High Visibility Makes Wine Crime Stand Out

 

String of crimes puts industry in the spotlight for reasons other than wine

 

Source: Wines & Vines

by Paul Franson

November 11, 2016                                          

                                               

Recent legal cases involving the wine industry have included charges of forgery, identify theft, selling alcohol without a license, embezzlement and fraud.

 

Is the wine business more prone to fraud than other industries? It may not be, but it certainly attracts a great deal of attention in spite of its relatively small share of the economy.

 

Admittedly, crimes like the March 2015 murder-suicide by Robert Dahl of Dahl Vineyards or Mark Christian Anderson getting 27 years in prison for his Wines Central Vallejo arson, in which 4.5 million bottles of fine wine burned in 2005, are rare, but other crimes are so visible that on Nov. 4 the Napa Valley Register newspaper ran three front-page crime stories related to the wine industry.

 

This year has seen two large cases involving the distribution network. In April, Michael Quinn of Michael-Scott Wines in Napa sold 58 cases of wine valued at nearly $9,000 to James “Jimmy” Allen Hall of new Jayhawk Beverage Distributors in Pittsburg, Kan. 

 

Quinn expected to receive full payment within 30 days, but the check bounced and Hall stopped communicating.

 

He also apparently scammed other wineries including Prolific Beverage, which produces a series of Cabernets with the “One” label, which delivered 28 cases of wine with a market value value of $15,000. Another winery wasn’t indentified.

 

Police in Kansas arrested Hall and recovered about $70,000 worth of contraband, according to the Kansas Division of Alcoholic Beverage Control.

 

The Kansas ABC eventually charged Hall with forgery, identity theft, making false information, obtaining an ABC license by fraud and the purchase, sale and distribution of alcoholic liquor without a license. He is due back in court Dec. 8 and has neither been arraigned on the charges nor has he entered a plea.

 

Hall is also wanted in Florida on suspicion of grand theft related to $811,593 of 401(k) funds. Between April 2015 and 2016, five reports were made alleging Hall received rental fees and down payments for vacation rental properties in Madeira Beach, Fla., NBC reported. Tourists claimed they lost their money and that the properties may not have existed.

 

Premier Cru

 

In a separate case, John E. Fox, 66, president of Berkeley’s now-bankrupt Premier Cru wine shop, admitted that he defrauded customers out of $45 million. He used the money for cars, women and golf.

 

By the time his Fox Ortega Enterprises, which did business as what is now known as Premier Cru, filed for Chapter 7 bankruptcy in January, thousands of customers had paid more than $45 million for wine they never received. 

 

In a classic Ponzi scheme, Fox’s business took customer orders for wine futures but for the most part didn’t fulfill them. It was one of the largest wine fraud cases in history, according to industry insiders.

 

Following an FBI investigation, Fox pleaded guilty in June to a single count of wire fraud. He faces more than six years in prison and tens of millions of dollars in restitution when he’s sentenced in December.

 

Other recent cases

 

. In April, attorney Peter Winkler of Tiburon, Calif., was arrested for allegedly embezzling nearly $30,000 from Thomas Knoll Winery in Napa between Nov. 27, 2013, and Oct. 5, 2015. Winkler was the chairman for the Tiburon Parks, Open Space & Trails Commission.

 

. Former vineyard manager and winery owner Jeffry Hill was sentenced to a year in jail in August 2015 for the 2013 theft of more than $50,000 worth of wine grapes from David Del Dotto’s Howell Mountain Vineyard in Angwin, Calif. Hill’s Hill Winery (no relation to Hill Family Wines) filed for bankruptcy, leaving behind $8.6 million in liabilities. The prosecution said the grapes stolen by Hill were turned into $800,000 worth of premium wine.

 

. Martin “Chris” Edwards, the former vice president and general manager of the Wine Tasting Network was sentenced Sept. 3, 2014, to two years and nine months in federal prison for embezzling nearly $900,000 from his employer. He used the money for vacations and a BMW, then disappeared after his indictment before being arrested in Puerto Vallarta, Mexico.

 

. In April 2014, Xandria Roxanne Neal of Hidden Valley Lake in Lake County, Calif., was charged with embezzling more than $340,000 from Rutherford Wine Co. in St. Helena, Calif. Neal used company credit cards to buy personal items such as iPads and to finance vacations.

 

. Another high-visibility winery owner was also charged with fraud, but it doesn’t appear to involve his wine business. Charles Banks, a former owner of Screaming Eagle Vineyards and co-owner of Mayacamas Vineyards, faces trial on federal charges of wire fraud related to CSI Capital Management, his investment advisory firm.

 

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