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Wine pyramid scheme? Customers sue Berkeley business over failure to deliver wine
Dec 7, 2015
(ContraCostaTimes) - From 2003 to 2013, Shirlin Wong paid more than $230,000 for hundreds of bottles of wine from Berkeley-based Premier Cru -- many of them "wine futures," or vintages still aging in barrels. Like several other investors, she expected a big potential bargain by paying for the wine before it was bottled, even if it meant having to wait months or sometimes years to receive it.
But the $6,000 bottle of 2009 Lafite Rothschild and three bottles of 2009 Haut-Brion at $1,800 a pop never arrived, along with hundreds of other bottles she had purchased in advance, the Hillsborough chiropractor claimed in a lawsuit. She never got to enjoy the renowned Bordeaux wine.
Wong's claims are echoed by scores of other connoisseurs who say they long ago purchased wine futures, as well as hard-to-get wines already in bottles, from the high-end purveyor, and are still waiting for their purchases to arrive. Many have followed Wong in taking Premier Cru to court.
The investors accuse Premier Cru, which was founded in Oakland in 1980 and claimed $20 million in sales as recently as 2010, of ignoring refund requests and running a wine pyramid scheme of sorts, raking in large sums of upfront money while never delivering the product.
At least 10 investors, many from China, have sued Premier Cru since November 2014, alleging they paid for more than $5 million worth of expensive wine and only received a tiny fraction. All the plaintiffs share the same tale: As the wine deliveries fail to turn up, Premier Cru employees string along anxious investors with excuses, and the routine continues with false promises of cash refunds. Customers were told of wine pallets stuck in French ports or at sea en route to China, always coming up with a new delay, the lawsuits claim.
Owner John Fox has said the problems arise from confused investors unclear on how wine futures work and unrealistic promises by his employees on delivery times.
But wine investors are not the only ones looking for Fox to pay up. Alameda County records show Fox owes more than $270,000 in delinquent property taxes for Premier Cru for tax years 2011-14. Fox also owed the state in 2013-14 more than $210,000 in sales taxes, but those liens were released.
While big investors sue, smaller wine collectors complain online, leaving desperate Yelp reviews and sharing their horror stories on wine forums.
"I am on the long list of people waiting for my wine to come in," one Yelp reviewer wrote. "It has now been two years. They always say they have 'a large shipment coming in six months.' ... Stay away from this store. They use illegally gained money from 'future' sales to run their business. These are orders they obviously have no intention of filling."
In 2013 and 2014, Chinese wine investor Bo Feng ordered more than $840,000 worth of wine from Premier Cru, mostly futures. Feng, who had planned to flip the wine once he received it, claims he is owed more than $660,000 in wine, according to his lawsuit filed this year. After receiving numerous promises over the phone from Premier Cru employees, he sent friends to visit the University Avenue store with its burnt orange, wood-paneled facade.
In January, Feng said in the suit, he was promised full reimbursement. From April to July, Feng listed 10 different times when he alleges Fox promised to send some money back but never followed through. He said he received one wire transfer of $15,000.
Chen Yu, a Canadian investor, had an agent purchase almost $300,000 in wine in March 2011. He asked for the wine in early 2013 but received nothing but promises before demanding a refund in early 2015, according to his lawsuit. On March 16, Fox cut checks for more than $1 million to Yu and other upset customers as reimbursements; they all bounced, Yu's attorney, Jonathan Polland, wrote in the suit.
"Fox's conduct is part of a continuing fraudulent scheme to defraud Plaintiff and other customers of Premier Cru," Polland wrote. "Fox has disregarded the separateness between Premier Cru and himself by, among other things, undercapitalizing this business entity, by using the entity's assets as his own, and/or by commingling the entity's funds and assets with his personal funds and assets."
Fox did not return emails to his personal and work addresses, and the voice mails of all employees at Premier Cru were full. An email and phone message to his attorney were not returned.
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