John E. Fox, Wire Fraud, California 2016

San Francisco – John E. Fox, the former owner of Premier Cru, a now-bankrupt wine shop based in Berkeley, has been sentenced to 78 months in prison for wire fraud, announced United States Attorney Brian J. Stretch and Federal Bureau of Investigation Special Agent in Charge John F. Bennett.

According to the plea agreement, Fox admitted to using his wine shop to run a multi-million-dollar wine Ponzi scheme, starting in the 1990s. He falsified purchase orders for wine he had never contracted to purchase, entered the phantom wine into Premier Cru’s inventory for sale, and then sold or caused Premier Cru’s salespeople to sell the phantom wine.

Between 2010 and 2015, Fox sold or attempted to sell approximately $20 million worth of phantom wine that he had never actually purchased prior to entering them onto Premier Cru’s inventory. In addition, he promised to pay foreign suppliers within 30 days, but embezzled money from Premier Cru’s business accounts and diverted money coming in from current customers to obtain wine for prior customers who had never received their wine.

Fox embezzled funds from the Premier Cru accounts by using the business account to make payments for personal expenses and making substantial cash transfers to personal accounts in his own name and in fake names. He used the embezzled funds to pay for personal credit cards, private golf club memberships, expensive cars, and other personal expenses, including over $900,000 on women he met online.

Premier Cru eventually filed for bankruptcy under Chapter 7 of the Bankruptcy Code, leaving customers owed approximately $45 million for wine that they had not received. On June 28, 2016, Fox was charged with a single count of wire fraud in violation of 18 U.S.C. § 1343.

Pursuant to his plea agreement, Fox pleaded guilty to the charge. The sentence was handed down by the Honorable James Donato, U.S. District Judge, who referred to Fox’s conduct as ‘a long running empire of deception.’

In addition to the prison term, Judge Donato ordered Fox to serve three years of supervised release and scheduled a hearing on January 18, 2017, to determine a specific restitution amount. Fox is in custody and will begin serving his sentence immediately.

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