Wine scandals are nothing new. Recent scandals documented here include those concerning adulterated wines and ownership soap operas that are as much about the industry people as the wines they represent. We have passed on the many fake rare wines, sham auctions, and suspect ratings that abound. The fact that there seem to be so many scandals nowadays seems in a weird way to reflect the overall arrival of wine as an intrinsic part of our culture. And for the ethically challenged, it's an opportunity to cash in on its popularity. Anyway, the latest involves John Fox, recent proprietor of the Premier Cru wine shop of Berkeley, California.
This post was lifted from Frances Dinkelspiel's August 18th article, "Meet the Wine World's Bernie Madoff" which has to do with the pre-selling of wine that is supposed to arrive up to two years in the future. Apparently buying from Fox is about as easy a way to get swindled as investing with Bernie Madoff.
Wine futures are the purchasing of wines based on barrel samples before the wine is bottled. Big players; wholesalers, brokers, retailers and restaurateurs; will commit to purchase large quantities of those wines they deem to be special and will expect delivery in a couple years. The idea is to beat future mark-ups on the best vintages. Futures may have been the impetus for Fox to offer "pre-arrival" pricing on high-end European wines in general with offers that were way too good to be true. And just like every good Wall Street Ponzi scheme, the thing took on a life of its own and the originator prospered greatly before the curtain came down.
John Fox's curtain came down about a month ago when he plea bargained a six and a half year prison term conditioned upon a full courtroom admission of what he had done. Fox admitted to billing his clientele for twenty million dollars worth of wines that were never going to arrive. He also admitted to personally embezzling five million dollars, falsifying paper work (purchase orders), and instructing his employees to reinforce whatever narrative he constructed.
Premier Cru was apparently the finest of fine wine shops. (In a separate matter Fox borrowed six and a half million dollars to buy and decorate the store.) Having filed Chapter 7 in January ($70mil/debt & $7mil/assets) and declaring personal bankruptcy in February ($5mil in homes, cars, club memberships, extra-marital girl friends), Fox had ample time to prepare for his day in court. The bankruptcy trustees expect to net a little over three million dollars from the sale of assets which will, of course, be as insulting to the victims as Fox's expected early release from prison.