Arroyo may have failed to list $12,000 Corona Cigar Co. ‘giveaway’ gift in state financial filing

Commissioner also apparently did not disclose gift before City Commission vote in favor of zoning text amendments favoring downtown businesses

Editor’s note: This article  was updated on the morning of Nov. 2 with comments from Commissioner Arroyo.

This post on the Corona Cigar Co. Facebook page for the Sarasota operation shows the presentation to Commissioner Erik Arroyo.

With early voting well underway for the Nov. 5 General Election, and three Sarasota City Commission seats on the ballots, The Sarasota News Leader has learned of various potential financial irregularities associated with Commissioner Erik Arroyo, who is seeking a second term as the District 3 representative.

Among them, Arroyo apparently did not disclose on a Florida Division of Ethics financial disclosure form that he received a 100-count Montecristo Cincuenta humidor that he won during a “giveaway” sponsored by the Corona Cigar Co. in downtown Sarasota. The humidor has a retail value of $12,000, as shown on the Corona Cigar Co. website.

This is the humidor, as shown on the Corona Cigar Co. website.

Moreover, to the News Leader’s knowledge, Arroyo did not mention the gift in public before advocating late last year for changes to city regulations that affect bars and restaurants in the city.

A Dec. 14, 2023 post on the Sarasota Corona Cigar Co.’s Facebook page showed staff presenting the humidor to Arroyo, with the company congratulating him.

Arroyo has made it clear during past City Commission meetings that he is a cigar smoker.

The owner of the building where the Corona Cigar Co. stands was among business leaders who had pushed for the zoning text modifications that the city commissioners finally approved in January. During a hearing on Nov. 6, 2023, Lou Donato told the commissioners about residents’ complaints regarding noise from downtown establishments at night. In another 10 to 12 years, he said, he expected up to 4,000 more people to move to Sarasota because of its progress.

Then he noted, “People are complaining about a little bit of smoke in front of the Cigar Bar. Let me tell you,” he added, “that building sat empty for two years. I lost a lot of money.” No one wanted him to put in a big retail operation, Donato said.

Further, he told the commissioners, while people complain about the smoking at the Corona Cigar Co., he indicated that they do not complain about the exhaust from the Sarasota County Breeze Transit buses that use the transfer station a short distance from his building, on Lemon Avenue.

Commissioner Erik Arroyo. File image

During the City Commission’s regular meeting on Jan. 16, Arroyo made the two motions to approve the zoning text amendments. One motion passed on a 4-1 vote, with Vice Mayor Jen Ahearn-Koch in opposition to it; the second passed 3-2, with Commissioner Debbie Trice joining Ahearn-Koch in voting, “No.”

One of the more controversial aspects of those zoning text amendments was defining a bar as outside or inside on the basis of where the alcoholic beverages were served, instead of where the drinks were consumed.

Members of the public also expressed concern about the potential proliferation of bars and nightclubs, if the zoning text amendments were implemented.

At one point, Commissioner Arroyo asked city Planning Director Steve Cover how many nightclubs exist in the city. Commissioner Kyle Battie replied that the only one he could think of was the Gator Club, on Main Street, though Battie added that he did not consider that business a nightclub.

Arroyo contended that the city had no nightclubs. He then talked about people’s desire to regulate individuals’ actions. “They don’t like behavior, right?” Arroyo said, noting people’s comments on the proposed amendments.

Then he added, “They don’t like people smoking. They don’t like people waking on sidewalks or sitting when they are walking on sidewalks. Don’t like people drinking alcohol.”

Arroyo did not respond to multiple News Leader request for comments on this article.

Florida law and ‘giveaways’

On a related issue to Arroyo’s voting for the zoning text amendments, Florida Statute 849.094, approved by the 2023 Legislature, says, “The operator of a game promotion in which the total announced value of the prizes offered is greater than $5,000 shall file with the Department of Agriculture and Consumer Services a copy of the rules and regulations of the game promotion and a list of all prizes and prize categories offered at least 7 days before the commencement of the game promotion. Such rules and regulations may not thereafter be changed, modified, or altered. The operator of a game promotion shall conspicuously post the rules and regulations of such game promotion in each and every retail outlet or place where such game promotion may be played or participated in by the public and shall also publish the rules and regulations in all advertising copy used in connection therewith. However, such advertising copy need only include the material terms of the rules and regulations if the advertising copy includes a website address, a toll-free telephone number, or a mailing address where the full rules and regulations may be viewed, heard, or obtained for the full duration of the game promotion. Such disclosures must be legible.”

The News Leader also found a Corona Cigar Co. Facebook post about an Oct. 6, 2023 giveaway event. The third-place  prize was a humidor with 100 Montecristo 1935 cigars. Although similar to those in the humidor that Arroyo won in December 2023, they appear to be of lesser value, more in the range of $6,000, based on the News Leader‘s review of various companies’ offerings online.

Through a public records request, the News Leader found no indication that the Corona Cigar Co. had registered its giveaway promotions with the Florida Department of Agriculture and Consumer Services. Moreover, the October 2023 Facebook post did not contain the disclaimer required by state law.

This is the Sarasota Corona Cigar Co. post on Facebook about the Oct. 13, 2023 giveaway event.

State financial form disclosure questions

As the News Leader reported earlier this year, in May, Arroyo ended up filing a more complete financial disclosure form with the Florida Commission on Ethics than a judge had ruled was unnecessary for elected municipal officials.

On that form, Arroyo did not disclose the $12,000 humidor he had received from the Corona Cigar Co. Yet, the form states, “Identify each separate source and amount of income which exceeded $1,000 during the year, including secondary sources of income. Or attach a complete copy of your 2023 federal income tax return, including all W2s, schedules, and attachments.”

Further, the IRS considers such prizes generally to be gross income:

Image from the Internal Revenue Code webpages

In his Nov. 1 email to the News Leader, Commissioner Arroyo wrote, “I would like to clarify that there is no discrepancy in my filings or disclosures. I cannot comment on the business dealings of Corona Cigar Co., as I have no involvement in their internal operations or promotional activities.”

Unpaid Local Business Tax

Finally, after a search through public records, the News Leader could find nothing to indicate that either of the two companies with which Arroyo is associated — Arroyo Company Chartered or Arroyo McArdle — has paid the City of Sarasota’s Local Business Tax this year.

The city website points out, “Businesses and licensed professionals operating within the City limits of Sarasota must pay a business tax. This includes anyone doing business out of their home, if the home is located within the City limits. A Business Tax paid for an office does not cover professionals working in that office. Each person engaged in an occupation requiring a state license must pay a Professional Business Tax.”

A city Frequently Asked Questions document about the tax notes specifically, “Anyone who must have a professional license to perform their job (such as a doctor, hairdresser, CPA, attorney, etc.) must pay a Professional Business Tax to work within the City limits.”

In his Nov. 1 responses to the News Leader, Arroyo wrote, “We have timely paid all local and county business taxes for last year and this year.”

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