Former Berkeley Shop Owner Pleads Guilty To Running Ponzi Scheme

BERKELEY, CA — John E. Fox, the owner of Premier Cru, a now-bankrupt wine shop based in Berkeley, has pleaded guilty to wire fraud, according to US Attorney Brian J. Stretch and FBI Special Agent in Charge John F. Bennett. The plea agreement follows the filing of charges in June 2016 that the wine shop owner engaged in fraud.

Fox, 66, of Concord, acknowledged that between 2010 and 2015, he 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.

Premier Cru generally sold wine in two ways: through a physical retail store and through a “pre-arrival” or “wine futures” business. Though its pre-arrival wine business, Premier Cru sold wine that it didn't have. The business was based on the premise that Premier Cru would contract to buy wine from Europe and then, after having contracted to purchase wine, would sell it, through Premier Cru’s website or salespeople, to customers before it arrived in the United States. Fox promised that the company would deliver European wines to customers within a time period of approximately six months to two years after customers had paid for the wine.

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Fox admitted that he 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 used the embezzled funds to pay for personal credit cards; memberships to private golf clubs; the purchase or lease of expensive cars including Corvettes, Ferraris, a Maserati, and various Mercedes-Benzes; and a variety of additional personal expenses, including more than $900,000 on women he met online.

Premier Cru eventually filed for bankruptcy under Chapter 7 of the Bankruptcy Code. At the time of Premier Cru’s bankruptcy, customers had paid at least approximately $45 million for wine that they had not received.

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Fox’s is scheduled to be sentenced in December. He faces up to 20 yearsin prison and $250,000 or twice the amount gained or lost as a result of the scheme.

The prosecution is the result of an investigation by the FBI.

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