR Director Liz Tanner said in an interview with Target 12. “They’re very hard to make that analysis, but I do think that what’s put in front of us — we are making fair and just decisions.”

Hemond said Club Seven likely won’t reopen soon, even though the state says it can, because owner Anthony Luisi said he lost staff members during the month the club was shuttered. He is still going through with the full appeal, hoping to preserve the liquor license as he attempts to sell the business.

Hemond argues the licensing board didn’t follow the legal process of “progressive discipline,” which involves handing down increasingly severe punishments to an establishment. In this case, the club had multiple prior violations, but never had an actual suspension before getting outright closed. (The club was temporarily closed after a shooting earlier this year, but the board ultimately dismissed the violation after finding no connection between the shooting and the club.)

Hemond has been defending nightclubs and bars in their licensing disputes for years.

“The Board of Licenses, I think, succumbs to neighborhood pressure,” Hemond said. “Succumbs to the political environment. I wouldn’t say political influence. I don’t believe there’s people calling them and telling them what to do by any stretch. But I think they get caught up in the emotion of some of these cases, and they look past the case law.”

During several Board of Licenses hearings about Club Seven, the hearing room was packed with Cabral’s family members holding up photos of the slain 28-year-old. The family, along with the Providence Police and the Federal Hill Commerce Association, were all calling for the nightclub to be shut down.

“The city of Providence relies often on community feedback and public outcry, as is their decision,” Tanner said. “DBR unfortunately just looks at the facts that are presented.”

She pointed out that in the Club Seven case, the city acknowledged that surveillance video from the club contained no evidence that the fight started inside.

“I think they’re afraid to go off of the recommendation of police,” Hemond said. “I think that’s a hard thing to do.”

Providence Mayor Jorge Elorza, a Democrat, argues it was the right decision to shut the club down. He and Public Safety Commissioner Steven Paré issued statements late last week criticizing DBR, writing that the state regulators were “ignoring the concerns of our community” in allowing Club Seven to reopen.

“It’s unfortunate that DBR continues to dismiss the decisions of the Providence licensing board and the recommendations of public safety officials,” Paré said. “It is our job to keep this city safe and to do so we need establishments to be held accountable for their operations.”

City Councilwoman Rachel Miller, who represents Federal Hill, said residents and businesses will have to “live in fear” that Seven will reopen, after feeling relieved that the club was shut down the previous week.

The decisions

In the past five years, the DBR has handed down 109 decisions related to liquor licenses at Providence bars, restaurants and clubs. In 77 of those decisions, the DBR decided for or against the establishment. (The other 32 were either dismissals or orders to remand the case back the Board of Licenses.)

Two-thirds of the time, the DBR ruled against the city of Providence.

Many of the incidents that prompted the cases made headlines at the time: a shooting inside Aqua Lounge, a prostitution sting at the Foxy Lady, a murder outside the $3 bar.

When these incidents happen — often, but not always, on the weekend — the Board of Licenses convenes emergency hearings and can shutter the club or bar for 72 hours. After that, the establishment can be asked to “show cause” why it should not be further penalized for the incident.

At Aqua Lounge on Broad Street, for example, the Board of Licenses shut the club down temporarily in August 2016 after a gun went off inside. The gun was fired towards the ceiling, and a patron was grazed by the bullet as it ricocheted. The licensing board ultimately fully revoked the club’s liquor licenses the following month.

Aqua, represented by Hemond, appealed the decision to the DBR, which overturned the revocation and reduced it to a 60-day liquor license suspension, which included the time the establishment had already been closed. The DBR upheld the revocation of the extended 2 a.m. license.

Aqua Lounge has since regained its 2 a.m. license, though problems have continued. According to Board of Licenses meeting minutes, the club was sanctioned earlier this year for having bottle service and entertainment without a license.

A recent high-profile appeal involved the Providence strip club Foxy Lady, which was shut down by the Board of Licenses last December after three dancers were arrested. On appeal, the DBR stayed the decision and allowed the club to reopen without using the VIP area. The club ultimately settled with the city this past June, agreeing to terms to stay open permanently.

“The volume of incidents that involve violence are increasing,” Tanner said. She said DBR used to hear more appeals related to underage drinking or bottle service, not shootings and stabbings.

Tanner said she could only speak to her year-and-a-half tenure at the helm of DBR, not the full five years that Target 12 reviewed. But she praised Board of Licenses Chairman Dylan Conley, who started around the same time as she did.

“I have seen a dramatic change in what they’re presenting us,” she said. “It’s a far more thoughtful process.”

A call for change

Elorza said the DBR’s tendency to rule against the city has been a “constant frustration.”

“We shut down a place that’s dangerous, and it just gets reversed through DBR,” Elorza said during a July taping of WPRI 12’s Newsmakers. “It’s people who aren’t from Providence, making decisions for Providence.”

He criticized the fact that DBR hears appeals “de novo,” which means they are essentially re-trying the case from the beginning rather than factoring in the city’s decision.

His administration pushed for a bill in 2018 that would have changed the process to be more similar to appellate courts.

“There should be deference to the facts that are established at the local level,” Elorza said. “Then, determine whether we applied the law properly.”

Tanner said she supported the legislation at the time. It passed the state Senate, but did not make it through the House.

House spokesperson Larry Berman said the chamber’s leaders believed the bill needed a more independent review of the city licensing board’s decision.

“The House believed that you must have a meaningful appellate process set forth when dealing with a political body,” Berman said.

Steph Machado (smachado@wpri.com) covers Providence, politics and more for WPRI 12. Follow her on Twitter and on Facebook

Tim White (twhite@wpri.com) is the Target 12 investigative reporter and host of Newsmakers for WPRI 12 and Fox Providence. Follow him on Twitter and on Facebook

Copyright 2019 Nexstar Broadcasting, Inc. All rights reserved. This material may not be published, broadcast, rewritten, or redistributed.

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