Tequila Company CEO Admits Bilking Investors To Line His Pockets

WARWICK, NY — The founder of a Hudson Valley tequila brand admitted he fraudulently solicited investments for his company.

Joseph Cimino, 57, of Warwick, pleaded guilty Monday to one count of securities fraud and one count of wire fraud.

Damian Williams, United States Attorney for the Southern District of New York, said Cimino now awaits sentencing for his fraudulent conduct.

"As he admitted in court today, Joseph Cimino lied about his tequila business's finances to lure investors and then diverted investor funds in order to line his own pockets," he said.

According to court documents and statements, Cimino raised about $935,000 between 2014 and 2018 from at least 25 investors based on fraudulent representations.

He attracted investors, prosecutors said, by falsely inflating the amount of money he had raised from prior investors and falsely claimed as investors several people who had, in fact, not contributed any money.

Cimino also falsely inflated his company's sales.

For example, authorities said, he claimed, in July 2017, in an investor report that year-to-date sales totaled more than 3,400 cases of tequila, when the actual sales totaled only 350 cases.

Also, in October 2017, Cimino falsely claimed year-to-date sales of more than 6,000 cases, which was about five times the actual total.

And using Hurricane Maria as an excuse, authorities said he claimed he would receive reimbursement for 800 cases of tequila supposedly destroyed at a Puerto Rican warehouse in the 2017 storm. In reality, no inventory was destroyed in the hurricane, and the company didn't have insurance.

Cimino also misused a substantial portion of investor money that was intended to fund the operations of his tequila business for personal expenses. Authorities said, from 2014 to 2018, he transferred about $472,000 of investor money to his personal bank account to pay for his food, entertainment and other living expenses.

Each charge carries a maximum sentence of 20 years in prison.

Cimino is scheduled to be sentenced Feb. 18.