Punishment has been handed down for a California wine store owner who ran a massive Ponzi scheme that scammed customers out of $45 million. The San Francisco Chronicle reports John Fox, who pleaded guilty to to wire fraud in August, has been sentenced to six and a half years in prison.
Fox’s Berkeley wine shop, Premier Cru, filed for bankruptcy back in January, citing more than $70 million in debt. In the wake of the announcement, some members of the wine community alleged Premier Cru was defrauding its customers. A month later, the FBI revealed it was investigating the wine retailer as a possible Ponzi scheme following numerous complaints.
Premier Cru was known for selling wines on a “pre-arrival basis,” meaning bottles were sold before they were in stock and shipping was often delayed. Some delays lasted years, prompting customers to file lawsuits against the vendor.
Fox admitted to selling and attempting to sell approximately $20 million of “phantom wine” — product he never actually purchased — over a five-year period. He then embezzled millions to pay off his personal debts accrued through the purchase of luxury items like cars and gifts for his girlfriends.
Fox will also have to pay restitution to customers he ripped off, and could also face fines up to $250,000.
• Berkeley Wine Store Owner Who Stole $45 Million Sentenced [SFGate]
• Owner of Bankrupt Premier Cru Wine Shop Faces 20 Years in Prison [E]
• FBI Investigates Premier Cru's Bankruptcy as Possible Ponzi Scheme [E]