John Fox, the embattled owner of the wine retailer, Premier Cru, will plead guilty to wire fraud in federal court in San Francisco on Thursday, one day after he turns himself into authorities.
Fox could face as much as 20 years in prison and a $250,000 fine for defrauding his clients — some of whom were among the most accomplished venture capitalists and investment bankers in the world. In a charge filed June 28, but only unsealed recently, the U.S. attorney has charged Fox with intentionally defrauding his clients from 2009 to 2015.
“John Fox did knowingly and with the intent to defraud devise, participate in, and execute a material scheme and artifice to defraud and to obtain money and property by means of materially false and fraudulent pretenses,” reads the indictment.
Fox had requested that the charges be sealed until closer to the arraignment because he was worried for his personal safety, according to court documents.
The U.S. attorney only mentions one specific fraudulent action in the charges, though. That is a wire transfer of $102,271 from an H.W.M.L. in Hong Kong to a bank account in the Northern District of California. (Fox had three accounts at the Community Bank of the Bay.)
The wire fraud may be referring to an action taken by a Premier Cru client, Lawrence Wai-Man Hui, who sued the store in 2015 claiming Premier Cru had not delivered 1,591 bottles of fine wine for which he paid $981,000.
The true story of how Fox took his clients’ funds to supposedly buy wine futures may never come out. That’s because Fox has waived his prosecution by indictment and has agreed to be prosecuted by information. In essence, he has legally confessed and all that remains to happen is his sentencing. There won’t be a trial and prosecutors won’t have to lay out a case against him.
Dean D. Paik, who said he was Fox’s criminal attorney in a hearing with the creditors of Premier Cru in February, refused to comment Tuesday. He would not confirm that he was representing Fox. The court record states that Robert Breakstone, who heads up the white-collar criminal division at Paik’s law firm, is Fox’s attorney. Breakstone was not in his office on Tuesday.
The trustee who is handling the Chapter 7 liquidation hired someone to analyze the wine company’s books and discovered that Premier Cru had collected $45 million in wine orders but had no bottles associated with those orders in the warehouse at 1011 University Ave in Berkeley. Fox had also “oversubscribed” a number of wines, selling certain bottles multiple times to customers, according to court documents.
Fox has agreed to turn himself into federal authorities before noon on Aug. 10, according to court documents. He will then change his plea from “not guilty” to “guilty” on Thursday, according to court documents.
Wine Spectator was the first to report that Fox had been charged and would plead guilty.
When Premier Cru filed for bankruptcy in January it listed 9,000 creditors. Fox filed for personal bankruptcy a month later and cited the same list of creditors.
Fox was forced to sell his home in Alamo and return his new Corvette. However, people have spotted him in recent months eating in fine restaurants in Contra Costa County.
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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