FYI.

This story is over 5 years old.

Food

This California Wine Business Was Accused of Being a Pyramid Scheme

Many clients of a California wine business paid tens of thousands of dollars for big-name wine bottles with zero delivered.
Photo via Flickr user Stewart Butterfield

There are a lot of ways to invest your money. Most of them involve boring stuff like mutual funds, stocks, or the bond market, but for the more adventurous investor, there is the world of en primeur wine futures. Under this fancy-sounding booze-driven financial structure, investors can buy wine before it's bottled. So if it's been a good year, then the pre-bottled wine will cost much less than it would for the suckers who pay retail.

Advertisement

But like any other form of futures investing, there is the chance that, for whatever reason, the product sucks and you can lose a lot of money. And much like other forms of getting rich quick, there is no shortage of charlatans and thieves out there to capitalize on eager investors, which is what seems to have happened with a California wine business, Premier Cru.

READ: NYC Officials Made Millions by Illegally Selling Red Bulls Bought with Food Stamps

While a French name may give the air of expertise and sophistication, the Contra Costa Times is reporting that the Berkeley company seems to have left many of its clients high and very dry. After repeated attempts by customers who had paid for pre-ordered bottles and cases of high-end wine, Premier Cru announced that it would be switching to exclusively online business.

The company's 29,000-square-foot Berkeley retail store is listed on a real estate brokerage site for $6.8 million, which is not a good sign for investors, many of whom have paid tens of thousands of dollars for heavily discounted big-name wine bottles that were never delivered. One investor told the Contra Costa Times that while everything seemed fine on the surface, repeated calls to the company on the status of pre-ordered bottles were always met with the same response: "the container ship was stuck in port and delayed." In light of these fraudulent allegations, Japanese corporation Firadis Ltd. filed a lawsuit against Premier Cru for over $100,000 for bottles of wine that were ordered haven't been delivered since 2012.

"It feels like a big Ponzi scheme. He's like the Bernie Madoff of the wine industry," another Bay Area investor told the Contra Costa Times said, referring to Premier Cru owner, John Fox, who has not offered any comment on the current situation.

While comparisons to Bernie Madoff may seem a little exaggerated, on the whole, wine schemes are common in the world of investor fraud. In England, fraud cases led to eight "rogue" wine futures businesses being shut down by authorities after victims were scammed out of an estimated 110 million pounds in the early 2000s. And recently, Chinese interest in Bordeaux wine caused unscrupulous wine dealers to make millions off of buyers of buyers of wine futures.