Just curious… But what was the wine, or wines that Banks was pouring that is causing you so much consternation?
Banks was sentenced to 4 years & ordered to pay 7.5mm in restitution to Duncan
Was this just an out today or was it from before?
And if he was convicted of a felony, doesn’t he have to divest of all of his wine Holdings? Just curious.
Larry
I’ll visit you Saturday to give you the Jacky Rigaux book and we’ll talk about Mr Banks
Sentence came down an hour or so ago
@EmilyBaucum was live tweeting it, did a great job
That doesn’t seem like much of a penalty.
and Qupe
Attn Jay Hack
I thought his lawyers could sleaze his way out of this but it seems you were right.
Could ask your wife if he will actually do time, and how much?
Can she see if she can get him sent to Lompoc Prison so I can taste with him in the ghetto on furlough days ?
Hi Larry:
The short answer is yes. To repeat an answer offered to a similar question in Post No. 31 –
It is absolutely clear that being convicted of any federal crime involving the element of fraud is automatically a crime involving “moral turpitude” for the purposed of Cal-ABC license revocation. There are also a few cases which have held that in the case of sole shareholders of a corporation holding a California liquor license, a felony fraud conviction warrants the revocation of the corporate license. The California Constitution vests discretion in the ABC whether to impose suspension or revocation of the license for a crime of moral turpitude, but in the ordinary course, a federal conviction for wire or mail fraud means license revocation.
California’s ABC requires that all persons who are officers, directors and holders of 10% or more of the shares of the corporation must meet the requirements for alcohol licensing, submit to fingerprinting, etc. California ABC Regulation 68.5 (4 Cal. Code of Regs. 68.5), describes the process of what happens when an officer, director or 10% shareholder is determined to be disqualified from holding a license. The corporate licensee and person disqualified have 10 days in which to petition in writing for a hearing. Once the determination of the ABC is final, a notice is issued which requires the licensee to take action within 30 days to terminate the relationship with the disqualified person. If the licensee fails to do that, the license may be revoked or suspended. One somewhat curious provision of the Regulation, subdivision (e), provides that Regulation 68.5 does not apply to corporations whose stock is traded on any California or New York stock exchange or any company required to make periodic filings with the SEC.
So, the short answer to your question is yes, since Mr. Banks has been convicted, he will be forced to divest himself of any and all ownership of California licensed wine businesses in which he holds 10% or more of the equity (as well as to resign from any entities of which he is an officer or director) – at least for some number of years. Any winery in which he is an officer, director or 10% equity owner will be required to terminate all relationships with Banks.
Note that the California ABC was quite slow in the license revocation process in the case of Rudy Kurniawan. Rudy was convicted in December 2013, but the liquor license of the Wine Hotel was not suspended until May of 2017. Part of ABC’s explanation was that Rudy appealed his conviction, but under Federal law a judgment is final from the date that it is entered (and Rudy’s appeal was rejected by the Second Circuit on December 22, 2015.)
ALSO, there was a separate civil proceeding seeking some serious civil penalties and a permanent injunction against Mr. Banks. Does anyone know the status of that proceeding?
For a white guy committing white collar crime? It’s huge. Much more than white rapists get in California.
Don, I don’t practice in the area of federal or state alcoholic beverage licensure, but if I recall correctly, it is a federal issue as well. I think he will have to divest ownership of any winery in which he is an owner or the winery could lose its federal basic permit, which would put them out of business.
There is an article published in the Wine Spectator today that provides quite a bit more explanation. http://www.winespectator.com/webfeature/show/id/Charles-Banks-Sentenced-to-Four-Years
Banks pled guilty to one count of wire fraud involving Tim Duncan on April 7, 2017 (so there will be no appeal in this case, and this makes Banks’ forced divestiture from the various wineries in which he owns an equity interest or serves as an officer more immediate.) In addition to four years in prison, Banks was ordered to pay Duncan $7.5 million in criminal restitution and to serve three years of supervised release after he finishes his prison time.
The lawsuit filed by Tim Duncan to recover additional funds of which he claims to have been defrauded remains pending. The SEC civil lawsuit (filed in Atlanta) may also remain pending. New Zealand’s Overseas Investment Office, a government agency which regulates foreign direct investment, has initiated a proceeding questioning Banks’ “good character.” and ownership through Terroir Life of Trinity Hill winery.
There is also a lawsuit pending in Napa against Banks brought by his partner at Mayacamas winery. To quote from the Wine Spectator article:
- Banks has been tangling in civil court with his business partners at Mayacamas, the Napa winery he and his wife purchased in 2013 with American Eagle Outfitters and DSW chairman Jay Schottenstein and his family.
The Schottensteins are suing Banks for breach of fiduciary duty, and asking him to step down as winery president. It is their belief that Banks’ status as a convicted felon puts Mayacamas’ licenses and permits at serious risk.
According to documents filed in Napa County Superior Court, the Schottensteins contend that following the Banks indictment, he diverted funds from Mayacamas to help pay for his costly legal fees. Additionally, they believe he directed more than $500,000 of Mayacamas’ wine sales to his own company, Terroir, to supposedly pay for marketing commissions which have not been invoiced. The purchase of Mayacamas was a personal investment for Banks; Terroir simply provides marketing and sales support for the brand.
Additionally, the Schottensteins allege that Banks marketed Mayacamas for sale without consent and refused to disclose the names of interested buyers. And they claim that Banks stopped paying his share of the winery’s operating costs.
The website MySanAntonio published an article which includes a video showing the written statement submitted by Tim Duncan. Tim Duncan's ex-financial adviser gets 4 years in fraud case It is a pretty compelling statement.
Mike:
You are correct.
All wineries in the US are required to have a Federal Basic License issued by the TTB (formerly known at ATF). Under 27 U.S. Code § 204 and the applicable TTB Regulations (27 Code of Federal Regulations §1.24), a Federal Basic License may be issued to a “person (or in case of a corporation, any of its officers, directors, or principal stockholders) [who] has not, within 5 years prior to the date of application, been convicted of a felony under Federal or State law, and has not, within 3 years prior to date of application, been convicted of a misdemeanor under any Federal law relating to liquor, including the taxation thereof.” The TTB may initiate a license revocation proceeding within 18 months following a conviction for violation of any of the above statutes.
In the case of Mayacamas, Charles Banks allegedly owns half of the winery in his own name. That interest will have to be divested, or Mayacamas will lose its license.
Banks’ entity Terroir Capital owns or controls 11 wineries, including Qupe and Wind Gap. I don’t know what Banks’ level of ownership in Terroir Capital is. After Banks’ criminal indictment, Banks was removed as President of Terroir Capital, and former Chief operating officer Kevin McGee was promoted to chief executive officer. According to an article in Beverage Industry Enthusiast, Kevin McGee stated in a telephonic interview that “Banks is no longer involved in the day to day operations of the company, but is still ‘present’.” According to Decanter Magazine, Terroir is apparently taking the position that it can continue to own the various winery interests despite Banks’ guilty plea, but the New Zealand government has already made clear (on June 15) that it won’t accept that argument in the case of Trinity Hill winery.
I would be extremely surprised if the TTB and California ABC continue to allow Terroir Capital to own the the various US wineries. In the case of Rudy Kurniawan, who owned the beneficial interest in two separate LLCs which held the ownership of the Wine Hotel, the license was revoked by virtue of the conviction.
News out that Banks has been convicted and sentenced to 4 years jail time. Also ordered to repay Tim Duncan $7.5 Mil.
Wine executive Charles Banks was sentenced to four years in federal prison yesterday for defrauding retired NBA star Tim Duncan of millions of dollars. U.S. District Judge Fred Biery also ordered Banks, a financial adviser and the founder of Terroir Life, which owns or manages nearly a dozen wineries in California, New Zealand and South Africa, to pay Duncan $7.5 million in restitution and serve three years of supervised release after he finishes his prison time
Go get 'em Psycho!!!
Didn’ t Fred Franzia get convicted of a felony??
How does he skate by??
A good question Mel. I see that Fred Franzia (the purveyor of the Charles Shaw wines sold at Trader Joes known as “Two Buck Chuck”) was convicted of a felony in 1993 and apparently fined $3 million. Supposedly Franzia started with the Charles Shaw wines in 1995. The Federal statutes listed above bar licensure for five years after a felony conviction, while the California laws presumptively permanently bar convicted felons, however the ABC is permitted to make exceptions based on the circumstances. I know that Mr. Franzia is a pretty despised character in the industry, in part over the fact that he initially labeled the Charles Shaw wines as “cellared and bottled in Napa,” which was literally true but the grapes did not come from Napa.
As I recall, it was felt that Fred’s disappearance from the wine scene would cause an economic blow to the area…seems far fetched doesn t?? I don t think anyone feels that way about Banks.