Karim Varela of i-Booze. Dan Schlatter/PSBJphoto.

It may be "last call' for i-Booze, the online beer and wine delivery service. The City of Seattle earlier this year rejected the company's liquor license, and just last week founder Karim Varela entered a plea bargain with the city on two misdemeanors of selling alcohol without a license and illegal possession of alcohol with intent to sell.

As part of the punishment, Varela must pay a $200 fine and perform 20 hours of community service. But the Internet entrepreneur is not giving up on i-Booze, which recently changed its name to Dilky in order to placate authorities who felt the i-Booze name encouraged excessive drinking.

"We are still working with the city and the liquor control board to regain a license, but it is a difficult battle," Varela tells TechFlash.

The problems arose back in May when Varela moved the company -- which was doing about 70 alcohol deliveries a month -- from Bellevue to Seattle. The move --which followed objections by City of Bellevue officials -- caused him to reapply for a new liquor license. While awaiting approval of the new license, Varela and his team continued to operate the business of delivering six packs and other alcoholic drinks to Seattleites.

That violated the law, according to Anne Radford, a spokeswoman with the Washington State Liquor Control Board.

During the summer, officers with the Liquor Control Board made what Radford described as a "controlled buy of liquor" through i-Booze. The purchase occurred at a time when i-Booze was not permitted to sell alcohol in the city, she said.

As of August, the alcohol delivery component of the i-Booze business had been shut down. The case is still making its way through the Liquor Control Board channels, with Radford saying that officials would take up the matter in the next couple of weeks.

Meanwhile, Varela is looking to draw support for his cause. On the company's Web site, he encourages former customers to contact the Liquor Control Board, the Seattle mayor and the governor.

Varela blames outgoing City of Seattle attorney Tom Carr for the legal troubles, and he's hoping that newcomer Pete Holmes will see his side of the story.

"We feel our downfall was mostly due to ex city attorney Tom Carr's battle against bars, clubs, and alcohol in Seattle and we just got caught up in the middle when really we're providing a beneficial service for the community," said Varela.

Related story: "Cigs and a six-pack delivered to your door with i-Booze."

John Cook is co-founder of TechFlash. Follow on Twitter @johnhcook.