John Fox — owner of wine shop Premier Cru in Berkeley — who filed for bankruptcy is currently embroiled in an FBI investigation for alleged involvement in a Ponzi scheme.
Premier Cru, previously housed in its brick-and-mortar store at 1011 University Ave., was sued for upward of $70 million by several complainants, who claimed the store neglected to deliver wine they had ordered. Premier Cru is owned by Fox Ortega Enterprises Inc., which filed for Chapter 7 bankruptcy Jan. 8.
Tom Boothe, a plaintiff in one of the lawsuits against Fox, said he was “disappointed but not surprised” when he heard that Fox was filing for bankruptcy. In Boothe’s original case, he lodged a complaint of a possible Ponzi scheme.
The Federal Bureau of Investigation is looking into claims of Fox’s involvement in the alleged Ponzi scheme, according to Michele Ernst, an FBI spokesperson.
Boothe said he suspected Fox’s involvement in a Ponzi scheme when one of Fox’s wine providers went out of business but Premier Cru kept selling wine futures — a method of purchasing wines when they are still in the barrel before bottling.
A “reputable” store, Boothe said, would have a contract with a provider[,] and there would be little delay between buying a wine future and receiving the physical order.
“He wouldn’t go that far in debt selling wine futures, because you wouldn’t sell wine for less than you paid for it,” Boothe said. “He started to have to sell to cover prior sales, so prior buyers were getting the benefit of later buyers*’* purchases.”
Fox estimates himself to owe between 5,000 and 10,000 people money, according to court documents. His liabilities rank from about $50 million to $100 million.
According to Boothe, who is also a lawyer, a trustee will be appointed to manage the bankruptcy case, which will then proceed to a meeting of creditors, wherein the creditors gather to ask Fox questions and have their complaints heard.
Fox’s attorneys could not be reached for comment as of press time.
In a bankruptcy case, there are “preferences,” Boothe said, regarding who will receive payment first. The first financial obligations for payment are taxes owed, employee wages and administrative costs, such as fees paid to the trustee and attorney for handling the case. Such costs will likely be paid by selling Fox’s assets.
“It is foreseeable that the cost of administration and tax debt will consume 100 percent of John’s assets,” Boothe said. “I’m disappointed I may not ever get paid back, but there are far bigger problems with far greater import than me not getting some wine.”
Anderson Lanham is the lead crime and courts reporter. Contact her at mlanham@dailycal.org.