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       A fraternal police lodge in D.C. whose members were accused of selling and shipping hundreds of bottles of Jack Daniel’s whiskey without proper permits has agreed to new oversight and spending controls as part of a settlement with the D.C. attorney general’s office, according to a written legal agreement obtained by The Washington Post.

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       The deal also requires officers of the nonprofit Fraternal Order of Police Lodge 1 to “cooperate with the District’s continuing investigation” of D. Michael Kruggel, who led “the Jack Daniel’s Fundraising Committee” that started selling the whiskey in 2017 to rescue the then-financially-troubled organization.

       A spokesman for the attorney general’s office confirmed the authenticity of the agreement, written on the attorney general’s letterhead and titled, “ASSURANCE OF VOLUNTARY COMPLIANCE.” The office declined to comment on pending or future investigations of Kruggel. The lodge includes thousands of active and retired members from all the city’s major local and federal law enforcement agencies. The lodge president, Ron Burgeson, also declined to comment.

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       The agreement, which has not been made public, was signed in late October by Burgeson and a deputy attorney general.

       In a brief telephone interview, Kruggel disputed the findings outlined in the agreement, which are based on an investigation by the city’s liquor board that concluded whiskey was “illegally sold and shipped” and resulted in a $2,000 fine. He said the attorney general’s office never contacted him and that investigators “received false information" from lodge officers who shut down the sales and commissioned an internal inquiry.

       Kruggel referred a reporter to an attorney who did not respond to an interview request.

       The Post reported in June that the D.C. attorney general’s antitrust and nonprofit enforcement section sought “voluntary compliance” from the lodge in lieu of resolving “allegedly unlawful conduct in court.” The settlement agreement finalized that recommendation.

       D.C. police lodge broke the law by selling hundreds of whiskey bottles online, investigation finds

       The FOP Lodge 1, the country’s largest, is separate from the D.C. police union, which negotiates labor contracts and bargaining for officers on the municipal force. The lodge is a fraternal organization open to law enforcement officers in the District and runs a clubhouse near the FBI’s Washington Field Office in Judiciary Square, offering services such as legal-defense plans and hosting social events.

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       The lodge also has a bar and a license that allows it to sell liquor, but only by the drink. In 2017, Kruggel was a lodge officer, even though he was not a full-time police officer but a security guard at a Tennessee Walmart and an unpaid volunteer deputy with the small sheriff’s department in that state. Lodge leaders came up with a plan to buy Jack Daniel’s by the barrel, have it poured into bottles engraved with the lodge seal and sell them at conventions and over the internet.

       At one point, the lodge bought a 53-gallon barrel of whiskey for $11,000 from the Jack Daniel’s distillery in Lynchburg, Tenn. That whiskey was poured into 240 bottles and sold for between $80 and $100 each. The D.C. lodge raised hundreds of thousands of dollars over three years — although nearly all of it was used to pay the committee’s own expenses, which included buying whiskey and shipping it, along with Kruggel’s travel and hotel bills, according to an internal audit conducted by a retired police detective hired by the lodge.

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       That audit found that sales of more than 3,000 bottles of whiskey produced roughly $516,000 over three years. But the audit said net revenue for the lodge, after expenses, totaled $11,000. Lodge officers who shut down the committee said the lodge was left in financial distress with cases of unsold whiskey stacked floor-to-ceiling in offices and storage rooms.

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       According to the settlement agreement between the lodge and the attorney general’s office, the Jack Daniel’s committee made a $282 profit after $124,665 in expenditures in 2017, a $9,229 in profit after $160,100 in expenditures in 2018 and a $1,855 profit after $203,719 in expenditures in 2018.

       The report says that of nearly $488,500 in expenses, $156,900, “or slightly more than a third, were paid to Kruggel in the form of reimbursements.” The attorney general said in the agreement that Kruggel was reimbursed $40,421 for 72,706 miles he reported traveling on committee business, $31,304 for flights and $105,266 for hotels, meals and rental cars.

       After The Post first reported on the committee in November 2021, the city’s alcohol control board found the lodge had violated six provisions of the D.C. law governing the importation, sale and distribution of liquor. The attorney general said the investigation found that the Jack Daniel’s committee “illegally brought alcohol into the District of Columbia without going through a wholesaler … sold alcohol for off-premises consumption, and shipped it nationwide."

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       In the settlement agreement, the attorney general’s office said the lodge failed to withhold taxes from reimbursements to Kruggel and failed to issue him a W-2 tax form. The office also said the lodge did not properly document or “determine the reasonableness” of the expense requests filed by Kruggel and did not keep accurate records of sales.

       D.C. police lodge broke the law by selling hundreds of whiskey bottles online, investigation finds

       Kruggel, in the interview Tuesday, said actions he took while running the Jack Daniel’s committee were approved by lodge board members at the time. He has previously disputed that the lodge did not make a significant profit from the liquor sales, and said internal reviews cleared him of wrongdoing. An attorney for Kruggel said in 2021 that his client did not have direct control over finances.

       In a series of text messages, Kruggel said the committee’s “expenditures were meticulously kept by the lodge” and that he turned “everything over” to its elected treasurer and an accounting firm “in order for the reimbursement processes and approvals to take place.”

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       Kruggel, in that text message, said the findings outlined in the attorney general’s report were based on two lodge members later ousted by the national board, and should be discredited. Those members have said they were ousted for exposing the Jack Daniel’s committee. Board members at the time the committee was formed have told The Post that some people expressed reservations or questioned the legality of the sales, but members assumed that because law enforcement was involved, they wouldn’t engage in illegal conduct.

       The agreement with the attorney general’s office requires lodge officers for the next decade take courses on financial accountability. Any member afforded a lodge credit card also must take training, and new written policies governing expenses must be developed.

       Retired D.C. police officer Gerald Neill Jr. said he shut down the liquor sales when he became president of FOP Lodge 1 in 2020. Neill said he and Michael Murphy, who retired from D.C. police in 2022, were expelled from the lodge by the national FOP board.

       In an interview on Tuesday, Neill said “we did the right thing for our membership.”

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