SAN FRANCISCO (BCN) — The owner of a bankrupt Berkeley wine company pleaded guilty in federal court in San Francisco today to a single charge of wire fraud and admitted bilking customers out of at least $45 million.
John Fox, 66, owner of the now-closed Premier Cru retailer of rare and expensive wines, entered the plea before U.S. District Judge James Donato.
He will be sentenced by Donato on Dec. 14. Under a plea agreement, prosecutors and Fox’s lawyers will recommend a sentence of six and one-half
years in federal prison, plus restitution of at least $45 million to customers and at least $6.5 million to creditors.
Fox, who appeared in court in a blue-and-white striped dress shirt and gray slacks, surrendered to authorities on Wednesday. He is in custody and will remain incarcerated while awaiting sentencing.
He chose not to make a statement before pleading guilty. When asked by Donato whether he wanted to confer more with his lawyer before entering the plea, Fox said, “No, I understand it all.”
Fox and other associates established Premier Cru in Emeryville in 1980. The company moved to a large retail store on University Avenue in Berkeley in 2011.
In January, the company declared bankruptcy. A report filed in federal bankruptcy court in Oakland in May by a former employee said that the defunct company had $44.9 million in unfilled customer orders for which there were no wine bottles in the company’s warehouse.
The company sold some of its wine in future orders for wine that might not be delivered for several years.
The wire fraud count to which he pleaded guilty was an electronic transfer of $100,271 from an unidentified person in Hong Kong to a bank account in Northern California.
The charging document, known as an information, said the transfer was part of a scheme “to defraud and obtain money and property by means of
materially false and fraudulent pretenses, representations and promises” between 2009 and 2015.
Fox waived having a grand jury indictment. Prosecutors and defense attorneys requested and received a court order sealing the June 28 information until Fox’s voluntary surrender Wednesday on the ground that “defendant fears for his safety in the community should the Information be made public.”
Assistant U.S. Attorney Benjamin Kingsley outlined the scheme during the hearing by summarizing the written plea agreement in which Fox admitted to the multi-year fraud. Fox and his attorney said they agreed with the summary.
When Donato asked whether the enterprise amounted to “a wine Ponzi scheme,” Kingsley answered, “Yes.”
A Ponzi scheme is an operation in which early investors are paid off with money taken in from later investors.