Jury awards $1M in whistleblower case to fired state worker running for Iowa auditor

A Polk County jury has awarded the Republican candidate running to serve as Iowa’s taxpayer watchdog $1 million in his wrongful termination case against the state's exclusive liquor wholesaler.

Todd Halbur filed a whistleblower lawsuit in December 2019 against the state of Iowa, the Iowa Alcoholic Beverages Division and its administrator, Stephen Larson. On Friday, a jury awarded Halbur $487,500 in back pay and $512,500 for emotional distress following a five-day trial.

Iowa is one of 18 states that directly controls the sale and distribution of alcoholic beverages, with the division assuming control over the wholesaling of all liquor and wine in the state. The division also regulates and licenses establishments that sell alcoholic beverages in Iowa.

Halbur started working for the state agency in 2015 as a controller/accountant responsible for planning, directing and overseeing the Alcoholic Beverages Division’s estimated $300 million operations, including advising the agency’s administrator and chief operating officers on cash management, inventory control, audit findings and adjustments. He said he was demoted and then fired in 2018 after raising questions about excessive price markups and payments made under a no-bid contract.

Larson, in court filings, denied any actions were unlawful, that pricing changes and other information Halbur disclosed “was already widely known throughout ABD” prior to the alleged disclosure and that Halbur was fired for ”ongoing performance issues related to personnel and staffing management.“

Larson did not immediately respond to a request for comment Monday by The Gazette.

Halbur said he discovered excessive liquor markups by the state agency in August 2017, and alleges Larson knew about the markups beginning in 2014 but “did nothing to prevent this continued practice.” Halbur said he encouraged Larson to report the excessive markups to various state officials and state agencies.

At around the same time, Halbur said Larson entered into a contract with Beverage Merchandising Inc. to develop a promotional discount website and database for the division. Halbur said the division made an initial payment to the firm in November 2017 to cover services performed in July, August and September of that year, but said he refused to sign off when Larson sough an additional payment to the firm for services rendered, “citing Iowa’s requirement for having a competitive bidding process for third-party vendors,” court documents states.

After refusing to sign off on the payment, Halbur said he was demoted and then fired two weeks later after complaining internally about and refusing to “engage in illegal practices occurring within the ABD.”

A spokesperson for the Iowa Attorney General’s Office, which represented Larson in his official capacity as the division’s administrator, said the office was considering its options after the verdict, and that there were likely be several post-trial matters to resolve before the question of an appeal is relevant.

Last year, the Iowa Supreme Court overturned a landmark $1.5 million jury award in a discrimination and retaliation case against the state’s open gay then-commissioner of workers’ compensation by former Gov. Terry Branstad.

Halbur, a licensed real estate agent and small-business owner from Clive, won a close primary in June against Mary Ann Hanusa, of Council Bluffs. Hanusa, a former state lawmaker who served in the White House for the administrations of President George H.W. Bush and President George W. Bush, was endorsed by Iowa Republican U.S. Sens. Chuck Grassley and Joni Ernst and Gov. Kim Reynolds.

Halbur is running to unseat Democratic incumbent State Auditor Rob Sand, who is running for a second term, in the Nov. 8 election.

Halbur and his attorney, Stuart Higgins of West Des Moines, praised the jury’s decision.

“We’re very pleased the jury recognized what we all knew, which was Todd Halbur was fired based upon doing what was right under the law and for the taxpayers of the state of Iowa,” Higgins told The Gazette.

Halbur said he “stood up for what was right” and “paid the ultimate price for it.”

“I feel that I’ve been vindicated from the jury’s decision and I thank them,” he said.

Higgins has also filed a class-action lawsuit against the state of Iowa and the Alcoholic Beverages Division on behalf of retailers with a Class “E” liquor license — such as grocery stores, convenience stores and liquor stores — who were overcharged by the state. The case is scheduled for a jury trial in May 2023.

Halbur calculated the division overcharged retailers in excess of $8.2 million from fiscal 2013 to 2017, “but we believe the number to be substantially higher than that,” Higgins said.

Comments: (319) 398-8499; tom.barton@thegazette.com