Man who cheated customers out of $45 million with his ‘wine Ponzi scheme’ is sentenced to 6½ years in prison
The former owner of a high-end Berkeley wine shop who pleaded guilty this summer to using his store to run a Ponzi scheme has been sentenced to 6½ years in prison for wire fraud.
John Fox, 66, is in custody and will begin serving his sentence immediately, according to a statement late Wednesday from the U.S. attorney’s office in the Northern District of California.
Fox will serve three years of supervised release in addition to the prison term, prosecutors said. He also will be required to pay restitution, they said, and a hearing in January will determine the exact amount.
This summer, Fox pleaded guilty to bilking customers out of at least $45 million in what one prosecutor described as a “wine Ponzi scheme.”
The Concord, Calif., resident admitted masterminding a “massive scheme to defraud” through his store, Premier Cru — taking millions from wine lovers around the world without acquiring the wine he promised them first, according to a statement this summer from the Department of Justice.
Fox falsified purchase orders for about $20 million worth of wine that he never bought, and then sold that “phantom wine” to unsuspecting customers, the statement said.
In the plea deal, Fox 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 buy 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 bricks-and-mortar store, the company dealt in wine futures — offering customers the chance to buy wines at a discount before they had even been bottled.
Premier Cru had 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.
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