Berkeley rare wine store owner pleads guilty in Ponzi scheme
The owner of a high-end Berkeley wine shop pleaded guilty to bilking customers out of at least $45 million in what one prosecutor described as a “wine Ponzi scheme.”
John Fox, 66, admitted masterminding a “massive scheme to defraud” through his store Premier Cru — taking millions from vino lovers around the world without acquiring the wine first, according to a statement Thursday from the Department of Justice. Under a plea agreement, Fox is facing 6 ½ years in federal prison.
Fox falsified purchase orders for about $20 million of wine that he never bought, and then sold that “phantom wine” to unsuspecting customers, the statement said.
In the plea deal, the Concord, Calif., resident admitted he embezzled money from the business. He spent nearly $1 million on women he met online, and also used funds to pay off personal credit cards, buy golf club memberships and purchase or lease luxury cars such as Ferraris, Corvettes, a Maserati and “various Mercedes-Benzes,” the statement said.
Fox also said he used money from newer customers’ orders to purchase wine promised to earlier customers — an arrangement compared to a Ponzi scheme by Asst. U.S. Atty. Ben Kingsley and Judge James Donato, according to the San Francisco Chronicle.
Fox co-founded Premier Cru in 1980. On its website, the company billed itself as “offering quality wines at prices lower than anyone else around.” Aside from the brick-and-mortar store, the company also dealt in wine futures — offering customers the chance to buy wines at a discount before they had even been bottled.
Premier Cru has been the subject of numerous customer complaints. Last year, several customers filed lawsuits against the company, alleging they never got the wine they had paid for, according to the Wine Spectator. In January, Premier Cru filed for bankruptcy protection; it listed $70 million in debt and $7 million in assets.
On Yelp, Premier Cru’s page is riddled with irate customers complaining of waiting years for wine deliveries — if they received them at all.
“Be very careful and think twice before even engaging in business with these guys,” wrote Vick S. of Half Moon Bay. After a year, he had yet to get his order of Bordeaux, the review said, and the company never responded to questions about his order.