In the latest instance of wine dealers ripping off their rich customers, a California wine seller has pleaded guilty to what one judge deemed to be a “wine Ponzi scheme.” On Thursday, 66-year-old John Fox admitted to defrauding customers out of a minimum of $45 million at his Berkeley wine store, Premiere Cru, and spending at least some of that money on high-end cars, an Alamo home, and “women he met online.” The scheming had been going on for a remarkably long time: Fox admitted in his plea agreement that he had started the practice of fraudulent purchases back in 1993 or 1994.
Founded in 1980, Premiere Cru filed for bankruptcy in January and listed $70 million in debts and $7 million in assets. While in business, the store specialized in wine futures, an advance sale that allows consumers and retailers the opportunity to prebuy fancy vintages for less than they would cost after bottling. But prosecutors claim Fox collected money for wine he hadn’t acquired or was contracted to purchase, bought wine he couldn’t pay for, and embezzled funds from the business.
Years of fraud evidently gave Fox the confidence to be more brazen with his scheme. According to an April court filing, former employee Brian Nishi said company records demonstrated there were no bottles in storage for wine orders from 6,6000 customers totaling almost $45 million. Fox admitted in his plea agreement to selling $20 million of wines he knew he couldn’t deliver and, in a bit of Ponzi scheming, said he used customer money to buy wine for previous customers. Though the fraud charge carried a maximum 20-year sentence, Fox’s plea deal got him six and a half years in prison. He’ll also have to pay back at least $45 million to Premiere Cru customers as well as $6.5 million to lenders, though he clearly doesn’t have the money for that.
