Wine store owner sentenced for $45M Ponzi scheme

John Fox, (left) who co-owned the now bankrupt Premier Cru wine store, is seen at a creditors’ hearing in February with three attorneys, including Dean D. Paik, one his criminal defense attorneys (standing to the right of Fox). Photo: Frances Dinkelspiel

John Fox, whose desire for recognition and riches led him to embezzle $45 million from his once-admired wine business, Premier Cru, was sentenced to six and a half years in federal prison on Wednesday.

U.S. District Court Judge James Donato handed down the sentence after telling Fox, 66, that his actions had ruined many lives.

“This was a long-running empire of deception that Mr. Fox carefully tended to for years at the cost of thousands of victims and tens of millions of dollars,” said Donato. “It was thought out. It was deliberate. Even though some of his clients were wealthy, this is not a Robin Hood story. This is a man who defrauded whoever walked through his door.”

After Fox is released at the age of 72, he will be under court supervision for three years, Donato ordered. He will also be required to pay restitution. The amount of that restitution will be determined at a Jan. 18 hearing.


 Read the back story about Premier Cru on Berkeleyside.

Fox shuffled into the courtroom in leg irons with handcuffs hung from his waist belt. He was wearing red coveralls from Alameda County Jail, the color indicating he is being held in protective custody. He wore bright orange plastic shoes, an orange T-shirt, and a long sleeve white thermal T-shirt. He weighed 15 pounds lighter than when he surrendered in August, according to his attorney, Robert Breakstone.

When asked if he had anything to say, Fox expressed remorse for running a Ponzi scheme, which he started around 1999.

“I wish I could go back in time and undo all the damage I caused, but I know I can’t,” said Fox. “I want to serve my time in prison. When I get out I hope to pay back everyone. With good health, I can pay everyone back.”

When Donato asked Fox how he would pay back the customers he defrauded, Fox said that he planned to take courses in prison and get a degree in computer science. When he is released he hoped to start a company and “become a billionaire.”


The former interior of Premier Cru at 1011 University Ave. in Berkeley. Photo: Berkeley Design Advocates

The six-and-a-half year sentence is on the lower end of the federal guidelines for crimes of Fox’s type. Donato said he was balancing punishment with the recognition of Fox’s age. He said he wanted to give Fox a significant penalty but also offer him the possibility of rehabilitation.

Before Donato pronounced the sentence, Raphael Cung, the attorney for the Hong Kong wine collector Mun Hei Li, argued that Fox should get 97 months in prison. His client had lost $669,000 in the Premier Cru Ponzi scheme, as well as his faith in American businesses, said Cung.

Outside the courtroom, Breakstone revealed that Fox found out about the FBI investigation into his business in December 2015 when a client called him up to say he had been contacted by federal investigators. Fox then contacted Breakstone’s San Francisco law firm, Rogers Joseph O’Donnell, and said he wanted to cooperate with authorities. Fox finally met with federal agents in February, according to court documents. Over the next few months, he not only walked them through how he created phony purchase orders to hide his scam, but agreed to help snare a Seattle woman who had been extorting him by threatening to tell Fox’s wife they had had sex. Fox had paid her $240,000. He admitted to paying a total of $900,000 to meet women online.

Neither Fox’s wife nor his daughter were in the courtroom Wednesday. Fox’s wife has left him and has returned to the Philippines, where she was born. His whole life is shattered as a result of his crimes, said Breakstone.

“He feels horrible,” said Breakstone. “He hurt a lot of victims who lost money. His business is nothing. He wife has basically left him. He has destroyed not only his victims’ lives, but his own life and the people who loved him. You can’t even measure that in words.”


Related:
Ponzi mastermind’s help could lead to shorter jail time (12.13.16)
Could Premier Cru auction help wine counterfeiters? (12.02.16)
At Premier Cru, a peak into major wine fraud (12.01.16)
Premier Cru owner used coffee shop as hookup HQ (08.18.16)
Premier Cru spent $900K on dates he met online (08.11.16)
Premier Cru owner will plead guilty to fraud (08.09.16)
How did Berkeley wine store accrue $70M in debt? (07.28.16)
Premier Cru lawsuit: Some customers to get refunds (06.23.16)
Bankrupt Premier Cru not run in ‘a reliable fashion’ (05.09.16)
Premier Cru owner had penchant for expensive cars (03.08.16)
Customers confront owner of bankrupt wine store (02.25.16)
FBI investigating whether Premier Cru ran a Ponzi scheme (02.22.16)
Troubles mount for Premier Cru as FBI steps in (02.11.16)
Berkeley’s Premier Cru paid its tech staffer in wine (02.04.16)
Shop Talk: The ins and outs of Berkeley businesses (12.22.15)
Berkeley store sued for not delivering $3M worth of wine (10.29.15)

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