Though the words “Ponzi scheme” may conjure images of Bernie Madoff ripping off big investment funds, the scam can come in many shapes in sizes… or liquids, as a case out of California involving a wine shop owner accused of stealing $45 million in undelivered products shows.
The Berkeley businessman and co-founder of Premier Cru pleaded guilty to wire fraud last week after falsifying purchase orders over five years for about $20 million worth of wine that he never purchased, The Daily Californian reports (h/t Eater).
In the plea agreement, Fox admitted to organizing the Ponzi scheme to defraud Premier Cru customers by promising them wine — and taking their money for it — that he never delivered to them. He made about $5 million from the operation personally, using the money to pay for personal credit cards, a bunch of expensive cars, private golf club memberships, and $900,000 he spent on women he met online.
Approximately 4,500 customers were left without the wine they’d purchased when the wine shop’s parent company declared bankruptcy in January. Several of them filed lawsuits against the shop in 2015 for almost $70 million for the alleged non-delivery of the wine they’d purchased. When the company declared bankruptcy, about $45 million in wine had been bought but never delivered.
The U.S. Attorney’s office is recommending that the businessman be sentenced to more than six years in prison and pay restitution to his customers. Whether or not they receive any money is another thing.
“He will try to make restitution as best he can,” his defense attorney told the paper, adding that he’s trying to make amends by pleading guilty. “Because that’s part of the judgement that’s going to be against him. Is he going to be able to pay 45 million dollars? I have no idea.”
Berkeley wine shop owner pleads guilty to Ponzi scheme, defrauding customers out of millions [The Daily Californian]
by Mary Beth Quirk via Consumerist
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